MORTGAGE LOAN INSPECTIONS ARE NOT NEEDED

From most things bad comes fear, and then well...crap. I'm talking about the latest development in the real estate market; something called the mortgage loan inspection. For about $275 you can have someone literally comb through your loan documents and potentially identify any problem areas, including those be darned predatory lending practices which have been partly to blame for the whole recent credit crisis. After the housing market all but took a dump and as thousands of homeowners face certain foreclosure (including many whom seem to have not understood the meaning of the word variable when used to describe their interest rate, but that's for another day) this would seem like a great idea. In fact, it could even be considered a smart move. It is but one more layer of protection for the potential homebuyer, because essentially if something does go wrong with the loan the homebuyer can point fingers at the inspector for failing to see problems. And why not, right? If you've followed any of the news at all on the subject, and there's been a ton of it, you'd be well aware that there have been lots of underhanded maneuvers and other shenanigans going on in the mortgage industry, and a ton of misinformed (and yes, some gullible) buyers got caught in a fine mess. Having some form of protection against such things may have saved many homebuyers from the frustration and despair they face now.

But here's my problem with that kind of thinking. It implies that people who do underhanded and bad things are free to continue on with their underhanded dealings so long as no one, like say a mortgage loan inspector, will be at the closing table to catch them in the act. It implies that bad contracts are going to be wholly binding heedless of how ridiculous or clearly fuzzy the terms, and that if someone comes before a lender that they determine to be gullible or otherwise uneducated or unprotected, then they (the lenders) have every right to take the buyer for the ride of their life.

We need not be protected by paying someone a fee. That's what we have lawmakers for. That is what we elect our officials to do. We put them in office to secure our interests as Americans. We want them to set forth laws that help to make our lives better. And yes, to provide us some form of protection from things like obvious predatory lending practices. After all this recent turmoil in the credit markets that's exactly what our legislators in the House and Senate should be doing right this very moment; focusing on the problems that got us in this mess and closing the loopholes which made it possible for predatory lending practices to occur at all.

Mortgage documents should be clear, concise and understandable. They must be fair and correct. To be anything less should put the lender, as opposed to the borrower, at risk. At some point people have got to become less agreeable to adding costs to their homeownership experience and stand up and say, if you intentionally try and screw me over and I can ultimately prove it, you are going to be held accountable for it. Enough said. This ridiculous extra inspection will only stick around if we, the consumer, is willing to bear it. I see no reasonable need for it. The law should be clear as well. It should be the only protection we need.

If the contract plays foul it should be moot. If that were the law and the lender was held to that, so would the need for an additional inspection, and additional cost, be moot.

© 2008 Jim Bauer/The Springboard. All rights reserved.

$129 A BARREL OIL CALLS FOR DESPERATE MEASURES

There's a guy at my place of work who has decided to buck gasoline. No, he's not interested in the latest fashionable hybrid vehicle and he's not rushing to the local smart car dealership. He's literally plugging in as he's certain the oil markets will only continue to go up. And he's not totally off his rocker to think so. Just the other day oil hit yet another record at $129 a barrel, and there are more than a few market watchers who say oil may climb all the way to the $150 a barrel mark, and perhaps yet higher still.

The guy, whose name will remain anonymous, ordered a conversion kit through some website he found that lets him convert his gas powered Chevy S-10 pickup truck into an electric vehicle. Don't ask me how it all works, I swear the man was speaking Greek to me through most of the conversation. But he's got it all put together, after some weeks (he's a pretty handy guy and working on cars is his hobby), and now he's just waiting on the charger so he can plug it in and rejuice, and then he wants to run some tests to determine his range and whittle down what he thinks may be some inflated claims by the manufacturer. More power to him, pardon the pun. The kit cost him $10,000.

Of course, I too believe that oil still has some upside left in it. In fact, I think it has a lot of upside left in it, and I strongly believe we will indeed see oil reach the $150 barrel mark and beyond. Let's not forget that summer isn't officially here yet, and while gasoline sales have been flat for the first time in say, the last thirty years or so, people are still going to have to at least get their behinds to work to pay for all the gas-related-inflation that has affected the most basic of everyday items. We're not out of the woods yet.

