Clark has a special tip for those who are interested in buying distressed real estate.

Banks are demolishing the credit scores of would-be bidders on short sales and foreclosures by running credit checks to decide if they'll be allowed to bid. Furthermore, The San Francisco Chronicle reports that people are also being told if they don't do a mortgage with the bank, then the bank won't even entertain their offer.

Don't let a bank force you as would-be bidder to allow them to run a credit check on you. Agents, beware of this abuse of your buyers and pushback if necessary.

Banks claim they're doing this to make sure they're not wasting time with a potential buyer who's not credit worthy. Well, again, that is not your problem. Don't let the bank make it your problem and push you to the point where you don't qualify because you have all these inquires on your credit.

An oldie but baddie scam has become active again in the home-selling market.

During an open house, criminals may work in tandem with one distracting your realtor while the other rifles around the house looking for jewelry. The criminals may arrive separately within minutes of each other or they may come as a couple.

The Washington Post reports that in one instance at least $43,000 worth of jewelry was stolen during five open houses in Fairfax County, Virginia.

Clark's rule is avoid the problem in the first place. When you list your home, be sure you also rent a safety deposit box off the premises where you can stash away jewelry or other valuables. Any important financial papers can be stored in a locking cabinet at your home.

Of course, most people who go to an open house will be honest potential buyers. But you still have to protect yourself from the small number of people who aren't. Prevention is not only the best cure here, it's the only one.

Short sales are gaining traction among lenders because of a new federal incentive. In essence, the government has agreed to absorb a part of the loss that a bank sustains whenever they do a short sale.

"In May, the Treasury Department said it would offer a streamlined framework for short sales and incentive payments of $1,500 to homeowners, $1,000 to loan servicers and $1,000 to second-lien holders," The San Francisco Chronicle reports.

Just 18 months ago, the term "short sale" was not widely known. Today, it's gaining some currency as more and more short sales get done, but it's still a misunderstood concept.

Short sales are when you need to get out of a house and you get the lender to agree to take market value on the sale -- instead of what you actually owe on it. You'll take a hit of about 120 or 130 points on your credit score for doing one.

Are banks doing this as a charity effort? No, it's cheaper for them to do a short sale versus a foreclosure. Some of the biggest lenders now have "war rooms" with specialists to process short sales. Certain lenders even take requests for short sales electronically nowadays.

Our associate producer Joel started looking to buy a home last winter. He immediately began honing in on short sales, much to Clark's dismay. The consumer champ knew that banks were notoriously incompetent when it came to processing short sales.

Naturally, Clark urged Joel to steer clear of them. But being a young man, Joel completely ignored Clark! So much of the market was short sales that it would have been very hard to ignore them in his search.

Joel was right in this case; he bought a short sale for $89,000 with a 15-year loan at 4.375 percent. The property had last sold for $155,000. So his patience was rewarded, but it took the better part of a year. And that's now made Clark himself reconsider the short sale as a viable option for struggling homeowners. It's for real this time!

Newly released housing data shows that foreclosures were at a record high during the last three months. It seems that the wave of embargoed foreclosures the banks were holding back have finally hit the market.

This new wave of foreclosures is generally among more expensive homes. In the past, it had been at the lower end of the pricing scale. That means both hazard and opportunity is on its way.

Clark thinks we'll see another attempt in Congress to allow workouts, as they do in commercial lending. This effort has failed in the past. But now with the rich losing their homes, there's a greater possibility they'll exert their influence in Washington D.C. and get it passed.

Yet workouts (aka "cramdowns") are not just freebies; there is a market cost to them. That cost comes when lenders have to factor in the risk of losing money on a workout, thereby driving up their mortgage rates. There is no free lunch for anyone!

The market overall still has awhile to go before things get healthy. Look for intensified opportunity to buy foreclosures in 2010. The best opportunities will be in discretionary home purchase categories like vacation homes and second homes.

The Federal Reserve has announced its intention to scale back support for the mortgage market. No doubt that realtors and sellers are upset by this move. But it's a necessary step to heal the housing market.

Dow Jones reports there are almost three million homeowners who are 90 days delinquent, but have not yet been foreclosed on. Of course, it's only a matter of time before the axe falls. This will only flood the market with more foreclosures.

The key takeaway here is that if you are looking to buy a home as an investment, as a primary residence or as a vacation home, the opportunity to steal a deal is likely to get even better in 2010. The expiration of the $8,000 first-time homebuyer credit is another step in removing artificial support for the housing market.

This is one train you don't have to worry about leaving the station without you aboard it.

Meanwhile, Clark feels housing is not likely to fall much further in price. So if you're sitting in your house fretting over the market, it's important to know that you're only in trouble if you're trying to sell right now. Otherwise, hang tight and wait it out for the next seven to eight years until we get out of this cycle.

Clark is often asked how a short sale or foreclosure will impact someone's credit score. A new report from syndicated writer Kenneth Harney now reveals the damage.

Before we go further, please note that these figures below are compiled based on your Vantage credit score. The Vantage score is a fake score manufactured by the three main credit bureaus -- Equifax, Experian and TransUnion. It is not the official score used by most lenders. Yet it still give you a good indication of what to expect with your true credit score.

• A short sale will ding your credit score by 120-130 points.
• A foreclosure will drop your score by 140-150 points.
• Bankruptcy can decimate your credit score by 365 points.

When you do a short sale, the lender agrees to let you sell your property for below market value and everyone walks away, essentially with almost no harm, no foul. But if you go into foreclosure, the lender has the right to sue you for deficiency. That means you're responsible for whatever financial losses they suffer as a result of the foreclosure.

And that can lead you to bankruptcy, which will remain on your file for 10 years.

MONEY-SAVING MOMENT: New mortgage rates are just about the lowest they've ever been. The average 30-year fixed is around 4.97 percent and the average 15-year loan is at 4.4 percent.

Remember, these kind of marquee rates will go to those who have great credit, equity in their homes and who really know how to shop around for the best deal. (Editor's note: Rates accurate as of Sept. 24, 2009.)

Now is the time to take advantage of this opportunity because the Federal Reserve will be gradually reducing its support for the housing market. That will raise mortgage rates to where they would otherwise be. In fact, the Fed's artificial support may be gone as early as March.

The good news is that even those who are upside down in their homes can take advantage of this latest interest rate bonanza. The Making Home Affordable program has a special refinance provision for those who are up to 125 percent upside down.

Meanwhile, those in ARMs that are favorable right now may be tempted to sit out these great rates. But if you think you'll stay in your house beyond the period when your rate resets, you should take advantage of these new low mortgage rates.

Just don't be one of those people who doesn't refinance because it's a royal pain. Refinancing today can put a lot of money back in your pocket in the long run. To prepare for the paperwork requirements, dig out your tax returns; your last 2-4 pay stubs; and be sure to have a clean credit report and a solid debt-to-income ratio.

In recent weeks, Clark has been talking a lot about the $8,000 first-time homebuyer tax credit. You don't actually have to be a first-time homebuyer to qualify; you simply must not have owned a principal residence during the three-year period prior to purchase.

There's still hope, however, for those who don't meet that loose criteria. Clark anticipates that December and January will be an extraordinary time to buy.

The reason behind his prediction is that the first-time homebuyer credit only provided artificial support for home purchasing. Much like people stopped buying cars when Cash for Clunkers ended, very few people will be purchasing houses when the $8,000 tax credit runs out on Nov. 30.

And, of course, autumn's procession of holidays and the arrival of winter always slow housing activity.

In other tax credit news, the consumer champ wants to get the word out about the federal subsidy of COBRA set to expire on Dec. 31.

The feds will pay for roughly two-thirds of your health premium once you get laid off. It's just there for the asking. That can be a great help when you consider that typically COBRA costs to an individual are your employer's premium plus two percent.

It's amazing how much our show has become influenced by Washington, D.C.'s involvement in capitalism. It's hard for Clark as an avid free marketer to stomach the fact that so much of the show is now driven by his response to D.C. financial policy.

Here's yet another example. The housing industry is at the trough on Capitol Hill trying to get the $8,000 first-time homebuyer credit either extended beyond Nov. 30 or expanded up to $15,000.

Now the New York Times reports that 4 out of 10 houses sold this year were sold to people taking advantage of the credit. Free money is a good thing, right? Well, not exactly. This is taxpayer money and it creates a false support under our housing market.

First, you have the feds guaranteeing 90 percent of mortgages in the country via loans owned by Fannie Mae, Freddie Mac, the FHA or the VA. Second, you have the feds giving out this first-time homebuyer cash for people to go out and purchase a home. False support all around!

The fact is that we overbuilt way too much. It will take awhile for the housing market to get healthy again. We have to decide if we are going back to a free market system or if housing should become a longtime ward of the taxpayers. Is it fair for those who own a home to subsidize others who want to purchase one at this point in time?

ING Direct is helping to restore the private mortgage market with a new 5/1 ARM at 3.99 percent. That rate is good on loans up to $750,000, which should be a boost to those in jumbo loans.

Did you know that the federal government now writes some 90 percent of all loans? You may think you're dealing with a private lender, but that private lender turns around and sells its loans to federal entities like Fannie Mae and Freddie Mac. Or else you're talking about a VA or FHA loan to begin with.

This is not a scenario for long-term health in the mortgage marketplace.

As you probably know, ING Direct is an online-only bank that can offer some innovative deals because of its unique business model. Their 3.99 percent offer is a little lower than the market at this time, but there are some other more compelling reasons why this deal is so remarkable.

First, the closing costs with ING are much lower than with a traditional bank. Second, the size of the loan is the real clincher. This is first real initiative since the banking crisis began over a year ago to provide real money at decent rates for those in jumbo loans. Jumbo loans are defined as anything over $417,000.

Other requirements for this particular ING loan include having a down-payment or equity of 25 percent. For many people, that's not realistic. But it's a way for ING to insulate itself from risk of default.

Finally, you must make bi-weekly payments. That is, you must make half a payment every 14 days. This will actually get you out of debt quicker, and it's not a rip like so many other bi-weekly payment plans!

Of course, after 5 years, the loan will adjust and you'll likely have to get out of that ARM.

But for now, Clark hopes other competitors follow in ING's footsteps and continue to open up the private loan market again.

The disparity in closing costs around the nation really proves that all real estate is local.

A new BankRate.com survey shows that $2,730 is the national average. But a state like Nevada can be as little as $2,236, while the average in Texas is a whopping $3,855.

You should know what is typical in your state. And if you have an upcoming closing, don't worry about what any one line item fee amounts to. You want to instead concentrate on the total dollar amount of fees.

And what about no closing cost refinances? Clark has long been a fan of these, but they're getting harder to find and the spread on the rates is higher.

If you plan to stay put in a house, it's often smarter to take a lower interest rate and just pay the closing costs upfront. If you can make it up in 30 months, you're better off opening your wallet at the closing table.

MONEY-SAVING MOMENT: Business Week has compiled a list of cities where it is cheaper to own a home than to rent.

This is a major reversal from historical precedent. In the past, you had to own for a long time before it was considered a better decision -- from a strictly dollars and cents perspective -- than renting.

But because of the housing slump, below is a list of the markets where the opposite is now true.

1. Detroit
2. Pittsburgh
3. Rochester, N.Y.
4. Memphis
5. Tampa
6. Cleveland, Tenn.
7. Dayton, Ohio
8. Columbia, S.C.
9. Orlando
10. Dallas-Ft. Worth

CLARKONOMICS: There's a lot of talk about how the market seems to be finding a bottom as values begin to stabilize. But Clark thinks this may just be wishful thinking.

The consumer champ believes the market still needs more time to stabilize for several reasons.

During the bubble, we built between 2 million and 10 million more housing units than our country needed.

In addition, demand for housing has dropped as people who might have bought a home didn't. They've either moved back in with their families or students of college age have moved back home after finishing school.

And looking forward, even though economists may say the recession ended in such-and-such a month of 2009, it doesn't yet bode well for housing because jobs are a lagging indicator of economic recovery.

Yet in the midst of all this caution, there is real opportunity. The housing market remains fantastic for investors; those who want a retirement or second home; those who want to be a landlord and on and on.

We're now at the point where 13% of all mortgages are in default. Of course, not every single one of those will become a foreclosure. But that's still a very high number by historical standards.

Most of the financial distress has migrated from houses that were bought by speculative buyers to owner-occupied homes where people have had hours cut, lost a job or had an ARM that adjusted with a crushing payment.

The opportunity for someone in a position to buy is outstanding. There are a meaningful number of Americans who still have secure jobs, some savings and the stomach to take a risk.

The most promising types of homes Clark has seen are in second-home communities that are 2-3 hours drive from a large metro area. Waterfront property is also hot as well.

Census Bureau data continues to show that there's a steady stream of Americans leaving the suburbs and moving back to the city.

This is a reversal of the exodus to the suburbs that started after World War II. As the suburbs spread further and further out, they began segmenting into inner ring suburbs, outer ring suburbs and the far flung exurbs.

Today's "back to the city" movement presents some interesting opportunities for your wallet. In fact, inner ring suburbs are likely to see the largest appreciation in value, in Clark's estimation.

When buying in an inner ring suburb, it's a given that the neighborhood may have lost some of its appeal over the years. Therefore, try to find a neighborhood that's located adjacent to an area that's still on the up and up and looks poised for more growth.

