Smallwander.com ^SM links the high-quality resources of small towns. The site, which is still in the testing stage, will include 10 to 30 towns from each of the southeastern states in the not-too-distant future. This site is different than other tourism sites because it

Focuses on small towns that have small-town charm, with historical, artistic, and natural offerings,
Pools the amenities of small towns into a single database,
Provides up-to-date information about events, and
Recruits businesses that are locally-owned, walkable, and environmentally-friendly

Hat tip: Phil Hardwick 

Today’s (March 19) New York Times features a credit-crisis-for-dummies story that, for simple-minded folks like me, is a must-read. Turns out, even the smart Wall Street types don’t completely understand what’s going on. (Whew! That makes me feel so much better. I may be ignorant, but I’m in good company?!)

I know it may not be PC (in most REALTOR® circles, at least), but this editorial from today’s (March 12) Wall Street Journal makes good sense to me. The gist of it is that helping homebuyers stave off foreclosure (for an additional month or so…) and programs that attempt to keep marginal borrowers in their homes at any cost is actually prolonging the agony. The author argues that the market won’t reach bottom and start back up until the bad credit risks (or at least the worst of them) are out of the homes and bad loans. In particular, he writes:

….Government policy is working against itself. The Fed is pushing on a string — it can’t bring back confidence in specific assets by flooding the market with generalized liquidity, though it can certainly undermine confidence in the dollar and its own anti-inflation credibility. On all sides, meanwhile, the call for a housing bailout is becoming deafening, nigh irresistible. But the seized-up credit markets won’t be unseized by trying to induce debtors to cling to houses they now see as throwing good money after bad.

By definition, the only haircut lenders rationally want to take is the minimum required to keep owners on the fence about walking away. Not much better are bailout plans that try to keep borrowers in their homes by shifting some of their equity losses to the taxpayer. The market has utterly changed from the market in which these recent purchasers made their purchase decisions. They’ve been renting their homes and don’t really lose much through foreclosure. Let them go.

What do you think?

“Each of us carries around a crippling disadvantage: we know and probably cherish our product. After all, we live with it day in and day out. But that blinds us to why the customer may hate it or love it. Our customers see the product through an entirely different set of lenses. Education is not the answer; listening and adapting is.” – Tom Peters, in Thriving on Chaos

Following is just-in from NAR’s Joe Ventrone (Vice President of Regulatory and Industry Relations):

Over the past few months, the GSEs (Fannie Mae and Freddie Mac) along with the Private Mortgage Insurance Industry (MIs) have been increasing fees and tightening up underwriting standards. This is a direct result of the mortgage crisis which surfaced last August. NAR is communicating with the GSEs about these changes and raising concerns about their impact on the market and unintended consequences. For example, the declining market policies may be stigmatizing entire markets and unfairly denying homeownership to homebuyers, especially minority and low income homebuyers. Although the recent GSE actions will have a significant impact on the mortgage and housing markets, we recognize they have suffered serious financial losses in recent quarters and their goal, like ours, is to make sure they are strong enough to continue making the secondary market work. Without the GSEs, the current crisis would have been much worse.

The following factors may help explain recent GSE decisions:
• These are essentially private entities that are universally losing billions because the mortgage markets in the last several years failed to apply strong underwriting standards.
• After what has happened in the mortgage market, with hundreds of billions of losses, a period of retrenchment is inevitable. A return to zero down mortgages is unlikely, which is not necessarily a bad thing.
• The FHA mortgage insurance program is a sound alternative for subprime and many Alt-A borrowers, People with weaker credit and a small downpayment should consider using FHA. There is a long history of FHA filling that role, and we expect the pending FHA reform legislation to help revitalize its programs and make them even more accessible.
• If Fannie and Freddie are charging too much and setting their standards unnecessarily high, considering the risk, there will be an opening for others to compete. Unfortunately, considering how cautious banks and other mortgage lenders have become, this could take considerable time.
Attached please find an update from our Real Estate Services program which was drafted by NAR consultants. This update provides up to date information on the current state of the mortgage market.

These are very trying times for our mortgage finance system, our members, and the American homebuying consumer. We at NAR are keeping abreast of up to the minute changes from the mortgage lending industry as well as the GSE’s and the financial regulatory agencies. In this regard, we continue to work with the GSEs on their declining markets policy. Please visit www.Realtor.org for current information. Please do not hesitate to call any of the following NAR staff if you have any questions.

NAR Contacts

FHA Programs Regulatory Contact:
Jerome Nagy, jnagy@realtors.org <mailto:jnagy@realtors.org> , 202.383.1233

FHA Programs Legislative Contact:
Megan Booth, mbooth@realtors.org <mailto:mbooth@realtors.org> , 202.383.1222

GSE Programs Regulatory Contact:
Jeff Lischer, jlischer@realtors.org <mailto:jlischer@realtors.org> , 202.383.1117

GSE Programs Legislative Contact:
Marcia Salkin, msalkin@realtors.org 202.383.1092

A story in today’s New York Times reports that bankruptcies were up 18 percent in February. Of particular note:

Americans filed for bankruptcy in growing numbers in February, buckling under the combined weight of rising energy prices, a weakening housing market and sky-high personal debts.

