Notice the US National Debt in the upper left corner, 16.5 Trillion. Now work your way down to the Money Creation section. The M2 money supply is only 10.7 Trillion. So even if the US Treasury were to confiscate every last penny held in circulation; the country would still be almost 6 Trillion dollars short of paying off the National Debt. As a side note, check the far right end of this section titled Currency and Credit Derivatives. This figure, 627 Trillion dollars is not currency at all. It results from all the ponzi schemes our financial institutions create out of thin air to skim more money out of the system. “Credit Default Swaps” and “Rehypothecation” are the tools used to create these many Trillions that don’t actually exist.

Now for the truly frightening numbers. Down at the bottom, not quite all the way to the right, are listed the US Unfunded Liabilities. They total 122 Trillion dollars. How do you think the nation is going to be able to meet these promised benefits? We can’t get there through taxation, as there are only 10.7 Trillion in circulation. So either the government has to break their promise or they have to create greater than 10 times more currency to pay the unfunded liabilities.

Given the option, to break the promise or to print the currency, which do you think they will chose? So from this you can expect that today’s dollar will only be worth a dime by the time they get through paying off the unfunded liabilities.

Dave Donhoff
Leverage Planner

The post Why traditional investing strategies will break you going forward appeared first on Leverage Planners.

Billionaire Hughes Chasing Blackstone as U.S. Rental King
http://www.bloomberg.com/news/2013-02-13/billionaire-hughes-chasing-blackstone-as-u-s-rental-king.html

Hughes, 79, has purchased about 10,000 properties through his American Homes 4 Rent, making the Malibu, California-based firm the second-biggest owner of single-family rentals after Stephen Schwarzman’s Blackstone Group LP. Hughes is using $600 million from the Alaska Permanent Fund Corp. and other fundraising to buy real estate, mostly at foreclosure auctions, according to Paul Saylor, chairman of CS Capital Management Inc., who advises the Alaska fund.
“Wayne founded Public Storage at a time when the industry was run by Moms and Pops out of their garages, and it’s kind of the same pattern,” said Saylor, whose Atlanta-based firm manages $1.4 billion and advises institutions with $4.3 billion in real-estate assets. Buying “single-family homes has been dominated until very recently by small investors across the country doing it locally.”

Macro implications that are usable by those who won’t/can’t go long rental homes directly;

The “big boys” and institutions foresee, have accepted & settled into the fact that our stable, middle-class, established population is going to overwhelmingly be renters for the long-term foreseeable future. Housing in many markets is now recognized as over-sold, and the rental pricing markets appear to be emerging out of the prior suppression caused by easy credit (which has disappeared as a suppressant.)

How to exploit?
OBVIOUSLY, #1 opportunity is to acquire your own rental property(s.)

Participation on an indirect basis, via securities speculation, is still anybody’s guess.

Dave Donhoff
Leverage Planner

The post Public Storage founder Hughes; long 10,000+ rental SFRs appeared first on Leverage Planners.

GSE Reform Could Have Dire Unintended Consequences for Renters
http://www.mortgagenewsdaily.com/12112012_multifamily_housing.asp

Renters face a long-term and growing affordability crisis. The demand for rental housing has skyrocketed and production has failed to keep up. As a result rents have climbed 4 percent this year while middle class wages have stalled and now one of every four renters spends more than half their monthly income on housing. Rents are projected to increase by at least another 4.6 percent next year and 4 percent in both 2014 and 2015.

This reality is supported by the 80,000 pound federal gorrilla… “skate to where the puck is going”! When the housing market (home owners) are subsidized, landlords rake in the benefits!

This is the trade of the century;
1) Residential rental property (the ultimate yield-producing hard assets,)
2) Acquired at depressed low prices (likely never to be lower again,)
3) After 20 years of rent suppression, with a reversal of financial forces,
4) Maximum leveraged (in decaying U.S. dollar currency,)
5) Leveraged at lifetime low interest rates,
6) Artificially supported by market distorting regulation!

Get ‘em while they last!
Dave Donhoff
Leverage Planner

The post Long-term rent trend on the hockeystick… appeared first on Leverage Planners.