Clark often looks at the cars in a neighborhood, or renovations and additions to homes, as other meaningful indicators of a neighborhood that's likely to gain in value.

Of course, there are never any guarantees in life!

CLARKONOMICS: Headlines can sometimes be misleading.

The big financial news of the day was that consumer prices in the month of June went up by seven-tenths of a percent. But monthly stats don't give you the entire picture. For example, the reason for the run-up can be tied to rising gasoline prices in June.

A more important stat to note is that there was no inflation to speak of over the last year. So a dollar today buys you more than it did a year ago. In fact, The Wall Street Journal reports that prices overall are declining by the biggest amount seen since 1950.

Prices will continue to get better on most things we buy. That means even if you didn't get a raise this year, your purchasing power has not declined.

Consider the implications for the housing market. Buyers can afford to sit and wait until prices drop even further. And sellers and banks with foreclosures will have to go into deeper price capitulation and lower their asking prices.

In Clark's estimation, today's financial news means there's no sense of urgency for buyers of distressed property to rush out and buy just yet. Better deals are still ahead of us.

CLARKONOMICS: The newly released Confidence Index (as compiled by the Conference Board) shows that consumer confidence has taken a dive. People who had hoped their own situation was getting better aren't feeling so optimistic any longer.

It means that we're not seeing the "green shoots" popping up we were hearing about back in the spring. People are not feeling the love from the economy.

Is there a valid reason to be more pessimistic? That's a very personal question that Clark can't answer for you.

What he can tell you is that we're in a long haul deal. It will take years to work off the problems of too much house, too much debt, too much car and on and on.

It doesn't mean, however, that we'll always have high unemployment and no economic growth.

Meanwhile, Clark wants to alert you to a window of opportunity that's opening for cheap mortgages and cheap refinances. He expects that rates will drop a quarter-point to half a point over the next week in response to this newfound pessimism.

Mortgage rates are directly related to the 10-year Treasury. Several weeks ago, 10-year Treasury rates were in the 4s. Now the last rate Clark saw was 3.48%. (Editor's note: Rates accurate as of June 30, 2009.)

The opportunity is there, especially for 15-year refis; look to credit unions for 7-year fixed and 10-year fixed loans as an alternative.

A small number of real estate markets around the country have seen activity firm up with multiple bids on houses. This has been especially true in the bubble states where values fell the furthest.

Does that mean recovery is coming in the market at large? Don't bet on it just yet.

Remember that all real estate is local at heart. New numbers Clark saw in The Washington Post indicate that there will be an ongoing buying opportunity for first-timer homebuyers and real estate investors through the end of 2010.

But here's the disturbing news. There are now over 1 million homes in the U.S. in which people are delinquent on their mortgages, but the banks have not foreclosed. The banks may not have enough staff on hand or else they simply don't want the houses.

Our associate producer Joel is stumbling through the home-buying process as a first-timer. He found a shortsale listed at $99,000 and bid $71,000 for it. The bank came back 4 months later and countered by asking for $138,000!

Clark's advice to Joel is to focus on foreclosures instead of shortsales. Also, be persistent if you hit a brick wall in the process. An answer of "no" to your offer should just be seen as a temporary answer.

For investors, the rules are a little different now. You will need to come to the table with cash. At least 50% of your offer should be in cash to increase your likelihood of being taken seriously. Know that buying a distressed condo could have a potentially greater return than a single-family home at this time, which is a very unusual circumstance.

And what if you are one of the 1 million homeowners in trouble yet you want to stay in your home? Seek free or low-cost housing counseling through a local affiliate of the National Foundation for Credit Counseling at NFCC.org.

While much of the world has embraced alternative forms of energy, we're still playing catch-up in America.

The problem for homeowners has been figuring out how to implement technologies like solar, wind and geo-thermal. You can't exactly just call around for quotes.

That's where the power of the Internet comes in.

Sungevity.com allows you to enter your street address and get a guaranteed quote on installation of a home solar system. The assessment is done by satellite mapping, so no visit to your home is required. (Editor's note: This service may only be available in certain areas of the country.)

In addition, there's federal and state money available as part of the stimulus law to install alternative energy at your home or business. Clark predicts this will be a real growth area for entrepreneurs who can do energy-efficient retro-fitting on homes.

Mortgage lenders across the nation are seeing a trend of people opting for 15-year refinances instead of 30-year refinances.

This is a huge reversal back to the ways of an era when we didn't want to be in debt. For too long, Americans heard the hotel ballroom pitches about using "other people's money" (OPM) as a way to get rich through leverage by borrowing, borrowing, borrowing.

Now, the pendulum has swung the other way.

15-year refis don't have the same dramatic savings they once did vs. 30-year refis. In fact, the typical monthly payment on a 15-year refi is now 50% higher than on its 30-year counterpart.

So why the sudden appeal?

Homeowners know that the equity comes from paying down debt. Of course, have a narrow focus on wiping out your mortgage if you're not maxing out your retirement accounts is not advisable either. You've got to strike a healthy balance.

No matter how you slice it, people are getting more reflective about their finances. Christa and her husband like to have what they call "money movie night" each week where they put a film on for their children and pore over their finances.

Modular homes may be the wave of the future if Warren Buffett has his way.

The nation's top dog investor is pouring his money into the i-House, an ultra-affordable, ultra-energy efficient home that's built in pieces in a factory and later assembled onsite.

Tradition holds that most homes in America are stick-built at the worksite, rather than being prefabricated. But the current housing crisis means that tradition is being upset.

Modular factory-built homes can be far more interesting architecturally because they're built with computer-aided design. We're not talking about single-wide or double-wide mobile homes here; rather, modular homes are championed by thinking man's architectural publications like Dwell.

And talk about the savings on your monthly energy bill! You can heat and cool the i-House for around $30/month!

There have been so many attempts to do factory-built modular housing in the past. But most people have never gotten away from fears about local zoning. Buffett's support may help create a new day in cheap, green housing.

Questions about refinancing a mortgage are among the hottest we're getting on the show right now. Today Clark spoke to one caller and shared a few tips to make the process as smooth as possible.

If you're in the market for a refi, begin by visiting myFICO.com and getting your true credit score. In the example of today's caller, she had a score of 703 and her husband's score was 824. Clark recommended they try to qualify for the refi on his income alone; most lenders will base your rate on the lower score if you're a couple.

Who can you go to for a refi? Clark recommended checking with a local bank or credit union. You'll want to get quotes from multiple lenders. And you may even want to get an online quote to use as leverage in negotiations. Whatever you do, be sure to get all quotes within a 14-day window to avoid damaging your credit.

Make sure you're prepared with all the paperwork that will be required of you…and it's going to be a lot. At the very least, you'll need to have your tax returns handy.

Finally, if you're waiting on the sidelines for rates to drop another quarter of a point, stop it! Even Clark's own predictions of months to come of ultra-low interest rates look like they're not going to pan out. Now is the time to strike.

The renter has become king of the real estate market because of a set of unusual conditions.

First, there's a huge shadow rental market composed of involuntary landlords who own property they can't sell and are instead renting it out. Second, people are opting to live with relatives or friends instead of renting when times get tough.

It's a classic case of too much supply and too little demand. Recent stats suggest that the number of vacant properties in the United States is the greatest it's ever been.

In addition, the rash of foreclosures has not created much additional demand for substitute housing. Why? So many of those foreclosures were never owner-occupied to be with! It was mostly speculative buying.

So the great news for renters is that they're calling the shots. Occupancy has fallen for 3 consecutive quarters. So look around for the signs on the side of the road advertising great rental deals.

Just know that you can't simply ask your landlord for a better deal and expect it to materialize. You've got to shop the market to see what other deals are out there. And then you've have got to be willing to walk if your landlord will not meet the offer you find somewhere else.

Keep in mind that you'll usually find the best rental deals from a desperate owner of an individual property. Beware, however, that an involuntarily landlord may not be quick to reply to concerns you have if something breaks.

Did you buy your house in 2000 or even more recently? The Washington Post now reports that you stand a chance of losing money if you were to sell today. In fact, more than 6 out of 10 people are selling for less than what they paid for their homes.

That means there's enormous opportunity for buyers.

Clark has been following our youngest producer Joel's quest to buy a home. In late winter, Joel put a bid on a short sale. He expected to get a response within a week; it took 3 months for the lender to even acknowledge his offer, and they countered with a price that was greater than the original listing price!

Meanwhile, those selling non-distress real estate are finding that it's hard to gain any traction in a market awash with foreclosures. And consider that the recent moratorium on foreclosures in the aftermath of the presidential election is set to run out soon. We'll soon be seeing a new wave of foreclosures as the ban lifts.

Joel is now looking to put a bid on a foreclosure. As a first-time homebuyer, he'll qualify for $8,000 in federal money, in addition to local money from his county. Even the Federal Home Loan banks have their own offers of "gimme" money. (Editor's note: You don't have to be a first-time homebuyer, actually. You only need to meet certain qualifications. Check with your lender for more details.)

And when will the housing market finally recover? Clark doesn't have a specific timeline to share, but he is noticing that the latest thinking suggests in-town and close-to-town markets will recover faster than suburban and exurban markets.

Residential housing starts have hit a 50-year low. That's actually very central to the housing market recovering. The pitiful pace of new construction means we're one step closer to supply and demand being back in sync in the housing market.

The average price of a home in the United States year over year is down by 13.8%. Now, you can look at those numbers and feel glum. Or you can realize the actual selling prices have been so heavily depressed by what's going on the bubble states and with all the foreclosures.

The truth is that the home market can not recover until supply and demand are in sync. The oversupply of houses means there's no market for houses that were bought at or near the peak. So they go into foreclosure and are snatched up by first-time homebuyers or investors. That creates a temporary floor to the market. Over time, month after month of depressed stats on home building means that household formation will soak up the inventory. The very act of the lack of building helps that happen. Clark predicts that the healing in the housing market will be anytime later this year to 2012 depending on your location in the country.

The one tough thing right now is if you have a house you want to sell or have to sell. We're not talking about the foreclosure crowd here. A new Home Gain survey of real estate agents finds that those on the market who are not in distress are overwhelmingly overpricing their homes. They're relying on old comps. Some 6 out of 10 are overpricing! Only 19% of people are pricing realistically.

The consequence is that you tend to get a lower final sale price if you overprice upfront.

Also, beware of the "hero" real estate agent. That's the person who comes in with the highest estimate of what they can sell your house for. Don't fall for it.

Be realistic about the price and you'll improve the odds of selling in an imperfect market. The best answer if you don't have to sell is to hang tight, though there's one exception. If you want to move up in house, now is the time to get a bigger foreclosed house. It will make be worth it to take hit on the sale of your house to move up in house.

CLARKONOMICS: California, Arizona, Florida and Nevada are all beginning to see more buyer activity in the real estate market, according to a recent USA TODAY report.

It's all part of the natural cycle of the housing market in bubble states that went bust, and it may hint at widespread recovery to come.

About 2 years ago, the banks were clueless in dealing with foreclosures because they had no recent experience. At first, they tried to get back out of the marketplace the value of the loans, but that was like being in denial. Eventually as more and more foreclosures piled up, the banks capitulated and dropped their prices.

Now we're starting to see some real prices out in the market.

USA TODAY reports that one area of Florida is seeing 1 in 10 homes attract multiple bids. That's the sign of a market starting to recover. Ditto in Arizona, where one house had 14 offers and sold for $40,000 more than its original asking price.

The marketplace is beginning to find a level, and it's starting in the bubble markets that fell the hardest.

It's great to buy real estate at a distress price. But what if you're the owner of a property that's worth less than what you owe on your loan?

Clark expects values to firm up and most people should no longer be underwater in the next 24-36 months. Of course, there will be some exceptions to this because all real estate is truly local.

Have you heard the term "shadow inventory" recently? Shadow inventory pertains to houses that are falling into a "no man's land" after banks foreclose on them.

Here's the scoop: The nation's banks have not been staffed adequately to deal with the vast number of foreclosures throughout the country. Even as the banks ramp up their REO (real-estate owned) departments, they're still falling behind. As a result, it's believed that more than half a million properties are falling by the wayside.

That's the shadow inventory.

According to a recent San Francisco Chronicle report, there are an estimated 600,000 foreclosed homes of this sort right now. The banks aren't getting them ready for sale and they're certainly not maintaining them in any way.

Neighborhoods suffer greatly from shadow inventory. Unused houses tend to attract vandals, squatters and a host of other troubles.

But as an investor, shadow inventory is a source of great opportunity. As these houses sit and go unmaintained, there will be many that have nothing fundamentally wrong with them; they just simply look and smell awful. That means no one else wants them and you can swoop in to steal a deal.

On another note, Clark believes that until the banks come to terms with their shadow inventory, we can not truly call a bottom in the real-estate markets around the country.

Meanwhile, a recent RealtyTrac study analyzed foreclosures in 4 states and found that 70% of them were not showing up in the MLS. Either they've gone into the shadow inventory or the banks put them up for sale as REO but without any agent representation in the MLS.

So how can you tap into shadow inventory as a first-time homebuyer or an investor? Go to the websites of individual banks and look for a link to their listings. You used to have to hunt around for this kind of info, but now you'll usually find it linked directly on their homepage.