An average of 3,960 bankruptcy petitions were filed per day nationwide last month, up 18 percent from January and up 28 percent from a year earlier, according to Automated Access to Court Electronic Records, a bankruptcy data and management company.

 February was the busiest month for filings since Congress overhauled the bankruptcy law in 2005. Bankruptcy experts said the rise was particularly worrisome because those changes made filing for bankruptcy more complicated and expensive.

 “This number of bankruptcies may be under-representative of the true financial distress consumers are feeling because of the steps Congress has taken,” said Jack Williams, a scholar in residence at the American Bankruptcy Institute and a professor at Georgia State University.

The latest figures show the financial pain is spreading from states like California and Florida, which exemplified the housing boom and subsequent bust, to those along the Eastern Seaboard like Maryland, Virginia and Delaware, which were among the 10 states with the largest percentage increase in filings in January and February. “You are seeing a good-size uptick everywhere,” said Mike Bickford, president of Automated Access.

As tempted as I am to fire off a snappy (read: snippy) response to some of the misunderstandings contained in Frank LLosa’s recent post about RPAC, I’m reminded of Seth Godin’s admonition that miscommunication is almost always the fault of the communicator, not the recipient. So if Frank has his facts wrong about something VAR does…especially something so essential to his business as RPAC…it’s likely VAR’s fault for not communicating more thoroughly or frequently or clearly.

So, herewith, a primer on RPAC for them what want or need to know:

1. RPAC is the largest PAC in America. RPAC of Virginia is the biggest business PAC in Virginia. Big deal? Heck, yeah. When it comes to the funding of a Political Action Committee, size matters…at least it does to candidates and elected officials. The better funded your PAC, the more likely elected officials are to think twice before doing something that would negatively impact your real estate business, or more importantly your customers and clients. It’s the “carry a big stick” theory of politics, and it’s effective. That’s why we beg and plead with you to invest every year. Because it’s the only protection you’ve got against bad law and regulation. Sure, you can give individually to whomever you wish…but where’s the big stick? (And yes, that makes it all the more imperative that we consider and develop carefully our policy positions so that they’re about what’s good for Virginia, good for our communities, good for consumers…and not solely self serving).

2. RPAC of Virginia gives fairly evenly to Democrats and Republicans. National RPAC does, too. We’re not affiliated with a political party. We represent candidates who support private property rights and fair land use policies and housing opportunity and free enterprise. In the recent General Assembly election cycle here in Virginia, we supported more Republicans than Democrats…which makes sense, considering the Republicans were the party controlling both houses of the General Assembly at the time. With the Dems now in control in the Senate, I suspect it’ll be different next time around.

3. RPAC is governed by about 20 trustees who are REALTORS just like (most of) you. They run real estate businesses AND they’re active in state and local politics. So when funding decisions are made, do remember that they’re made by folks who do what you do for a living and understand the issues confronting your profession.

4. This is a biggy: RPAC funds can only be used for CANDIDATES. We’re prohibited by law from using it to lobby; we’re prohibited from using it in issues campaigns (say, to support or oppose a grantors tax increase). Lobbying and issues campaigns are funded with your dues dollars, not with RPAC funds. You invest in RPAC so that your association has funds to help elect candidates who support what’s best for your business and for homeownership in Virginia. That’s pretty much all that your RPAC money is used for. The vast majority of RPAC overhead costs — staff, recognition, brochures, etc — are paid for from your VAR dues dollars, not from the PAC.

5. Before the RPAC Trustees decide to support/endorse a candidate (which usually means we give them money or in-kind campaign support, but not always), we interview the candidates to determine which is best for your interests. We don’t pay attention to a candidate’s stand on social issues; instead, we ONLY look at his or her position on real estate issues. We almost always interview in races for an open seat. In races where an incumbent who has supported your issues is running, we’re less likely to interview; after all, such a candidate has a track record, and we can tell if he’s been for us or against us. On the other hand when an incumbent hasn’t supported us, we either stay out of the race, or we look for someone to challenge him/her in the election. Likewise, most local associations interview candidates before they make endorsements in local races.

6. Which reminds me: Of every dollar you invest in RPAC, 30 cents goes to NAR for use in federal (Congress and US Senate) races. The remaining 70 cents is used in Virginia for statewide and General Assembly races AND in local races (and the local portion is controlled by your local association, but their rules and process for candidate contributions are nearly identical to VAR’s)

7. There are serious limits to what National RPAC can give to Federal candidates (Congress and US Senate). I’ll spare you the gory details, but it totals $15,000 per candidate per election cycle. National RPAC does NOT get involved in the presidential race. In Virginia, however, there are no limits. Still, I think you’ll find the size of our contributions to be in line with those of other groups. There’s a limit, of course, to what the market will bear, and any contribution that seems larger than the market will put us in every newspaper in the state, and…let’s just say the coverage wont be flattering. You can find a record of all political contributions in Virginia at http://vpap.org.