In an earlier blog, "Oil's well, but be weary," May 14, I made the prediction that I thought oil would come down. I still believe that. To me oil has all the ominous signs that it is an an inflated, overpriced market. You've literally got people breaking their necks, scrambling, trying to scoop up as many futures contracts on the stuff as they can. Wink an eye or fart in the wind the wrong way and the oil speculators all but lose their minds. It's all this hype that I believe will eventually, inevitably, kill the cash cow oil has been. We're a long way from gas under $3 a gallon, but I don't think it's impossible either. It just depends on how big the crash is when it happens. Again, it will happen.

My bet is that oil will go to under $100 a barrel in as little as 18 months. But, it has got to get ugly crazy before reality has a chance to really hit the fan. I don't think it has yet. I think we're still reeling in shock.

There is no doubt, though, that in the meantime it's going to be one hell of a ride. I hope it all works out for my buddy at work. If I'm wrong, I may need to carpool with him.

ONE YEAR AGO, TODAY

Life comes at you fast.

Those words come from a series of chuckle-rendering television commercials selling insurance, but I'm sure that the marketing gurus behind the catchy phrase weren't the ones who first coined it. Perhaps it is merely a more conservative, modern version of the old "shit happens" idiom. Either way, the very statement those five words make is wholly profound.

Life really does come at you fast. In a flash, everything changes. And more times than not, they are changes that you weren't necessarily looking for. They are changes initiated by things that seemingly come out of nowhere and just sort of take you by surprise. They are sometimes the best things to happen to us in our lives. Grounding things.

As I write this my wife, Dawn, and I are just now entering our first year of marriage together, and while we are far from strangers to one another (we've been together for going on three years now), there is still much we are learning about who we are. As anyone familiar with this path can surely attest, being married to someone is vastly different than simply being with someone at varying times throughout the weeks and days. To be sure, no one is nearly as refined in real life as in the impression-setting moments during the dating process. Marriage and being together all the time has a way of revealing some things. My wife has determined that in real life I'm a pig, for example, and that by the evidence of the food crumbs that regularly surround my plate at the dinner table, a fork appears to have been a tool I only recently learned how to use.

Hey, I am her knight in shining armor. She even told me so once or twice. And she did marry me. She is my princess, and of course I did marry her. But eventually the armor must come off to reveal the man inside. And for the record, a princess must eventually, too, hang up her tiara. At the end of the day we are, of course, people. We all have our irks and quirks. Some of them will excite and intrigue us. Some of them will make us melt to mush. And others...well, let's just say this is a tale that has been told more than once.

The long and short of it is that it's an adventure. A journey. And for better or for worse I'm having the time of my life. Change is good. Profound change is good. We've moved from the duplex I own with my mother and bought a new house just down the street. We've had the misfortune to endure the deep emotional pain of a miscarriage, though on the bright side we had a glimmer of the special excitement and joy the prospect of a child will one day add to our lives. We've made important discoveries about each other, and we've grown ever closer, and ever more in love each day.

A year is a short time, relatively speaking. Yet, even though it's only been a short time, in an odd sort of way there is this surreal sense that it has always been this way. That we have always been this way. Whenever I hold my wife in my arms and feel her warm caress, whenever I kiss her tender lips, I feel like this is a place that I've known forever. I feel like this is a place that I never want to leave. It feels good and it feels right.

It's been one year ago, today that my wife and I were married. Life comes at you fast, and I'm ready for whatever comes our way in the next year. If it's anything like the past year, I can't wait.

OIL'S WELL, BUT BE WEARY

With the price of a barrel of oil continuing to reach record highs you'd think that I'd be all but tripping over myself, getting to my broker, to fill-up on as many oil stocks as I can get my hands on. You'd think that I'd be screaming in utter amazement why in the hell isn't everyone riding this oil roller coaster? Including those who don't have the faintest clue about the stock market. And you wouldn't be so off-base to think so. It makes perfect sense, right? I mean, gas prices are not going to come down for the foreseeable future, and there's still a ton of those gas-guzzling monsters on America's highways, the hybrid vehicle market is confused about what kind of alternative energy technology it wants to utilize...so, what's to be weary about, about oil?