This gives you the ability to potentially ferret out a bargain before others get it through an agent and the MLS.

Does that mean you don't use an agent? No. If you a hire a buyer's agent, you need to have a written agreement stating that they only represent you on properties they show you. You don't want a blanket agreement where you owe them commission on any property you buy -- even if they have nothing to do with locating it.

Do you like the mountains, the beach, the lake or another resort area? Vacation homes and second homes are one area of housing that is providing more opportunity than any other right now.

The National Association of Realtors reports that sales of second homes have collapsed. This is a major reversal from recent history, when vacation homes were a big part of the excessive speculative buying and building.

Of course, there's a big "if" here in Clark's advice about the second-home market. This advice only pertains to you if you're in a financial position to afford it!

You've got to understand that second homes are not investments; they're a lifestyle choice. The only reason to own a vacation home is to live in it and/or enjoy it at your leisure.

However, sometimes what begins as a lifestyle purchase can wind up being an investment.

For example, Clark and his brother bought a vacation condo in Park City, Utah back in the 1980s. They bought in a building that was hit by a trifecta of trouble. The lending bank, the builder and many of the owners all went into foreclosure. This was a risky move on Clark's part, but he and his brother were later able to sell for an obscene amount of money during the peak of the real estate bubble.

The consumer champ does not recommend trying to time the market like this, but sometimes all the stars just line up.

The state of Virginia is banning the building of new neighborhood developments with cul-de-sacs. North Carolina and parts of Oregon are also seeking to do the same, according to The Washington Post.

Cul-de-sac neighborhoods are beloved by parents because by their very design -- there's only one way in and one way out -- they prevent motorists from racing up and down the street and endangering their children.

But with cul-de-sacs come traffic jams on nearby main access roads. Cul-de-sacs also slow first responders in the event of an emergency. Then there's the possibility that with the traffic jams, you may have to move utilities, widen streets and buy the right of way.

In short, cul-de-sacs can be costly for local municipalities.

So if you view it from a strictly economic standpoint, Virginia is doing the right thing. The preferred alternative to cul-de-sacs is a grid design.

Most Mormon cities in the Mountain States are laid out on a grid. Usually every fifth street will be a through street. That ensures the other surrounding streets remain quiet and it deters their use as cut-throughs.

At a time when state and local governments are under financial strain, look for more focus on trying to eliminate the building of new cul-de-sac neighborhoods. Clark's just waiting to see if the ban will increase home values of existing cul-de-sac neighborhoods in jurisdictions that go this route.

CLARKONOMICS: The news on the housing market continues to be bleak, bleak, bleak. In just one example, the latest numbers from the Case-Shiller index show that home values in Phoenix are down almost 50% from their peak in July 2006.

This is not surprising considering that many Phoenix properties were not owner-occupied, but were bought to be flipped -- a trend that really fueled the overbuilding of houses.

There are similar numbers in Las Vegas and Miami (both down more than 40%) and San Francisco and San Diego (both down 40%). But you've got to realize that the housing stats are skewed by the bubble markets where people were trying to get rich quick on someone else's money.

So where's the good news in all of this? Well, so many sales today are of REOs (real-estate owned properties). That's where you buy directly from the bank after they foreclose on a property and let it go unloved and neglected for several months.

Meanwhile, half of all purchases in February were from first-time homebuyers taking advantage of incredible deals and fantastic financing, according to The Financial Times of London. So they're getting incredibly affordable housing.

In addition, true investors (not speculators) are buying REOs and fixing them up and turning them into rental properties. Clark was recently talking with a real estate investor who bought a 4BR/2B in the suburb of a major metropolitan area for $21,000!

That particular property needed lawn care, new carpeting, new paint, new appliances and a replacement for the HVAC system that had been stolen. The total cost of repairs was just under $15K. That's amazing! You may not find a new home for the cost of a Camry, but there are deals out there. It just requires thorough research.

Finally, a word about Clark's prediction that mortgage rates on 15-year loans will dip into the 3s by May 1. A kind listener recently informed us that at least one homebuilder is offering 3.625% on a 30-year loan.

But because that's a subsidized rate geared to boost sales, Clark isn't counting this one. So the pies may still fly…

Are you eligible for a refinance under the terms of President Obama's Making Home Affordable plan? Clark is sensing a great deal of confusion over his original explanation of the program earlier this month.

Fortunately, there is an easy way to find out if you qualify. You can simply visit the newly established MakingHomeAffordable.gov and complete a self-assessment test.

There are really only 2 possible scenarios under which you might qualify. That's because Making Home Affordable is an umbrella name for 2 separate programs.

Under the first program, you can refinance if you're current on your mortgage -- even if you have no equity in your home. See what criteria you'll have to meet. Approximately 4 in 10 homeowners will be eligible.

Under the second program, you can get a loan modification if you're behind on your loan. This is very controversial because of the issue of moral hazard. See what criteria you'll have to meet. Bear in mind that this second program is completely different than the failed HOPE NOW alliance, and it requires the voluntary participation of lenders. The feds, however, are throwing in $750 billion to grease the wheels and get things going.

If you haven't refinanced recently and are sitting at 5.625% or higher, you may be candidate for a refinance right now or in a few weeks when the initial burst of activity dies down.

Meanwhile, Clark recently made a prediction that 15-year refinances would be available at 3.875% by May 1…or his staff will get to throw pie in his face for charity!

Finally, something he failed to mention in his original discussion: Some credit unions may be offering real deals on refinancing into either 7 or 10-year loans, so keep your eyes open!

CLARKONOMICS: There is just so much opportunity in buying foreclosures and other distressed real estate at this point. But a few words of caution are also necessary.

The condo market in particular has a lot of hazards. For example, when you buy a condo, you're buying an obligation and a commitment in a condo association. Do not buy in a building that has been recently constructed. You want to look for established condo buildings that have been there 6 years or longer. With established buildings, you know that most people are paying their condo fees.

In fact, you should never buy early in any new development. If you do and the builder goes belly up, you could be living next to scarred earth that's been homogenized for development and looks just awful.

Meanwhile, in more heartening news, February data shows that the sales of existing homes went up 5% year over year.

Are you looking for foreclosures or distressed property in the single-family home market? You want to look for several things: An established neighborhood that's 10 years or older; a neighborhood where it's mostly owner occupied -- not rental; and a house that is structurally sound with cosmetic damage only.

CLARKONOMICS: There's much confusion over the federal bailout for homeowners and Clark wants to clear some of it up.

There are two scenarios under which the "Making Home Affordable" program could possibly work for you. The first is if you're behind on your mortgage, and the second is if you're current.

Let's examine the first scenario. If you can not afford payments and can not refinance for whatever reason, you will have the opportunity to have your loan temporarily reduced to 31% of your monthly income. This applies to homes valued at up to $759,750 in most areas of the country. Your interest rate may drop to as low as 2% for the next 5 years!

Under the second scenario, those who are current on a mortgage held by Fannie Mae or Freddie Mac will also be allowed to refinance -- as long as they're not more than 5% upside down in their home. (Note: This does not include a second mortgage). The new loan you'll get will likely be re-written to an interest rate of around 5.125%.

To determine if you're loan is held by Fannie Mae or Freddie Mac, simply follow our web links or call them directly. Contact Fannie at 1-800-7-FANNIE and Freddie at 1-800-FREDDIE from 8 a.m. to 8 p.m. ET. Start with Fannie Mae -- they're the larger of the two.

And you may also be eligible for assistance even if your loan is not with Fannie or Freddie. That's up to your individual lender, so get in touch with them to find out if you qualify.

For an additional resource that fleshes out more details, see The San Francisco Chronicle's Q & A and a link to the Treasury Department's official guidelines.

Meanwhile, it looks like the idea of empowering bankruptcy court judges to cram down mortgages is gaining momentum -- despite Clark's worries that this would undermine some of the basic tenets of capitalism. We'll keep you updated.

Cash is king right now in the real estate market, particularly if you're talking about the condo market.

Clark recently read a report that spotlighted two buyers vying for the same condo. One wanted to pay upfront in cash and the other was seeking to arrange financing. The cash payer offered $133,000 on the condo, while the person seeking financing offered $179,000. Guess which offer was accepted…

No one wants to make loans in the condo market because of the speculative nature of how it all blew up. That means cash payers can steal a once in a lifetime deal right now. This same thing is happening -- albeit to a lesser degree -- with single-family houses in some of the bubble states.

When Clark raised this in a staff meeting, several staffers said they thought the scenario of paying cash for real estate was very unrealistic for the penny-pincher's target audience. But just days ago, Clark shared word that there is nearly $4 trillion just sitting in money market accounts. That could easily be put to use in a scenario like this one.

So if you're among the millions of Americans who have money -- but are clueless about what to do with it -- let this be food for thought.

CLARKONOMICS: There's frightful news about housing everywhere you turn. Existing home sales have dropped to a 12-year low. Meanwhile, almost half of all homes sold across America in January were foreclosures. That's a startling statistic.

The home construction market is also in disarray. Housing starts are down 60% from just a year ago. Then there are the drops in the Case-Shiller home price index. Las Vegas is down 33%, Miami 29% and San Francisco 31%. The least-affected cities include Denver and Dallas, which are both only down 4% year over year.

Out of this ugly scenario comes the possibility of real opportunity. During the worst excesses of the housing bubble, the relative cost per month to rent was just a tiny fraction of what it cost on a monthly basis to buy. Yet now The Wall Street Journal reports the relative affordability of renting vs. the cost of buying is once again coming into synch.

That makes this a great time to buy a house, according to Clark.

Remember, the only important long haul factor for housing is supply and demand. Builders have stopped building, and that sets the stage for the excess in the market to be soaked up. Opportunists will be a necessary part of the correction. They start the healing by coming in and establishing a pricing floor that creates the stage for recovery.

Of course, "inertia bias" dictates that psychologically we feel home values will always be in decline -- because that's the way things are now. But that's not the case. Most of the bad news (and the decline) has already happened -- though it may not be over yet in every market.

Pres. Obama's new housing initiative has brought intense reaction from many Americans who are not happy that those who didn't meet their mortgage obligations will be bailed out. Here are a few more tidbits to enhance Clark's original discussion of the plan:

• Beginning March 4, people who are current in their loan but upside down in their home may be eligible for a refinance.

There are a few stipulations to know about. First, the new mortgage can't total more than 105% of a property's current value.

Second, your loan must be underwritten or insured by Fannie Mae or Freddie Mac -- and that info is not easy to come by unless your lender specifically tells you.

Finally, you can't have a jumbo loan. Jumbo loans are typically above $417,000 throughout much of the country -- with some notable exceptions such as California where the limits are higher.

• When it comes to loan modification, this is a method of marking down a loan so that the payment is affordable -- usually 31% of your monthly income. However, it's instructive to look back at the results of the HOPE NOW loan modifications. What we learned from HOPE NOW is that there's a tendency for people to return to default even after concessions are made on their loans.

On the one hand, it's easy to feel compassion for families that are facing a home loss. But from an economic perspective, the reality is that somebody gets an unfair shake if concessions are made to non-payers at the expense of those who do pay.

One other fact that hasn't been widely reported, but Clark sees as a very positive sign: Housing starts have hit their lowest level since right after WWII. This is actually great news for recovery in the housing market. After all, we have way too much inventory and not enough people to buy the houses.

In the end, all the programs and proposals amount to nothing if you don't look at the fundamentals of supply and demand. You can't outlaw economics.

CLARKONOMICS: Pres. Obama announced his housing rescue plan today and Clark wants to give you an overview of it.

• People with mortgages that have become unaffordable would be allowed to file a petition to have their monthly payments reduced to roughly one-third of their household income. Essentially, they could be allowed to stay in their homes at a big discount -- a very controversial move.

• People who are current on their mortgages but could not qualify for a refinance because they lacked equity may have the chance to refi going forward through Fannie Mae and Freddie Mac. Look for a forthcoming briefing from Clark once more details about this part of the plan become available.

• In the most controversial move of all, Congress could pass a statute to give bankruptcy court judges the right to do cramdowns. Cramdowns are common in commercial real estate. In this scenario, they would be used to reduce the mortgage of someone who is upside down in their home to reflect the property's current market value.

All of these points obviously raise strong questions of moral hazard. Yet on the other hand, many economists believe that the nation's financial institutions will not stabilize until the housing market stabilizes.

Maybe that's true…but Clark thinks the real problem in housing is that we have too much of it! Supply and demand still have yet to meet up through natural population growth. Simple demographics must do the job of eventually soaking up the excess supply of houses.

We're just now getting our first clear indicators that recovery may be coming in the housing market.

New polling data from Harris/Zillow.com finds 57% of homeowners acknowledge that their own home has declined in worth. That's a major shift in perception. We're finally starting to lose the irrational attitude that our house has retained its value but our neighbor's home has not.

Meanwhile, Economy.com is predicting that housing is going to reach a bottom in most markets around the country by the end of 2009.

The single hardest hit market in the United States has been Naples, Florida. When things do finish bottoming out, home values in that town will be 70% below their peak. That explains why Obama went to Southwest Florida to rally support for the stimulus plan.