OK… not *quite* there yet…. Wholesale 30 FRMs are paying a few bips rebate at the 3.0 coupon today at close.

The Mortgage BONDS are actually already there… LONG ago there, with an extending spike up today as well;

The lender’s secondary trading desks, however, have a significant loss backlog from hedging costs on broken locks (due to people locking rates then abandoning the locks to shift to another lender as rates moved down during the process.) Because of this carried sunken costs, the lenders are going to be equally non-competitive amongst each other while trying to let swelling margins recoup the broken lock costs.

I’m going to make a guess that this will take from a week to 4 weeks… and with virtually zero chance of global economic and geo-political optimism breaking out in the coming 2-24 months, I hereby declare 30 FRM mortgages *WILL* be in the mid-to-high 2% range before Christmas.

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

The post 30 FRM in the high 2%s… appeared first on Leverage Planners.

Likely at least 5/8 to ¾ better in rate over just the past 2 weeks… but ratesheets don’t reflect it yet, because secondary (at all banks) has to digest a lot of abandoned lock hedging costs… that will probably take a solid 4-6 weeks, minimum… but the bond trend is solid (with Europe melting & the Middle East burning in front of our eyes, and the President’s masters doing everything possible to add sugar to the immediate economy.)

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

The post *CRAZY* new FNMA bond highs today appeared first on Leverage Planners.

I usually do a quick skim over these guy’s content because they’re usually a bit more sales-push-ish than is my style…. HOWEVER, today’s 5 minute content is pure insane gold!

Skip to the 1:00 mark… to see the *insanity* we are dealing with on literally an everyday basis in the mortgage industry at present.

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

The post Cat Racist Real Estate INSANITY! appeared first on Leverage Planners.

For Unpaid College Loans, Feds Dock Social Security
http://www.smartmoney.com/borrow/student-loans/grandmas-new-financial-problem-college-debt-1344292084111/#article_tab_article

<_SNIP_>
It’s no secret that falling behind on student loan payments can squash a borrower’s hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits.

<_SNIP_>
The government’s withholding power also extends to Social Security disability benefits. Tammy Brown of Redding, Calif. says that the government has been taking $179 out of her Social Security disability check each month for the past five years. Brown, 52, became disabled in 1986 after being involved in a car accident. Unable to work, she fell behind on her student loan payments. She says the Social Security check is now too small to cover her food and medical bills, so she quit taking prescription pain pills. “It’s kind of hard to live on this amount of money,” she says.

<_SNIP_>
FROM THE READER COMMENTS:
Posted by VINNYNY.
“BOO, HOO, HOO!…
As a mortgage banker after graduation, I had dozens of clients who did not qualify for mortgages because they had defaulted on student loans. The absolute worst offenders were doctors and lawyers. In fact, I stopped taking applications from doctors because virtually all had bad education debts.”

Dave’s Comments;
Of course, the mature and responsible thing for everyone to do is to repay one’s debts, preferably on time and in full. Then again, sometimes “life happens” and adjustments have to be made… sometimes in the timing (and even the certainty of timing,) and sometimes ultimately in partial or complete default… sometimes leading to derogatory credit or bankruptcy. The most critical thing every person must do is manage their economics to remain self-sufficient and survive.

Its easily arguable in favor of the government (as lender) garnishing wages (social security) as the income payor… but there is a more critical point here.

When a person takes out a credit card loan, both the lender and borrower understand that the loan is unsecured, and that any delay or default is at the lender’s risks… and the loans are subsequently priced in rates & fee for those risks, plus the lenders cautiously measure how much credit they offer.

When a person takes out a real estate mortgage, both the lender and the borrower understand that the outstanding balance is collateralized by the value of the real estate itself… and in some instances *ONLY* the value of the real estate can be used to offset any delay or default costs to the lender (so if the value ends up less than the outstanding loan balance, in some cases that unsecured balance is again at the lender’s full risk.) This reduction of risks is priced into the rates & fees & terms as well. MORE IMPORTANTLY, this allows a smart and responsible borrower to SEGREGATE RISKS… like a large ship tanker with compartmentalization so that the ship can take a direct torpedo hit, and still proceed without sinking.