8. Despite the conclusion one might draw from the National Home Builders Association’s recent decision to cease all funding of Congressional candidates until Congress does what the builders want, it’s not about buying votes. Sometimes I wish it was that easy, but I’m glad it’s not. What it’s about is electing thoughtful officials who’ll at least listen when we come to them with good, sound policy proposals. It’s an open door. But if we’re not fighting to elect that kind of candidate, there are plenty of other groups out there with different ideas from you who’ll fill the void with their brand of candidate, and you’ll be out in the cold. If we’re not engaged in political advocacy, we can’t effectively represent you. That’s what RPAC is for.

That’s enough for now. Three last things:

> You’ll find a really cool member-produced video about RPAC on VAR’s website. It’s short, it’s current, and it’s worth your time.

> Here’s a list of 2007 VAR legislative successes, powered by VAR’s first rate lobbying team and your support, but undergirded by the “big stick” that is RPAC. Do note how many of the issues we’re invlved in aren’t only about us, about REALTORS®; rather, they’re about better communities and moving Virginia forward.

> Lastly…I do apologize for being so pedantic. I understand that politics can be an unpleasant and divisive business. But to those REALTORS® who would recoil from it and refer to RPAC as something nasty and say that politics is distasteful and REALTORS should have no part of it, I say this: When they declare that ditch on your investment property a wetland, and they put a tax on your commissions, and they decide to fund the bulk of transportation infrastructure on the backs of homebuyers and sellers, and implement all manner of regulation that negatively impacts your bottom line, you’re going to want to say “Where was RPAC?” And I’ll have to bite my tongue to keep from replying, “Where were YOU?”

I read today that rhinotillexis is on the decline, and that’s a good thing.

The term means “picking one’s nose with one’s fingers.” In an article by Jim Shahin in the February 15, 2008 issue of American Way, a Harvard study reveals that rhinotillexis is down 70% from the year before. The decline is attributed to the fact that cameras are everywhere and people are becoming more cautious about the activity for fear of showing up on YouTube and grossing out their friends.

So for you REALTORS® out there, here’s this friendly warning:  Please don’t pick and drive, especially with clients in the car or around cameras. You never know who’s watching. (Chalk this up to more helpful advice from your association.)

> This from the Chicago Trib: Should you buy or should you hold off?

> This from Inman: Realtors question Web site name restrictions, about concerns some are raising about a new Code of Ethics standard of practice that says REALTORS shall not “use URLs or domain names that present less than a true picture.” The new SOP, approved last November, is the result of the use, by some members, of domain names that suggest that the REALTOR is actually the MLS (for instance, a broker whose website is “VirginiaMLS.com”). Seems to me such usages are misleading at best…and therefore the new NAR SOP is appropriate. Or in other words, just because it’s legal and you own it doesn’t mean it’s ethical. What do you think?

In our ongoing effort (okay, MY ongoing effort) to keep you well-read on what’s being written out there about the housing economy and your profession, here are a few must-reads:

> Incredible, but true: Daniel Kadlec actually writes something positive about the current housing market in last week’s issue of TIME . Any article about the current situation that’s entitled Ignore the headlines (as this one is) has got to be provocative, right?

> This, from the February 22 New York Times about some new proposals Congress is considering for “rescuing” homeowners who are upside down on their mortgages. What’s your take on this idea of a bailout (for lack of a better term)?

> Interesting piece here (from seekingalpha.com) that takes a contrarian view of what’s happening (and is ahead) in the mortgage markets. Be sure and read the comments, too, many of which take a contrarian view of the author’s contrarian view.

> Speaks for itself: Top 5 Things I Love About The Current Real Estate Market

> The Next Slum? In this month’s Atlantic Monthly, Christopher B. Leinberger says the subprime crisis is just the tip of the iceberg. Fundamental changes in American life may turn today’s McMansions into tomorrow’s tenements.

> How to find your lost iPhone. I read about this at sellsiusrealestateblog. If you lose your iPhone, this service will locate it for you on a Google map. Not that I can imagine anyone so careless as to misplace anything as lovely as an iPhone….

> From today’s NYT (Feb 23): A ‘Moral Hazard’ for a Housing Bailout: Sorting the Victims From Those Who Volunteered

Lastly, if you have a life outside work, pick up a copy of THE ROAD by Cormac McCarthy. Has not a thing to do with real estate, but I just finished it, and it’s the best thing I’ve read in a long time. And don’t be dissuaded by the fact that it’s an Oprah Book Club pick; it won last year’s Pulitzer Prize.

– Scott Brunner, CAE