Likewise, Miami home values are worth two-thirds of what they were at their peak. Phoenix is at 56% of its peak and Las Vegas is at 53%.

Keep in mind that when recovery does come, it will be a gradual process.

CLARKONOMICS: Home construction in December is at the lowest level it's ever been since stats started being kept in 1959. Only 500,000 housing units were built in the entire country during last month, according to new figures from the Commerce Department.

The home construction industry is in a depression -- and that's not a word to be used lightly. But Clark believes this is actually a good sign overall.

Our current real estate slump is partly related to a vast oversupply of houses. We have anywhere from a minimum of 2 million to a maximum of 10 million too many homes for our population. The level of construction was artificial and the high cost of housing was inflated by speculative buyers.

So this latest drop in housing construction is actually a good thing. It slows the runaway growth of extra housing and is part of the correction process for the housing bubble.

One last word of advice: Be realistic about your pricing if you're looking to sell your house this spring. Hire an inspector to vet your home; fix whatever they take issue with; and then make the inspection report available to potential buyers.

RIP-OFF ALERT: If you're among the roughly 1 in 3 Americans who is a renter, you need to be aware of a new scam in the housing market.

The Washington Post reports that criminals are going to foreclosed properties and changing the locks at the houses. They post ads about a house for rent online or in newspaper classifieds, and then play landlord when you go to look at the property. Then they'll collect a deposit -- and sometimes the first month of rent -- before giving you the keys and telling you to move in.

You may live there for days or even months before the bank wises up and evicts you as a trespasser or a squatter. It's perfectly within the bank's right to do so -- even though the whole scenario only took place because of their incompetence in managing REO (real-estate owned) property.

What telltale signs can you look for to avoid getting ripped off? You definitely want to know where the supposed landlord or real estate agent showing you the house has his or her office. In some cases, you may even want to jot down their license plate number. Just be sure to have some verifiable information about who they are and where they do business.

In non-judicial foreclosure states, there is no paperwork documenting the real owner of the property. That creates a legal loophole big enough for Mack truck, as Clark says, and it can easily be exploited by crooks engaged in this scam.

Are your expectations about the housing market unrealistic? Clark was recently stunned by a story in The Wall Street Journal that reported the average American thinks their home's value is going to rebound in the next 6 months.

That's not going to happen.

Housing prices around the country have fallen by huge amounts on average. The worst markets are down 35% year-over-year from peak to trough. More foreclosures in 2009 will mean continued pricing pressure on home values. Now that's a realistic assessment.

So what does this mean to you and your house? Well, the good news is that most of us have no need to sell. So even if your market is down, it is only a paper loss, not a real one since you won't be selling anytime soon.

Typically, home values go up at the rate of inflation plus a little more each year. Right now, we're going through a classic standard correction -- prices went out of sight; they came crashing down; and now recovery will be gradual and we'll eventually get back on track with traditional increases in home values.

Clark is often asked if there is a "magic moment" when it's best to sell. There's no answer to that. The home market gets a normal burst of activity starting sometime between February and April. Early-to-mid 2009 may be your best bet if you're in a non-bubble market. That's just a general gist, without accounting for the fact that all real estate is truly local.

The moves by the federal government to lower mortgage rates mean that you may now be able to sell to a qualified buyer who may not have qualified as recently as a week or 10 days ago.

One last word of advice: Be realistic. Don't go by last year's comps. And realize that housing is not a "can't miss" thing. The Wall Street Journal reports that many Americans think real estate is the best source of long-term financial security. Not so, says Clark. Stocks, bonds and mutual funds are still the best bet -- even though that may sound crazy right now.

There's been a lot fuss about the advice Clark gives out to callers who are upside down in their mortgages. For those in an owner-occupied property, Clark suggests a workout -- as is often done in commercial real estate. The reality is that lenders would rather renegotiate the terms of your mortgage than have to foreclose and play property manager.

Now even the FDIC is getting involved in the workout game. After the failure of IndyMac, the FDIC voluntarily contacted the bank's mortgage customers who were upside down with offers of a workout. Why? The federal taxpayer benefits more this way than if the feds have to foreclose, mismanage a property and finally unload it as a distress sale.

So far, the FDIC has lowered monthly mortgage payments for IndyMac customers by $430; they're adhering to a flat 38% of the homeowner's income. Meanwhile, other workouts are being orchestrated by Bank of America for their Countrywide division. For more on that, see Clark's discussion of the topic earlier this month. Simply put, workouts are a smart business move. It's cheaper to cut a deal with a borrower than to put them out on the street.

On the other side of this issue, you have the question of fairness. Is it fair that you pay your mortgage as agreed and get no help? No, it's not fair. Workouts do protect the value of your neighborhood by preventing too many foreclosures. But if you drill down to you as an individual borrower, it's obviously not fair. The world is grey sometimes -- even though we'd prefer it to be black and white.

Some of you may have heard Clark say it will take until 2011 or 2015 (in bubble markets) for housing to recover. Those are scary years if you're sitting in a house and wondering when you'll have some value.

The reality is that we built way too many houses and condos than there were available families and people to occupy them. This trend was fed by speculative building, speculative buying and silly loans. The surplus is between 2 million and 10 million properties, depending on what measure you use.

Now the pendulum has swung the other way and new construction has almost stopped. One consequence of the swing has been that residential builders are experiencing a depression. Housing starts are the lowest they've been in 17 years and maybe even since WWII -- again depending on what measures you use.

Recently while driving through a rural area, Clark was stunned by the amount of scarred-earth neighborhoods he saw. Most of these abandoned half-built complexes were surrounded by chain-link fences. This is a natural part of the correction process as new supply gets choked off. Unfortunately, it also means builders are suffering mightily.

So if you are a first-time homebuyer or a move-up buyer, has there ever been a better time? Sure, you'll take a depressed price for your existing home if you're the latter, but this is a great time to move up in price point. What an opportunity! And if you buy a spec home, builders are offering some amazing incentives.

But hold on, you say, "Show me the money!" The assumption that mortgages are unavailable simply is not true. Lenders may require you to have real credit standing -- a very different scenario than the past few years -- but the money is there. Having a FICO score of 720 or above should make a variety of mortgage products available to you. FHA buyers may find additional leniency on the credit score front.

There's currently a move in Congress to put a moratorium on all foreclosures. This is, of course, a direct result of our government's recent "bail out the rich investors" mentality. Since we bailed out the big guys like Bear Stearns, Fannie Mae, Freddie Mac, etc., shouldn't we do the same for the little people?

That kind of moral equivalency troubles Clark. After all, if someone is paying their bills and staying in a home, why should another person get to keep a home if they're not making mortgage payments?

The penny-pincher instead advocates workouts (aka cram-downs). That's where you sit down with your lender and come up with a new financial plan that allows you to meet your mortgage obligations. It's done all the time in commercial real estate.

Clark's advice is very timely advice considering the latest August numbers show that foreclosures have hit another record high.

Everyone wins when a compromise is reached. Think about it like this: The lenders don't have to spend money to foreclose and pay to maintain a property; the neighbors don't have to take a hit on their home value when there's a foreclosure in the 'hood; and the homeowners get to stay put.

CLARKONOMICS: The federal takeover of Fannie Mae and Freddie Mac is the kind of thing that makes most people's eyes glaze over. But it does have some direct consequences for your wallet.

In short, mortgage rates are going down, down, down. If you are in the market to buy a home and you have a good credit standing, you can take out mortgage in the 5% range. If you are in an existing mortgage somewhere in the 6% range and you have some good equity, you should be able to refinance in the 5s.

The nationalization of Fannie and Freddie has both positive and negative aspects. On the plus side, it brings some relief and stability to the housing market (even though there's still too much oversupply). But on the other hand, we taxpayers are on the hook for literally trillions of dollars.

For people just starting out in life, it's becoming more difficult to afford a place to live. Bunking up with several roommates is becoming more common around the country. It's tough. Clark talked to flight attendant who had two children recently. When her home flight base was closed, she had to transfer to to another one in a different city, her only recourse was to share an apartment with 15 other attendants. She said that everyone had their own bunk bed, taking up all the rooms in the apartment. But this was the only way to make it affordable.

An architect in San Francisco came up with a design for a 250 sq. ft. condo -- roughly one-tenth the size of a typical house in America. That's smaller than a typical bedroom in a modern house. But by using intelligent design, it may not be roomy, but it's functional. But here's the kicker. How much do you think these condos sell for? $279,000 - $330,000. Most places in America, you can buy a whole house for that kind of money. But still, if you think about affordable options, this is a good start. The Habitat for Humanity homes Clark helps build use computer aided design to utilize every inch of available space. This allows them to build 4 bedroom, 2 bath homes with only 1000 square feet. The upshot is, if we can live with less, we can make places for people that are decent and affordable.

Clark's been receiving a lot of calls from listeners who had HELOCs (home equity line of credit) shut off with no notice -- sometimes in the midst of a renovation!

Now it turns out this practice is illegal. New federal guidelines* have been issued that forbid banks from redlining via zip code, via state or any other blanket method. They are not allowed to arbitrarily shut down HELOCs in a neighborhood where home values are dropping.

If a bank wants to curtail your HELOC, they must look at your house and circumstances on an individual basis. So if you got the squeeze, go talk to your loan officer and get it rectified. They are required to restore your HELOC -- unless they have individual proof for your address or your situation that compelled them to cut it in the first place. Get in there and fight for your rights!

* Note that this is a pdf file.

CLARKONOMICS: While there's no shortage of down news about the housing market, Clark believes we've seen the worst of the bad news already. But don't expect everything to suddenly become sunny. Rather, it's more like we've gone from absolute downpours to moderate showers.

For starters, the banks are reaching capitulation. In California, for example, foreclosures are again attracting multiple bids. That's a clear sign of the market stabilizing. Note that word: "Stabilizing" -- not "recovering." We're getting back to where market values are based on fundamentals, not speculation.

In related news, the new housing rules have a controversial measure to create land banks. These land banks would take areas that are blighted and turn them around, but there is a potential for corruption.

Whatever happens, you can be sure it won't happen in a day. Some markets do have more to fall, like condos in Miami and single-family homes in Las Vegas and Phoenix. But much of the rest of the country never really had a bubble to begin with.

Remember to study the market and not overpay. Know your max price and don't pay more if you're in an auction scenario.

Meanwhile, mortgage rates have recently climbed -- just about the last thing the market needed! But here's an important reminder: If you can buy at a great price, it may still be worth it to pay a higher-interest mortgage for a few years. The purchase price is set forever, but interest rates can be refinanced down the road.

CLARKONOMICS: The economic news today is frightful. Wholesale prices of goods rose at the fastest level in 27 years. Retail has also reported dismal signs, including J.C. Penney, Target, Home Depot, Staples and more.

But Clark wants to take the headlines down to an individual level. He wants you to see how your decisions cause financial heartache and how you can change your behavior. The core of his message is, of course, save more and spend less!

New stats from the Federal Reserve show that the average American only has about 40% equity in their home. 20 years ago, we had 75% equity in our homes. But that all changed when banks started pushing home-equity borrowing like a dealer pushes illegal drugs.

People were only too happy to borrow for lifestyle. Now the banks are in a tight spot. We're defaulting on our home-equity lines left and right. Banks are losing money when they foreclose, but what choice do they have when we're not paying anymore?

We need to do a hard restart in our brains. Some people think it's a good idea to borrow home equity at a low rate to pay high-interest credit cards. But doing so only frees up the credit cards so you can charge them up again, plus it creates a deficit against your home.

There isn't really a quick solution; you've got to climb out of debt step-by-step. You didn't get into debt overnight and you won't get out of it that way. It all comes down to this: Do not use borrowed money to achieve a desired lifestyle.

You've got to come up with your own deterrent -- think of it as financial electric shock therapy -- when you're contemplating spending money you don't have.

Google has launched an interesting service that could be a real boon to house hunters and celebrity star gazers. Their "street view" function (be sure to click the street view tab) allows you to type in a street address and see high-quality pictures of houses and whole neighborhoods. You can even "walk" or "drive" up a street by using the mouse to scroll around!

Talk about a testimony to Google's immense wealth. They're sending photographers all over the country to take digital photos of every house, and then they're marrying it to the existing Google maps technology.

Not every street is mapped as of yet. Once you type in an address, you know it is mapped if a thumbnail image of the property pops up.

Think about the value of this service in the real estate world: You can get the inside scoop on a house and see real pictures -- not the staged ones you may see at an agent's site.

Remember when people would buy a map of the stars' homes in Los Angeles and spend the day driving around looking at their residences? Now you don't have to go to L.A. to gawk at the homes of the famous and near-famous. You can do it from the comfort of your living room using ZabaSearch.com to determine street addresses and this new Google Maps function to actually see them!

Clark wants to share some information that could impact those in the housing market as potential buyers of distressed real estate and those trying to sell a home in a neighborhood that has foreclosures.

In economic terms, we're beginning to hear that "capitulation" has come. What that means in plain English is that banks have sobered up and are dropping their prices on REO (real-estate owned) properties, according to The Wall Street Journal.

Previously, the banks had been asking unrealistic prices that were comparable to the outstanding loan balances on foreclosed properties. No wonder they didn't get any bites!

So it may be worth your while to make another offer on REO property right now. The banks are more likely to be humbled after sitting with that house in inventory for this long.