In my opinion, a lot.

As I see it, right now there's just too much excitement in the oil markets, and that makes me a bit nervous. There's also a ton of hype. It's a market rife with scare tactics galore. The price of oil rockets upward at even the slightest hint of bad news. Quite literally oil is on fire, and it's starting to get a bit carried away.

Don't get me wrong, the run up is not quite over yet. There's still an interesting amount of upside in the oil sector, and therefore an opportunity to continue to profit from all the hoopla. In no way am I advocating throwing in the towel altogether on this black gold. That would just be plain silly. But I am saying I don't think you should bet too heavily on it either.

It's sort of reminiscent of that great era of the Internet stocks, and the technology boom that rode on its wings with companies like CISCO, AOL and Digital Island (just to name a few) raking it in. These companies were all the gab, and they were making their investors very rich, very quick. The most recent housing boom had similar effects, and now the whole industry surrounding real estate is left to scratch their heads in the aftermath and wonder starry-eyed about what went wrong.

Like all things that go up, they eventually must come down. It's just the nature of things, and oil is no exception. It will fall. And why shouldn't we think it will?

Of course, at this point it's anyone's guess exactly when this certain bust in the oil markets will occur. No one can predict the future. But one can see the signs of a correction looming the more outrageous the market gets. It's getting pretty outrageous now.

So, in the meantime I'm still buying into oil. But I'm keeping a watchful eye on those flames. I think you'd be right to as well.

BETTING ON THE REBOUND

To be sure, these are not the worst of times economically. But these are tougher times; gas has risen to nearly $4 a gallon, food prices have skyrocketed, access to credit is limited, job losses continue to rise, and even though winter is now behind us, people spent a fortune to heat their homes through some very cold days, and the wounds haven't nearly healed yet. Next year it's not likely to get any cheaper.

The simple truth is that people do not have the disposable cash they had, and so they're holding back on non-essential spending. In a consumer driven economy such as ours that's not a good thing. Even as the stimulus checks begin to make their way into the hands of consumers, many experts agree that much of this money will go to help pay for gas and food, and therefore will not have as profound an impact on the economy as our faithful politicians intended. The wait for the recovery is on.

As well, when the official report comes out in a couple of months, I think the data will clearly show that the economy is in recession-a decline in GDP for two or more consecutive quarters. So, how are you going to make money out of this market?

I'm not going to tell you my best stock pick for the week, or provide any financial advice-I'm not a qualified financial advisor and I'm certainly no fancy Wall Street analyst (or even Donald Trump as someone suggested to me recently). I live in America's heartland and I work for a living in a production facility. But I can make an observation, and I'll give my best effort to convey why I think it's one worth paying attention to.

Look, the bad news is that the economy has taken a fall. But the good news is that the economy is resilient, and it is going to come back. It always does. So, if you want to make money in these current market conditions you want to position yourself well to take advantage of this certain rebound by buying the stocks of companies whose products people will buy when they've got money to blow again. And yes, people will have money to blow again.

Before you call me a nutcase, consider the sentiment of Wall Street investors, and frankly the nation as a whole, during the worst economic time our country has ever known. The Great Depression. While many people chose to jump off the tallest building they could find, others chose stocks wisely and put their money to work, and for many of them the payoff was extraordinary. They bet on the idea that things would get better. The economy would rebound. And it did.

Throughout history the stock market, with all of its turmoil, has outperformed every other single market hands down.

We're not at depression levels, but we are presented with an extraordinary opportunity to buy depressed stocks and take advantage of giveaway prices. If you're not buying stocks now, you're missing the boat.

So where do you put those investment dollars? What companies have been unfairly knocked around? There's a ton of them. Good, solid companies who have seen their stocks tumble for no other good reason but that the whole market has tumbled.

Again I'm not going to give you specifics here. But take a moment to think about where you'd spend your disposable dollars once the economy rebounds and money is flowing freely again. What will you splurge on? A new car? A new TV? A vacation? Dinners out? That new boat you've been wanting?

Those are the companies you buy today and cash in 12-18 months from now, and those are the companies you can be assured I'm placing my bets on.