MANY federal student loan borrowers were probably unaware that although their student loans were unsecured, the lender (the government) still reserved garnishment rights against their future social security income and disability benefits. Being unaware is no excuse, and earns no sympathy…

However social security benefits are commonly expected to be “last resort safety net” benefits, not any kind of luxury lifestyle supplementation therefore easily tapped for repayment of student loans. There is something that seems viscerally sinister in the idea of a lender squeezing out repayments from someone’s ‘last resort’ sustenance income source.

ULTIMATE MORAL OF THE STORY: Risk Compartmentalization!
Better to never put yourself in the position of relying on *anything* from government benefits… but if you are given no choice (such as a career in a position where paying into the social security system is mandatory,) then be fully aware that the government can determine in the future, for whatever reason convenient at the time, that you owe them money. In this particular story case, the “balance owed” is obvious and “bright line” in student loans… but I think its safe to realize that politicians can be ruthless when the system is financially starving, and every asset they have access to is vulnerable, in order of their ease of access.

The most obviously and immediately vulnerable are accumulated payout benefits, as described above. The close second most vulnerable are the so-called “qualified plans” (401k/403b/TSP plans, IRAs, ROTHs, etc.)

Everything has its own measures of risks… and a previously under-recognized risk is now making itself known; Government economic desperation strong enough to break the sanctity of last-resort social safety nets.

Build your safety nets beyond the risks of liens & garnishments, whenever possible.

Dave Donhoff
Leverage Planner

The post Another economic canary died… anyone noticing? appeared first on Leverage Planners.

It’s not unusual to come across plans of that size with total cost exceeding 3.25% of plan assets per year which is a devastating tax on future accumulations. In that case, I wouldn’t invest one penny over what it takes to get the match (if any).

In contrast, we are putting clients into retirement accounts that end up costing 1/3 *OR LESS* of these costs, *AND* have protections against losses in market down years, yet STILL get market gain years and average 6-8% TAX FREE!

Anyone who still funds their working retirement nest egg into a 401k anymore is only doing so out of lack of awareness of their superior alternatives.

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

The post Why Saving In Your 401(k) Might Be Horrible For You – Forbes appeared first on Leverage Planners.

Who said this party is over?

At a 104.24 yield, the banker lock trading desks are going to begin getting squeezed over to the 3.0 coupon soon. It is already yielding 102.06 as I type…

When that happens, we’ll be in arm’s reach of 30 FRMs in the high 2%s, in serio.

Meanwhile… today’s lockables* for comparison purposes;

(*Notwithstanding ‘hits’ for credit scores, amount, LTV, occupancy, prop type, etc.)

FHA:

30 FRM @3.25% paying 1.152 rebate

5 yr ARM @2.25% paying 0.008 rebate (call it “par”)

Conforming:

40 FRM @4.0% paying 1.136 rebate

30 FRM @3.375% paying 0.012 rebate (call it “par”)

5 yr ARM (Fully Am’d, & I/O) @2.5% paying 0.186 rebate (call it “par”)

HARP2 (Obama Refi) to 125% of value

30 FRM @3.75 paying 0.76 rebate

15 FRM @3.0 paying 1.651 rebate

HARP2 (Obama Refi) to 175% of value

30 FRM @3.75 paying 0.053 rebate

DISCLOSURE/DISCLAIMER:  ALL PRICING ABOVE IS ACTUAL WHOLESALE INTEREST RATE ONLY.
ANNUALIZED PERCENTAGE RATE (APR) MUST BE CALCULATED ON A SPECIFIC LOAN SCENARIO.
APR WILL INCLUDE THE VARIOUS CLOSING COSTS, WHICH ARE UNRELATED AND NON-VARYING TO THE ABOVE INTEREST MARKET PRICES.

Luck to all!

David Donhoff, Advisor

Leverage Planners

(425) 223-4520 desk

(425) 652-1001 cell

The post FNMA Morgy Bonds – New Highs appeared first on Leverage Planners.