On the other side of the ledger, capitulation means that you should probably have a new target price in mind if you're selling in a foreclosure-riddled neighborhood.

Think about it this way: If REOs sell after banks come down in price, then those lower sale prices become the comps you're competing against in the area. It's incumbent on you as a seller to photograph the sad, rundown foreclosures so that buyers can see exactly why they sold for less than your house. That way you can justify asking a higher price for yours.

Meanwhile, Zillow.com is reporting that roughly 30 percent of people who bought during the last 5 years are upside-down in their homes. Zillow also has a new feature that allows you to see national home value trends on an interactive map of the United States.

Of course, talk of lower home values comes with Clark's usual caveat: Don't worry if you're not selling right now. None of this impacts you. In fact, you can use the decline in home values to contest your property taxes. Check with your local tax assessor for details on entering a dispute.

How do you think other people drive? The average person would say that others are terrible behind the wheel -- while they perceive themselves as great drivers.

The average homeowner has a similar psychology when it comes to home value. The belief is that "my home has gone up in value over the last year, but surrounding homes have not," according to a Zillow.com survey.

The real danger of this kind of thinking occurs when you go to sell your home. If you believe your own hype and overprice your home, you'll probably wind up getting less than if you priced it right upfront.

Here's why: When you first list your home, you get an influx of traffic from agents and investors. If you're overpriced, agents won't bring any clients back to show your home and no investor will buy it. You become a stale listing.

If you really want to sell your home quickly, try listing at a price that's "low aggressive" -- that is, low enough below what others are offering so that you look like a bargain.

Clark learned this lesson the hard way. Back in 1996, he and his wife overpriced a home they had for sale. It took them 14 months to get the house sold and they had to carry 2 mortgages during that entire time. They wound up really having to cut the price to entice agents to bring clients around.

Yesterday, Clark reviewed some changes that are coming in the housing market because of new housing laws.

This lobbyist-laden bill is already befuddling some. One provision in the housing rescue bill even has a subsidy for railcars. Kudos to syndicated financial columnist Kathleen Pender for digging that tidbit out of the more than 700 pages of rules.

Here are some more key provisions, most of which become effective in October:

• Reverse mortgages will now have a 2% maximum on fees (1% for mortgages above $200,000) -- with a cap at $6,000. This is good news for "house rich, cash poor" seniors contemplating a reverse mortgage. It should reduce the number of people getting ripped off with huge fees.

• Interest rate rescue for those in jumbo loans is on the way. Fannie Mae and Freddie Mac will be allowed to buy loans up to 115% of the local median home price. That means access to lower interest rates for those in loans above $417,000.

• There will be new protection for active military and veterans against foreclosures. Lenders will be required to wait 9 months -- instead of 90 days -- before beginning proceedings. Plus, there are new rules on interest rate adjustment. For too long, banks had unwittingly violated laws on interest rates for military. Visit Military.com to learn your rights.

• Vacation homes will be the subject of new scrutiny. No more loopholes about avoiding capital-gains taxes by living in a vacation or rental property as a primary residence for 2 years before selling it. Now you may owe tax on a portion of the gain, based on the years you didn't live there full-time.

CLARKONOMICS: A few weeks ago, Clark explained why a recession is the best time to start a business. Need more proof? Read on.

Have you noticed vacant storefronts as you drive around? The International Council of Shopping Centers now reports the largest historical increase in vacancies. 1 out of every 7 retail spaces in the United States will vacate this year. That creates great opportunity if you want to open a retail location or a restaurant. Landlords need you! And you're in a powerful negotiating position.

If you have an existing business and your lease is coming up for renewal, once again, you have so much negotiating power. But you must be willing to relocate to a shopping center across the street if need be.

And here's a special warning for entrepreneurs: Make sure you get a kick-out clause in your lease. That will protect you should the anchor retailer vacate from a shopping center. Anchor retailers could be a supermarket, a Target, a Wal-Mart or what have you. If they leave, all the ancillary businesses die as traffic drops off. So a kick-out clause allows you to vacate if the big fish goes elsewhere.

Are you facing a penalty for a kick-out clause? Negotiate a lesser penalty. You've got the upper hand.

The housing market woes continued unabated while Clark was on vacation. We've now seen the greatest drop in home values since records were kept. But there are some bright spots. Dallas, Charlotte, Portland and Seattle are among the cities that are doing OK with housing.

The typical housing value in Miami is down 30% from its peak. Phoenix is down 26%, and Las Vegas is down around 30%. New stats also show that every 1 in 8 people in Alt-A loans -- typically those who are one step below having solid credit -- are going delinquent.

Meanwhile, Clark is upset about taxpayers having to bail out private investors in Freddie Mac and Fannie Mae. Most Americans don't know the first thing about Fannie and Freddie. They're the "money" behind the scenes that allow you to buy a home. The unfortunate reality is that their political connections may buy them taxpayer-funded bailouts. Private gain, public risk; it's just not right.

In related news, Clark wants to break down some key points of the new housing rules that Pres. Bush recently signed:

• If you're delinquent on your primary home, you'll be potentially eligible for a workout -- funded by taxpayers -- in the fall. This voluntary measure allows lenders to write down loans to current market value plus 10%. So let's look at the example of a $150,000 home that's now worth $120,000. The lender would mark it down to $120,000; take a further haircut to $108,000; and then write a new loan for that amount. The homeowner must then split the profits with taxpayers upon eventual resale.

• As a first-time homebuyer, you can get a $7,500 credit courtesy again of taxpayers. This also is a loan, which you as a borrower get interest-free. You pay it back over time interest-free, and it is retroactive for those who bought from April 9, 2008 onward. There's also an oddball loophole that allows non-first-timers to qualify for the credit. Former homeowners who recently have been renting for a couple of years may be eligible.

• Down-payment assistance programs will no longer be legal beginning in October. These programs allowed builders to raise the price of a house, say, from $100,000 to $105,000. Then the builder would make a $5,000 donation to a supposed charity. That charity would in turn give you $5,000 toward the home. The end result was that it looked like you had a $5,000 down-payment when you really did not. But the rate of foreclosure involved here was extremely high.

These new housing rules are more than 700 pages long. Look for more info tomorrow on other provisions that affect upper-middle and high income earners with some gotchas.

If you've been in a house for 5 years or longer, chances are you may be grossly underinsured for homeowner's coverage. In fact, you'll only discover it after a catastrophic loss when it's too late.

So you must read the coverage limits when your policy comes up for renewal every year. Let your insurer know if there's no way you could rebuild your house for the specified amount. Note the name of the rep you speak to and the date/time of the call. That way if your insurer refuses to raise your limits and a catastrophic loss happens, you've already begun building a case against them.

Clark's insurer would not raise his limits, so he triggered a clause in his contract and got a 3rd party appraiser to look at his home. The insurer accepted the appraisal and then complied by raising his coverage.

The chances of a catastrophic loss are minimal, but why take the chance of having your wallet disrupted just as terribly as your life in the case of the unthinkable?

Clark recently bought a foreclosure in a mountain community. In this case, the insurer sent an appraiser out to him and told Clark he needed more insurance because of the expense of rebuilding on a mountain.

The penny-pincher always takes big deductibles so he doesn't get hurt much. Don't have the $500 deductible of yesteryear. Today, insurance can only be used in the case of a catastrophic loss. It's a "use it and lose it" proposition. Clark saved 31% on his last renewal by having a higher deductible.

Meanwhile, Fireman's Fund has a rider that allows you to rebuild your house as an energy-efficient structure in the event of a catastrophic loss. The San Francisco Chronicle reports that it only costs the average homeowner about $70 more for this policy. There are also other insurers doing these "green" riders. But this should not be treated as incentive to burn down your house just to get it rebuilt as an energy-efficient model!

The Mortgage Lender Implode-O-Meter is a popular website developed by former Emory University research Aaron Krowne. This unique portal monitors the overall health of lenders so that you know if they're safe to do business with.

Clark particularly loves the site's slogan -- "Tracking the housing finance breakdown: a saga of corruption, hypocrisy, and government complicity" -- because he believes those words ring very true.

We're still in the early innings of the corruption shakedown. More banks will likely fail; there will be continued credit problems for several years; and more bailouts of institutions deemed "Too Big To Fail" will come courtesy of taxpayers.

This last point really rankles Clark. When we bailed out Bear Stearns with $30 billion in guarantees, we taxpayers should have become owners of the company -- but that's not what happened.

Meanwhile, we indirectly feel the effects of the mortgage crisis whenever we fuel up at the pump. Over the last several months, Clark has explained how the Federal Reserve devalued the dollar to help out Wall Street bigs and their idiotic lending practices in the housing sector. Because of that devaluation, the price of a barrel of oil is nearly double and the price of gas is some 60% higher.

More lenders and banks likely will fail. So now is the time to heed FDIC limits (or NCUA limits, if you're with a credit union) and not exceed $100,000 in the bank. Clark would prefer that you stick closer to $90,000. That way you won't lose one penny of interest in the event of a collapse.

If you are over the $100,000 limit, reduce your exposure by having multiple accounts at different banks. You can also use the CDARS.com program to do it for you.

Another day, another wrinkle in the mortgage crisis and its impact on other sectors of the economy!

First off, we had the second-largest bank failure in U.S. history with IndyMac on Friday. Just a day later, Clark got a call from a relative who wanted him to talk to a family friend. Clark had to difficult task of explaining what happens when you have money that's not FDIC-insured in a failing bank.

The latest stats show that 37% of people have money above FDIC limits --$100,000 in a bank account and $250,000 for retirement accounts. If this train wreck has already happened to you, here's the scoop: If there are assets left over after all depositors have been reimbursed up to $100,000, then you'll get a portion of your unprotected money back.

Hopefully, you're not in this situation. Heed Clark's advice now and reduce your accounts to $90,000 so you don't forfeit a penny of interest in the event of a collapse.

Second, let's address the mortgage crisis involving Fannie Mae and Freddie Mac. These are both private corporations that created money for mortgages with a wink and nod and the understanding that taxpayers would back them up in the event of any difficulty.

Well, now the difficulty has arrived and Pres. Bush, Treasury Secretary Paulson and the folks at the Federal Reserve have agreed to bailout private stockholders with taxpayer money. This is unacceptable. The only reason it's happening is because Fannie Mae and Freddie Mac are politically connected.

Third, the Federal Reserve has issued new rules for banks making mortgage loans. The first rule states that they can't make a loan if you can't pay it back. Duh! That took a federal regulation?! Under the new rules, they have to make sure you can pay at the highest rate that your monthly payment could adjust for 7 years. In addition, there will be no more pre-payment penalties (in most instances) and escrow accounts will be required for property taxes and insurance.

CLARKONOMICS: We live in a time when "Dare To Be Rich" foreclosure schemes are pushed via infomercials, web ads and more. If you believe the hype, foreclosures are the hottest deal since sliced bread.

But do you remember when it was all about how to get rich with leverage using other people's money to buy real estate? Well, the whole house flipping trend ended in "jingle mail" -- that's what lenders call it when you mail in the keys and just walk away from a mortgage.

So we've moved from excessive speculation to excessive hype. Clark has done well with foreclosures over the years. He actually purchased his most recent one about 5 months ago. But realize this: Foreclosures are just one area of opportunity, not the "be all, end all" area that people think.

In fact, foreclosures are part of a larger category of "people problem" houses. These are houses sitting on the market as wounded ducks because the owners endured a job loss, a divorce, a relocation or other troubling scenarios.

The bottom-line is this: People focus unnecessarily on foreclosures. All manner of distressed real estate can be a deal. The key is to know local market conditions where you're buying.

You have know the exact neighborhood you're targeting. Go after the properties that are REOs (real-estate owned by the bank or lender) for 45 days or longer. Lenders are usually unrealistic about properties on their books for about the first 6 weeks.

But don't think foreclosures are the magic bullet. They're just one possible way to get wealth. Again, know the neighborhood, and pay attention to those houses sitting on the market for 150 days.

Beware of agents who may delete a listing and relist it to conceal the fact that the seller is desperate. This practice may be illegal in some states. So dig through the MLS and see if the house has been listed before.

Think of the real estate market as a pie. Foreclosures are only one slice; look at the people problem houses -- relocation, job loss, estate sale, divorce and others.

Some of the largest banks in our nation made aggressive marketing moves to get people locked into what Clark calls "the dumbest mortgage products ever." We're talking about option payment loans, also called negative amortization loans or Pick-a-Payment loans.

Thankfully, Washington Mutual and Wachovia are both moving away from these loans. Clark recalls negative amortization loans were popular in the mid-1980s and led to a wave of bank collapses and foreclosures during that decade.

With a negative amortization loan, your balance actually goes up over time. That's because you're given the option to pay whatever you want. The unpaid balance each month simply gets added on to the tail end of the loan. When home values drop, you're suddenly quite upside down in your home.

Clark recalls the first time he took a call about a negative amortization loan in 2000 or 2001. A woman called up to ask about an offer she received for a 30-year mortgage at 1 and seventh-eighths percent. But that's only what the monthly payments were based on; her loan balance would continue going up month after month. Ultimately, this is poison for your pocketbook.

