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By sonnypage
February 4, 2009

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All of our METAR regulars know that my wife and I are Realtors, also associate brokers, who live and practice real estate north of Atlanta; we are north of the Chattahoochee River out in Roswell and Alpharetta. I have written before of our mortgage lender friend whom I refer to here as "Amanda". We joined her today for lunch at the Thai Thai for the first time since the week before Thanksgiving.

As soon as we had ordered Amanda grinned as she said, "Well, you won't believe this but Parker and Janice are doing a refi with me, we close next week". I was more than amazed for a couple of reasons. We had worked with Parker and Janice off and on for eight months last year as buyers' agents before finally closing during the last week of December. Amanda had worked with them all along with us, but when they finally bought, they jumped at the last minute to another lender. The reason was just as amazing; the other lender had an arrangement with American Express that allowed them bonus points for their closing costs. I felt badly for Amanda because she had worked with them as long and as hard as us but had nothing at the time to show for it.

"So how can they justify a refi after just five weeks," I asked? "Nothing to it", said Amanda. She explained that their rate when they closed was 5 ¾ % but she was doing their refi at 4 ½ %. Rates had dropped that much in just five weeks and this would save them $270 or so a month on their payments. Amanda had done an incredible job for Parker and Janice last year and apparently they thought so as well by coming back to her on their refinancing. I knew that much of Amanda's business these days was refinancing but exactly how much, I asked? She thought for a minute before saying that she had seventeen transactions in process so far for February, and of those, only one was a buyer and not a refinancing. That, I think, is pretty amazing.

I brought up the subject of a 4% government guaranteed rate that is being talked about in Washington. How much would that help, was my next question? Amanda replied that it would help, but it would not be a complete cure all by a long shot. "Sonny, we are probably only approving 70% of our refinancing applications. Keep in mind, if the property has depreciated, they may no longer have enough equity", said Amanda. "And if their stock portfolios were smashed down 30% this past year in October alone, they may not be able to make up the difference even if they want to", I added. What I did not say was that if they were unemployed you could drop the rates down to zero and have absolutely no impact at all, at least for those unemployed. Another problem is what I call "lock up". We have two buyers who would love to buy, need to buy, but unfortunately their homes elsewhere in the country are not moving.

Last week one of you was in town and I almost got to take you to lunch at the Thai Thai, but your schedule changed at the last minute. Doctor Optimist is the only Fool I have ever met before in person. If any of you find yourselves heading for the north side of Atlanta, give me a shout. Lunch at the Thai Thai is on me.