There's a simple rule of thumb Clark tells people to follow when shopping for a mortgage: See what you qualify for when it comes to a traditional 30-year fixed rate loan. Then back off and go house shopping at only 90% of what you'd be approved for. So if you qualify for a $200K mortgage, don't look at houses above $180K. This will give you some financial wiggle room over the years.

People have mistakenly thought that stretching to buy a home creates wealth. But it's like more like a rubber-band -- stretch it too far and it will break.

Mortgage disclosure statements are so complex that even the educated don't know what they're signing. The American Enterprise Institute has drawn up a mortgage cheat sheet (and definition of terms) that you can use as a plain-English disclosure when getting a loan. (Editor's note: The first link is a pdf file.)

CLARKONOMICS/RIP-OFF ALERT: Here's a story that's disturbed Clark so much it required both a Clarkonomics sounder and a rip-off alert one!

During the coming weeks, you're going to be hearing about how Congress is rescuing the American homeowner with a foreclosure bailout. This is natural rhetoric for an election year. But Clark wants you to know the real story.

First off, Countrywide is being sued in Illinois and California for conspiracy to defraud would-be homeowners. They allegedly issued loans when they knew there was no way they'd ever be paid off. Countrywide made a lot of money by originating these loans and then selling them off. The ones who really got burned were the investors who snatched them up from Countrywide.

Meanwhile, The Washington Post recently reported on a 28-page Bank of America document -- marked "confidential and proprietary" -- that's been floating around Capitol Hill.

The document basically outlines a potential bailout for lenders, where the Countrywide loans and others like them would be dumped on the government. This plan is being sold as a "bailout for homeowners," but it's the lenders who really benefit.

This is a perfect example of socialized risk and privatized reward. BoA is using its influence in Washington to get a deal for itself and other lenders from the government -- with taxpayers being put at risk to fund it.

The question remains: Will this move actually help the homeowners who are delinquent? We'll have to wait and see. There's no telling if this is a workable solution for those who got into loans they could never afford.

Most of us who pay our mortgages every month aren't happy about a taxpayer-supported bailout. But there are complicating factors. For example, every foreclosed house in a neighborhood lowers the value of surrounding homes by 1%.

Still, the takeaway here is this: The next time Congress pretends to act like a knight in shining armor, you need the real story behind the scenes. This is all about bailing out the influentials in the banking business.

For almost the last 50 years, we Americans have lived according to the "freeway exit" rule: We've driven out as far as necessary until we reach a point where the houses are affordable. This worked well to bring people into the middle class lifestyle for nearly 3 generations.

But right now, Clark believes we are at a time when we're turning back inward. People don't want the long commute or to have to deal with a yard on the weekends. There's a boomerang effect among baby boomers that are now empty nesters. Meanwhile, people who came of age in the last 10 years are becoming "new urbanists."

These new urbanists have a car but feel disconnected from the suburbs and crave the interaction of a city. Of course, today's high gas prices provide a direct economic incentive for new urbanism.

If Clark is right about people turning back inward, that means price appreciation will dwindle in the distant suburbs. In-town neighborhoods will have the greatest increase in value, followed by close-in neighborhoods. In some extreme cases, suburban homes may not even keep up with the inflation rate.

There are also some serious implications for public transportation here. In short, cities like Dallas, Houston, Atlanta and Charlotte have growth corridors that could support more of it. This is separate from the issue of energy.

The price of gas will not necessarily trend upward forever like the headlines proclaim. But even if energy prices decline, Clark still thinks that in the long run you may want to look closer in if you're thinking of real estate as an investment.

There's new hope for those who are behind on their mortgages and either want to stay in their homes or do a short sale. As Clark told you months ago, a collective of the nation's largest lenders are pushing The Hope Now initiative.

The lenders' interests are purely monetary as they face a critical mass of some 2 million potential foreclosures. The reality is that lenders don't want you out on the street because it's expensive for them and they're notoriously bad property managers. Under the voluntary Hope Now program, participating lenders will help you to do a short sale or get a loan modification.

By the end of July, participating lenders will be required to confirm receipt of your request for either option within 5 business days. Then they'll have 6 weeks to accept or decline your request. This is a major change because it puts a timeline on the procedure for the first time.

The biggest beneficiary here will be your fellow neighbors. Their home values won't automatically plummet with your foreclosure, now that there are more options available to you. Keep in mind that home values decline about 1% for every foreclosure in a neighborhood.

The other beneficiary is the bank. They lose a minimum of about $70K on every foreclosure. That's why they're willing to do these workouts. For you as borrower, the benefits are obvious. But the big unknown is how it will all work for people who have 2 loans on a home.

One thing Clark doesn't want to see is a Congressional bailout for the mortgage lenders, which may be disguised as being in the best interest of homeowners.

The real estate market's greatest losses -- in terms of both dollars and percentages -- have come in tony neighborhoods. That's because jumbo loans have not been available, or were only available at very high interest rates. Jumbo loans typically begin at $417K.

Months ago, a law was passed that allowed you to take out a jumbo loan in expensive housing markets at conventional loan rates. But the loans never really appeared in the market. People thought they'd be able to refinance or move up to a larger house, yet it was essentially vaporware.

Now these modified conventional loans, which are about a quarter of a point higher, finally are showing up. So if you were trying to sell and would-be buyers couldn't get financing, take heart. Or if you wanted to refi a high-cost loan in a high-cost neighborhood, you may be able to get that loan now. The politicians hope this will get the high-end market moving again.

What areas will benefit most from the new influx of jumbo loans at near-conventional rates? Check out the complete list. (Editor's note: This is a PDF file.)

Finally, some great news for consumers in the housing market! For ten years, the real estate industry has done its best to keep the power of the internet away from its potential customers. The National Association of Realtors (NAR) and its affiliates have been engaging in anti-competitive practices, conspiring to fix commission prices on real estate sales. Well, they've finally backed down. This is going to make a big difference in how you will buy and sell property in the future.

Before the internet, the only way to know which homes were for sale was to find an agent with a Multiple Listing book, a monthly publication that listed all the available properties in a particular market. It was like a closely guarded secret. But the internet broke open that secret. Non-traditional players jumped into the game and began offering discounted services, or menus of services, letting the consumer pick only those which were necessary. The NAR did all it could to shut down these non-traditional companies. But very soon, real estate commissions will be allowed to float with the free market, and you as a consumer will be empowered. Sellers will be able to pick and choose the specific services they need to sell a property, and buyers will have online access to all available listings - regardless of commission rate. This is a long overdue victory.

That said, experienced agents will still be in demand. Houses with unusual or unique features will still require special marketing techniques. Some buyers will still need talented agents to help them navigate through the purchase process, or to fully understand their specific market. But not everyone needs this level of expertise. The free market now offers you a choice, and for Clark, this is cause for celebration!

New figures show that option payment loans are defaulting at higher rates than sub-prime loans. Clark has often spoken out against these kinds of loans, where your balance actually rises over time. Option payment loans sometimes go under the name "Pick a Pay" or "Pick a Payment." Countrywide is in the midst of a criminal investigation for allegedly pushing through falsified applications for these loans.

Meanwhile, The Los Angeles Times recently reported a new wrinkle on the old practice of owner financing in the loan market. Clark has done owner financing several times over the years. That's where he's actually served as the bank for a borrower.

During that time, he's received letters from investors wanting to buy his loans. They typically offer him an immediate payout at a discounted rate. So if he holds a $120K note, for example, the investors may offer him $100K upfront. Obviously, he's never taken them up on their offer.

Now here's the latest twist: Investors are pooling money, going to banks and buying "non-performing" loans for between 30-70 cents on the dollar. Then they go to the homeowner and offer to reduce the interest rate and the balance on the loan. People immediately suspect that they're being scammed, but this is actually a new business in the marketplace.

The next question that comes to mind: Why wouldn't the banks themselves just do this for the borrowers? Clark thinks they're too bureaucratic to make it work efficiently.

If you're behind on your loan, how would you know if you're facing a legitimate mortgage reduction offer from an investor who recently bought your note? This may sound crazy, but Clark actually suggests that you spend some money, hire a lawyer and have them vet the paperwork. Lower-income homebuyers may be able to get this legal advice for free.

A lot of Americans are afraid to buy homes right now. It's no wonder that people are skittish about jumping from renter to owner when you think about the constant barrage of "housing crisis" headlines. Clark wants to offer some "tools of trade" so you have a better feel for when you should venture into the marketplace.

First off, the foreclosure rate (through March 2008) is up about 60% over a year ago. The numbers got ugly during August of last year and peaked in March. 700,000 people were put out on the street during that month alone.

Right now people are even frightened to touch foreclosures -- along with "people problem" houses. But that's a mistake. If you can buy well below fair market value, that will protect you on the downside.

Looking for a sign for some guidance? Wait until the rate of foreclosures declines for 4 consecutive months. It's going to be like waiting out a fever that has peaks and valleys. You want to see that fever has broken substantially before you buy. Clark will let you know on the air when that happens.

They say all real estate local, but there are some unprecedented national trends that helped foster the housing slump. First, there was the idiotic lending that created more of a demand for housing than is natural. Second, the Federal Reserve had artificially low interest rates that created further demand. (Yes, Alan Greenspan is a human being, not a god!) Finally, there were bubble markets in the spec states of Florida, California, Arizona and Nevada.

The bottom line is that even though the cycle is still playing out, there's already opportunity out there for you.

One final note: Loan underwriters Fannie Mae and Freddie Mac have set up penalty systems for those who mail back the keys and walk away from a foreclosure. Fannie Mae will penalize you for 5 years, Freddie Mac for 7 years. With Fannie, however, you may get out of the penalty box after 36 months if you have certain extenuating circumstances.

So just because you go into foreclosure, it does not mean you'll never be able to buy a house again.

Have you heard of Zillow.com? This is a website that homeowners use when they voyeuristically want to know about their home's value. The site also pinpoints info about schools, safety and other quality of life issues in an area where you might be thinking about moving.

If you live in an architecturally unique neighborhood, you may find that Zillow won't give you an accurate home value. For example, Christa lives in a 40-year old house in a neighborhood where every house is individual. So a home with 8K square feet could be worth millions, while a 2 bedroom/1 bath pre-WWII bungalow may be valued for several thousand dollars.

But Zillow is still a good tool to assess the schools in a potential neighborhood. Homebuyers who don't have children should still be concerned with good schools. Why? They'll be likely to get more per square foot when they go to resell.

Have you heard of anyone who wanted to refinance their mortgage and couldn't do so because the appraisal came in too low? This is the natural result of the pendulum swinging back after a spike in inflated real estate appraisals.

Months ago, Clark told you that 90% of appraisers say they've been pressured by mortgage lenders to artificially raise the value of a house. About 5 years ago, that number was just a little over 50%. Standards and ethics became much looser as everybody tried to make the deals happen.

Now we're in a time when many mortgage lenders are questioning appraisals because of the rapid decline of home values in many markets. Plus, they're scared of increased scrutiny of their lending practices.

Here's what's been going on behind the scenes: New York State Attorney General Andrew Cuomo has been pressuring the industry to change how appraisals are done. He wants to ensure that loan officers can't influence appraisers and would actually be separated from the decision of which appraiser is hired.

The Mortgage Bankers Association is fighting hard to overturn the new rules so they'll still be able to get "liar's appraisals." That's just shameful, according to Clark. We've had enough harm done already to families who got into homes they couldn't afford and are now being put out on the street.

Meanwhile, Countrywide has been under a cloud for cheating people on their loans by coming up with false paperwork saying they owe additional money. Clark already relayed the report about Countrywide fabricating documents when they got caught cheating a homeowner with inflated loan fees. But after being caught, the company reached an agreement with the homeowner to keep the documents secret. Thankfully a federal judge intervened and said these documents need to come out -- especially in light of similar allegations against the company all over the country.

Countrywide is going to disappear as a company; either Bank of America will go through with a purchase, or it will fail. It's a shame that a once-respected brand has been sullied. Yet a lot was built on false pretenses and foolish lending. Clark was surprised to learn that the company had internal procedures in place to cheat people, especially those in bankruptcy.

As always, Clark would love to have a Countrywide representative come on the show and explain their position.

CLARKONOMICS: New foreclosure data shows that the 4 states with the worst situations are Nevada (where 1 in every 54 homes is a foreclosure), California, Arizona and Florida. Rounding out that list is Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut. Meanwhile, the nation is facing a record high number of vacancies with 3 out of every 100 houses going empty. Unfortunately, REO properties (real-estate owned) are notoriously unkempt and invite crime of all kinds.

In related news, Dow Jones recently reported that the Miami/Ft. Lauderdale area has 3 years of backlog inventory to burn through. That's if another house never went on the market again! Only 3 markets are doing well by any standards. Seattle, Houston and Dallas each only have a 6-month supply of housing for sale.

So here's the good news: This is a great time for buyers (especially first-time homebuyers) and renters. Affordability is coming back to the market after going AWOL for years.

About 10% of rentals are vacant, which means that you can steal a deal as a renter. Try to shop around about 4 months before the end of your current lease. The greatest hazard and opportunity alike is in renting from an involuntary landlord who can't sell. They usually just need the money and don't know much about maintaining a property. But you'll get cheaper rent than in a traditional rental complex. The danger comes if they stop paying the mortgage and go into foreclosure. Then you'll be out on the street too.

Clark recently read an article that took a unique angle on the foreclosure epidemic. The Wall Street Journal reports that animal shelters are being overrun with pets that are abandoned when families face foreclosure and have to leave their homes.

Meanwhile, Maryland has passed some tough legislation aimed at correcting the mortgage crisis. First, they've moved to eliminate pre-payment penalties. The federal government will say you can't do that, but Clark is in the support of the state on this issue. He hates pre-payment penalties, which are often attached to sub-prime loans. Second, Maryland has criminalized the kind of lender behavior when they write loans that they know you can't pay. Of course, this won't help out the millions who are already in a rough spot. Finally, they've also criminalized mortgage rescue fraud. That's where elders are conned into sub-prime loans on houses that may already be paid in full. Seniors sign over a house in return for a promise that they'll be allowed to live there until they die. Then they get an eviction notice several weeks later.

Clark is pleased with Maryland's actions, but where are the feds on these issues? Where's Eliot Ness? The sad fact is that the president himself appointed Roland Arnall -- a guy who made a killing on sub-prime loans with his company Ameriquest -- as an ambassador! Meanwhile, Christa recently read a Boston Globe story about a mortgage broker who was apprehended after hiding out in a hotel. This particular broker fabricated tax returns and falsified bank statements to help people get jumbo mortgages. Oh, how the mighty have fallen!

CLARKONOMICS: Clark is not a man who's afraid of the condo market. He knows the value of a condo typically fluctuates like an EKG -- up and down in rapid cycles. Single-family homes, by contrast, tend to rise slowly but steadily over time, barring a bubble market. The problem is that people usually buy condos the wrong way. They own them for short periods of time and then can't get the value they paid when they resell.

Because of general market malaise, lenders are increasingly getting spooked about making loans for condos. New rules and requirements are being established that reflect the fear. It's getting tougher to refinance a condo loan or get one in the first place. Some lenders have even begun redlining -- that's where they take whole zip codes and refuse to make loans in them regardless of credit score.

Other lenders won't make loans in condo communities where there are more than 25% rentals. Some owners have become unwitting landlords so they can meet their monthly payments. Yet if a condo association allows a high percent of rentals, the condo community won't be exempt from future financing.

Compounding the problem are new Fannie Mae and Freddie Mac guidelines. Lenders are being required to make a decision about whether or not a condo association has solid books before making a loan. The practice hurts lenders who may want to sell out their loans out of portfolio, and Clark says it will have a further chilling effect on condo lending.

The pendulum swung too far with irresponsible lending; now it's swinging too far the other way. It all creates a hardship for those condo owners who want to sell. The good news is that there's great opportunity right now to buy a condo for cash or if you're able to get a loan. Condos go through phases of incredible pessimism followed by ill advised optimism. Right now we're in a pessimistic cycle, so look for the deals and pounce. Do you smell what Clark is cooking?

There's a new trend that you need to know about if you have a home equity line of credit. Buried in your HELOC is a clause that allows the bank to freeze or reduce your line, at will, with almost no notice. In his TV work, Clark recently did a story about Bank of America doing this to its HELOC holders. But many banks other than just BoA are doing this.

This is a double whammy because many banks charged fees upfront to set up the HELOCs. So far they're not refunding the junk fees. Meanwhile, your credit score can also be demolished based on utilization of the HELOC. Say you have a HELOC with a $100K limit and you're only using $30K. That means you're using 30% of the limit, which is a relatively low level. But if your HELOC is suddenly dropped to a $30K limit, then you're using 100% of what's available to you and your credit is buckling under that strain.

Banks are slashing HELOCs because people are increasingly defaulting on them. Yet people with solid credit can get fantastic offers for borrowing right now because it's such an odd time in our economy. Clark's credit union is offering a 5-year fixed rate HELOC at 3.95%. That's really inexpensive! He also has access to car loans at 3.90% for new or used vehicles on loans of 4 years or less. There's such a stark contrast between what's available to people with good credit and people with bad credit.

Are you a Countrywide borrower who fell delinquent? Are you worried that they may have cooked the books about how much you owe? A federal judge has ruled that an investigation of Countrywide on this allegation can continue. Florida, Georgia, Ohio and Pennsylvania are among the states probing the nation's largest independent mortgage lender. There's a lot of smoke surrounding Countrywide on this one, so Clark thinks there's got to also be some fire. But really this is just a sideshow with what's gone on in the mortgage marketplace.

A recent Wachovia internal memo leaked to the media claimed the bank would discontinue its option-payment loans program. Such loans -- also called negative amortization loans -- were being pushed under the Pick-A-Payment tag. But the internal announcement now seems to have been premature. You should avoid the Pick-A-Payment choice at all costs because the balance on the loan actually rises over time. Here's how it works: If you borrow $100K at 6%, the bank only calculates the interest as if it were at 1%. The other 5% goes straight to your balance every month. Wachovia has been pushing the Pick-A-Payment plan, but that hasn't been a smart business move; negative amortization loans only increase the likelihood of default. This really highlights the lack of common sense in the housing market.

Clark is amazed that the federal government has not pushed for meaningful disclosure in mortgage lending. There were proposed rules about 3 years ago to demand full, plain English disclosure when you sign a mortgage. But the banks and brokers went berserk and showered Capitol Hill with money to get the proposal stifled. Don't hold your breath waiting for a change in policy -- instead check out a disclosure form developed by the American Enterprise Institute. We got into mess because so many people did the wrong thing. What we need is somebody to stand up and make sure we do the right thing going forward.

CLARKONOMICS: The Senate has reached a bipartisan deal for a mortgage bailout of those facing foreclosure. The vote was 94-to-1, with Jim Bunning (R-KY) being the only person to vote no. We're being told this new measure will help ailing homeowners, but it's really another bailout of the banks. We are the ones who will be paying through tax dollars to subsidize lenders that wrote bad loans.

The mortgage industry asked to be allowed to correct itself, and Bush was very happy to launch the Hope Now initiative with that in mind. The Commander-in-Chief was told that calls to this helpline were being answered in about 30 seconds, but a New York Times reporter experienced wait time of an hour before giving up. The kind of help Hope Now is promising should instead be coming from the private sector, Clark believes.

The penny-pinching guru applauds a Maryland plan to require that homebuyers go through independent counseling before taking on a high-risk loan. Such a plan would reduce the number of people getting into trouble with sub-prime loans. As often happens in capitalism, the pendulum swung too far toward idiotic lending. Buyers and lenders were both at fault. Clark just worries that the 85-90% of us who do pay our mortgages every month will have to subsidize everybody else. He can't support that.

It's important to realize things correct themselves with time. USA Today recently reported on entire neighborhoods in Denver going dark because of foreclosures. In the short term, that's a disaster. But look back to Houston in the late '80s. Several neighborhoods hit hard by foreclosures became ghost towns. Eventually Houston recovered and those neighborhoods are now alive and well. The same will happen in Denver. Time heals excess.

Here's a caveat, though: In the Midwest, Ohio and Michigan, the foreclosure problem is compounded by labor market problems. These neighborhoods may not come back because of lack of future job growth. One Ohio community is even bulldozing boarded-up houses and building parks.

CLARKONOMICS: Treasury Secretary Paulson is still trying to recover credibility after the Bear Stearns debacle. Now he's launched a campaign to reorganize who's regulated by the government and how they're regulated. Bear Stearns and others were using borrowed money to make bets that brought in huge profits during prior years. Then when the bets failed, they whimpered like hurt animals and went running to Uncle Sam. After all, there were the costs of yacht rentals, vacation home mortgages and country club memberships to pay…boo hoo!

The problem is that Bear Stearns was bailed out with taxpayer money. Meanwhile, the Federal Reserve has been lowering interest rates unconscionably, which destroys the value of our dollar and our financial status in the world. We'll be paying for years to come for the excesses of the banks, brokerage house, et al. Next up, look for the push and shove on Capitol Hill as our elected officials tackle the issue of moral equivalency in deciding whether or not to offer bailouts to ordinary homeowners.

But where there's distress, there's also opportunity. Have you heard about the foreclosure tourists in Southeastern Florida? These are mostly European investors who are flying over here and hopping on buses to go around looking at foreclosures. If they see something they like, they use their strong Euro currency to get a steal of a deal. This is also going on in the Washington, D.C., market. Clark does not believe we should use taxpayer money to bailout those who are facing foreclosure. Meanwhile, this trend of foreclosure tourism underscores the fact that there's real opportunity in the second home market. The National Association of Realtors corroborates with news that vacation home sales are down by a third.

CLARKONOMICS: Think the economic news in the housing sector is abysmal? There just might be a money-making opportunity in it for you. By now you've probably heard that the average price of a house is down 11.5% over last year. Of course, some areas like Charlotte, N.C., actually saw an increase! But the majority of places are seeing values on the wane. Miami and Las Vegas are among the hardest-hit areas. Then there's the news about foreclosures. The rate that properties are being foreclosed upon is not keeping pace with the rate that buyers are snatching them up. There's more supply and less demand. So there may be opportunity here for investors. Banks are over-run with REO properties and the Dare To Be Great believers who got burned are out on the sidelines. The worst-case scenario is that you might buy now and prices could drop even more. But who cares if you're in it for the long haul? Remember Clark's rule of thumb: Buy 20% below fair market value for homes and 30% below fair market value for condos. Just be wary of buying investment property in areas like Michigan and parts of Ohio where economic growth is not happening because of declining population, decreasing job availability, high taxes or strong unions.

CLARKONOMICS: Clark recently heard bits of sobering news on the banking and housing fronts. First, the feds are providing $200 billion in bailout money to try to keep banks afloat. It's disturbing to Clark that banks which made bad bets are being propped up by taxpayers. Zombie banks should be allowed to fail as the marketplace dictates. But the feds are probably heeding the unwritten "too big to fail" rule. We'll have to see how it all plays out.

In our own financial lives, the equity we have in our homes is the lowest it's been since the Great Depression; it's now less than 50% for the first time ever. As part of trying to prop up the housing market, you can now borrow more from conventional sources. This means people with jumbo loans can refinance into conventional loans that may carry lower interest rates. This may affect you if you live in California, Colorado, Florida, Hawaii or through the Northeast. See a complete list of the affected areas.

Finally, all the ups and downs of the market mean that there will be both winners and losers. The big winners are first-time homebuyers and some investors who can steal a deal from builders or on REO (real-estate owned) property. Some Europeans are even taking bus tours of foreclosures here in the United States. They're looking to leverage the Euro's strength against the dollar to buy properties at a fraction of their original cost. There is one caveat for the first-time homebuyer: You should put something down -- at least 5% -- in order to get a decent loan.

Selling a house is a turbo-challenge right now. Clark's mom recently put her condo on the market. Figuring out the price point was the most difficult part. Everyone's perplexed by the question of price point these days. Here's some advice: Don't look at comps from a year or 2 ago; look at today's comps. Know that if you overprice, you'll likely get less in the end than those who price realistically upfront. You lose your initial marketing thrust when you overprice upfront. Listing your home at a realistic price will lead to less angst, a shorter time on the market and possibly a better price.

Clark and Christa have a mutual friend who was selling her home last year. Clark advised the friend to price her home at a totally oddball figure, something that ended in $XXX,552.27, for example. Everyone laughed at him at the time. Now financial writer Jonathan Clements reveals this pricing strategy actually works. When you throw out an oddball figure, people think 2 things: First, that it's a bargain. Second, that's there is carefully thought out reason behind it. But whatever you do, do not overprice your home!

CLARKONOMICS: New stats show that the inflation level at wholesale was 7.5% last year. It's been a long time since we had similarly bad numbers. Some of Clark's staff -- namely Joel -- weren't even born the last time we were in such a squeeze. At the same time, housing prices have declined 9% year-over-year in some big markets. That's the biggest decrease ever in the Case-Shiller home price index. So the things we own have gone down in value, while the things we buy are going up in price. That's why people feel ill at ease, even if they're relatively comfortable in their own lives.

There's also a push/pull going on between lenders and homeowners. On the one hand, you have Bank of America leading an initiative on Capitol Hill to dump the cost of low-performing mortgages on taxpayers. Meanwhile, there's also a move to establish cram-downs for homeowners. That's where you get a judge to reduce your loan to the current value of the house. Clark is opposed to both extremes. BoA's move is outrageous, and cram-downs -- while frequently done in commercial real estate -- would undermine the confidence of investors with disastrous long-term results. The reality is that we'll have to work through the housing and inflation issues by readjusting how we spend.

Think about groceries: With costs rising, you've got to fight back by using coupons; buying in bulk when dry goods are on sale; and trading down in brand when you shop. You should also heed the common sense wisdom: Never shop on an empty stomach; don't go down the candy, ice cream or cereal aisles with your kids; and get your children involved by having them clip coupons and giving them a percent of the savings.

CLARKONOMICS: A new report analyzing markets that were most affected by foreclosure in 2007 finds that the Detroit metro area is at the top of the list. The top 100 markets saw a 78% increase in foreclosures in a year. While Detroit is up 68% by comparison, Motor City has a whopping 5% of homes in foreclosure right now. At No. 2, we have Stockton, CA, with just under 5% of homes in foreclosure. Rounding out the top 10 is Las Vegas; Riverside, CA; Sacramento, CA; Cleveland, Ohio; Bakersfield, CA; Miami; Denver and Ft. Lauderdale, FL. Rounding out the top 20 we have Atlanta; Akron, Ohio; Memphis, TN; Fresno, CA; Dayton, Ohio; Oakland, CA; Warren, MI; Indianapolis, IN; Toledo, Ohio; and Orlando, FL.

Many of these markets like Detroit, Akron, Dayton and Toledo were never part of the housing bubble. But now they're a part of the bust -- thanks to poor job markets. Atlanta didn't bubble either, but it was front and center in the sub-prime mortgage mess. Most of the other cities listed above were bubble markets. It could be 10 years before equilibrium comes and housing stabilizes. Those who bought in a bubble market during the last 36 months will really feel the crunch the most.

You have to look back to the dot.bomb era to get some perspective on the housing slump. The tech craze pushed the NASDAQ over $5K some 8 years ago. Right now it's $2.3K -- still worth less than it was at its peak all these years later. That's because the peak was artificial, but the decline was real. The housing crunch will not be this dire because the run-ups were not as steep as with the tech stocks. Think about it: The tech loss was $7 trillion, while the housing decline could be $2 trillion -- less than 1/3 of the tech bust. So the overall housing picture is not as bad as it was with the tech bubble.

Meanwhile, The Wall Street Journal reports that the banks are working the White House to get a federal bailout for themselves, at the expense of taxpayers. It is not our job to bail out banks and brokerage houses that made idiotic sub-prime loans. Clark vows to be all over this story to help protect your wallet.

A few years ago, Clark told you about a website that lists trash facilities and toxic waste sites in a given area. Potential homebuyers could use the service to vet a neighborhood before a purchase. Then he recently read about a website called CrimeReports.com that allows you to do the same thing for crime statistics. CrimeReports.com is still a fledgling effort so there's not too much info in the database yet; so far Dallas and Chicago are the only big cities listed. One of the main impediments to growing the website will be from politicians and police departments. Unfortunately, a lot of politicians don't want their local police departments to be honest about crime rates. Spikes in crime reflect poorly on a politician's leadership. So we'll see how this site progresses in the future. CrimeReports.com was the brainchild of a man in Virginia who had been the victim of a crime. The site could prove to be a real boon to community-based policing of the sort that was favored by former New York mayor Rudy Giuliani.

We track the calls that come into our show and the Consumer Action Center. There's been a shift during the last 30 days from calls about debt and credit questions to calls about the housing market. About 35 percent of your questions now deal with this latter topic.

In some of the most speculative markets in the country, a much larger percentage of homes than previously thought were owned by speculators who never intended to live in them. This is referred to as occupancy fraud. What happens when these homes go into foreclosure? Usually, an increase in foreclosures equals an increase in demand for rentals. As people get displaced, they have to have to go somewhere. But in this case, the normal cycle of displaced demand is upset because the foreclosed houses were ghost residences. This end result is that housing recovery in spec-heavy markets will take longer to happen and the decline in values could be deeper than anticipated. The Wall Street Journal reports that Nevada, Arizona, Colorado and Florida will be hardest hit by this trend.

Meanwhile, homes in Michigan and Ohio are very inexpensive, but for good reason. Both states have declining job markets. Sure you can steal a deal, but where are the jobs? Some builders have responded by offering price protection. Always remember that housing is cyclical and will recover. What makes the occupancy fraud scenario different is the combination of spec building in oversupply and the dangerous lending that fueled it. So it's going to take longer to work off the excess in many places.

Several just-released home market stats highlight how stinky the real estate market has become. In the latest session of Clarkonomics, Clark explains how the current market situation is turning some of his long-standing advice on its head. New stats show that home prices in 10 major metro areas are down 8.5 percent from a year earlier. That's the worst number since stats have been kept. Meanwhile, the Commerce Department reports that sales of new homes have dropped 27 percent -- the worst since record keeping began 44 years ago. Finally, the National Association of Realtors reports that overall home sales are down 13 percent over the last year. Add it all up and there's no denying that the new home market is in much worse shape than the used home market.

If you read Clark Smart Real Estate, you know that Clark spoke about people putting too much focus on foreclosures; and about how buying used is a better deal than buying new. But that's not the case anymore. Right now, you're better off getting a new home -- preferably one that's an REO (real-estate owned). When a lender takes a house back, they drive it into the toilet because they're not in the business of property management. So REOs quickly morph into overgrown, smelly houses that deteriorate into crummy shape. That's when you can steal a deal, hopefully somewhere in the range of 20 percent below market value. Of course, you'll have a lot of cosmetic work to do.

Congress is currently cooking up some temporary props for the housing market. There's talk of giving people in jumbo loans (above $417K) the chance to refinance at standard rates, not jumbo ones. Keep your credit score as high as possible in preparation for when/if this legislation goes into effect.

A lot of us got a lump of coal from our own government this past year. Your home may have gone down in value in 2007 and may continue to do so this year. But talk about rubbing salt into the wounds; people are getting property tax reappraisals that are way up from where they were before. The Washington Post reports that Maryland residents are seeing property tax increases of 33 percent, yet property values are down in much of the state. This scenario is being repeated all over the country. The appraisals are out of date and use faulty data from boom-year sales. The net effect is that your local government is ripping you off. There's no other way to say it. Do you have to take it? No, you can appeal your appraisal. The rules for appeal vary by jurisdiction. There may be an informal process before the formal one. Never gripe about the government during the process, just present the facts about recent sale prices of homes similar to yours. These figures, often called "comps" in real-estate lingo, are the smoking gun that will help you get an appraisal price rollback. Search out comps on the Internet or consult a local real-estate agent for help. If you can get comps for foreclosures in your neighborhood, that's like having extra ammunition. Clark suggests dressing business casual if you have to appear before a panel as part of the process. The idea is to dress nicely -- but not too well -- and people will respond to your appearance.

Take a look at The Wall Street Journal and you'll see one dire headline after another. In the latest edition of Clarkonomics, Clark explained how one root of the problem is that money has been too easy to borrow. Between 2000-2006, our average household debt rose by 500 percent. That's unprecedented in our history. Banks kept making mortgage loans and didn't care if the loan was going to get paid. They were all too happy to package loans together and sell them off as supposedly safe investments. Meanwhile, conventional wisdom says that sub-prime mortgage holders get in trouble when their rates reset. Yet the reality is that most got in trouble even earlier. On the other side of the spectrum, you have upper middle-class people who took out option payment loans and bought expensive homes. These are people with good credit scores and histories. But the balance on option payment loans goes up over time. So the story of one man who contacted Clark when he was $400,000 upside down in his home is not unique.

In the past, when the economy started to tank, you flooded it with money. That's no longer an alternative. We're facing a time when we'll have to go cold turkey and clean the excess out of the economy. Millions will get hurt, and hundreds of thousands in the financial sector may lose their jobs. States and local governments will continue going in the red and have to decide whether to cut spending or raise taxes.

At some point, people will lose confidence in owning real estate. They'll have to double up, move in with family or become renters. We're not there yet. But after we get there, look for a time when the excess housing supply will be a real deal. If you have an opportunity to buy for pennies or dimes on the dollar, pounce on it and then be prepared to wait for recovery. The other bit of advice Clark has for tight economic times is perennial: Reduce your debt exposure!

For the past 2 years, Florida hasn't had any population growth. Moving companies report that as many people are moving out as they are moving in. Real estate prices are now down 20 percent from their peak, and The Washington Post reports that enrollment in public schools is down year after year. Many families are leaving because they're being priced out of the market, not to mention that the cost of insurance with all the hurricanes has been too much. Florida's popularity ultimately became its own hex. So that means this a great time to zig when others zag. Clark thinks there will be tremendous real estate opportunities throughout Florida in 2009.

If you hope to buy Sunshine State real estate, don't go by the last sale price on a given property. Instead, look back at what properties sold for in 2004 and use that as your baseline. Keep in mind that the ridiculous prices of 2005 and 2006 were speculative. Miami will present a lot of opportunities in the condo market, but beware of location. Many developers built condos in unsafe neighborhoods as desirable land got scarce. Know the market before you buy.

The exit polling from New Hampshire told us that the economy was a big issue for people. The slowdown affects us in a lot of ways. For example, hourly employees may find their hours diminishing. There are always winners and losers in any economic scenario. Right now is a great time if you're in the market for a refinance on your mortgage. The loan originators practically have no customers. But it's not uncommon for people to hear the headlines, watch the news and still miss the opportunity. Try refinancing if you're current in your mortgage and have an interest rate that's 6 percent or above. Also try refinancing if you have a floating rate.

Meanwhile, Clark recently upset some people with his comments about Countrywide. The company is in serious trouble and there are reports that they may file for bankruptcy. But there are still a lot of question marks surrounding the whole situation. So here's what Clark wants to reiterate: If you are an existing Countrywide customer, nothing changes for you whether they go bust or not. You'll still owe on your loan. One caveat: Be sure to track your loan balance. See that each month's payments are being applied properly and the balance is dropping correctly. Don't trust your lender to do the math.

As a counterpoint to the last story, Federal Reserve economists are predicting that housing values could fall 15 percent before the overall market returns to normal. Believe it or not, that's good news. Historically, people have paid marginally more to own vs. rent. Right now the costs to own vs. rent are very disproportionate. That's partly because the speculative trend and "Dare To Be Great" mindset fueled a lot of stupid investments. Now we have the largest number of vacant properties ever. The good news is that housing will once again become affordable to the average working family. It may take a 15 percent overall decline to get there, but it will happen. It's funny how all the press you read about the housing market says the sky is falling, but that's not really the whole picture. For people who are in their houses and have some equity, this is just a temporary bump in the road. And when those people eventually want to trade up in housing, their next property won't be so exorbitantly priced.

There's an old saying that tells us, "If everybody's unhappy when a leader takes a stand on an issue, then they probably did the right thing." Clark thinks that's the situation President Bush finds himself in after announcing his voluntary plan to handle the mortgage meltdown. As you may recall, Bush is allowing lenders to voluntary freeze the interest rate on bad loans for 5 years -- if the homeowner had been current with all their payments. A lot of critics, including Clark's friend Bill Brennan of the Legal Aid Society, have emerged saying that Bush's plan is just mere window dressing. People of a libertarian mindset are upset on account of the free-market interference.

The truth is there's no tidy way to clean up this mess -- even though candidates from both sides are making promises. Things could remain messy in some high-spec areas until 2015. The speculative-buying fever of the early 2000s fed a rash of bad loans like 80/20s, no docs and more to falsely inflate housing values. The real tragedy is the human one when children and families are put out on the street. Clark's late father had that happen twice as a young child and it really shaped him for the rest of his life. Now a lot of new homeowners may not be able to stay in their homes if they can't make the payments. The equity the average American has in his or her home is down to 49 percent. The flipside of this whole discussion is that there will be great opportunity in 2008 or 2009 for those willing to take a risk on distressed property. But we're not there quite yet.

There's a new recipient of the old "car on blocks" award. You know the saying, "Stay away from neighborhoods that have cars on blocks," right? Portable on-demand storage (PODs) units are getting that kind of stigma now. Instead of you going to storage, you bring the storage to your front yard with a pod. Leaving one on your property for too long is a sure way to drive your neighbors crazy. The Washington Post reports that there's now a big backlash over the prevalence of PODs. You'll see them invading neighborhoods of all price points, in addition to construction sites. And these things aren't cheap, either; they can cost nearly $400/month to rent! So townships are getting ordinances passed to restrict or to require permits to have PODs on your property. The original concept with PODs was that you loaded them up and moved to another place or had them stored elsewhere. It's a more recent phenomenon that they've become at-home storage units! Clark's wife would kill him if he got a POD at their house.

Don't attempt to adjust your radio if you hear some ambient noise this hour. That's just Clark broadcasting on location as part of Christmas Kids 2007! Interested in helping out a needy child this holiday season? Clark will be personally accepting donations at stores throughout the Atlanta area until Dec. 15. If you're not able to make it out, why not donate online? By working with the Salvation Army, your gifts can be distributed to children right in your own state or area!

Switching gears for a moment, Clark wants to discuss President Bush's announcement about a voluntary plan for people in mortgage meltdown to receive assistance from their lender. Those who took out blow-up mortgages like 2/28 loans in the last few years and have been current on their payments are most likely to benefit. 2/28 loans are typically offered to first-time homebuyers or people with damaged credit. The homebuyers were conned into 2-year loans at a decent rate that becomes outrageous after 24 months. Sometimes the blow-up rate will put the annual payments near or equal to the homeowners' annual income.

Under Bush's plan, lenders can voluntarily freeze the interest rate for 5 years if it's a homeowner's primary residence and they've made timely payments for the first 2 years. This will not help speculative buyers who got into 2/28 loans. Ironically, there are protections under bankruptcy law for spec buyers that don't apply to owner-occupied property. Clark thinks it's reasonable that there shouldn't be any coercion on lenders to freeze the rate. If the government were to try to impose its will, it would have a negative effect on the confidence of investors making loans. After all, why should an investor take on the risk if the government will just come in and decide how much money they'll be able to earn back? Some lenders would be wise to freeze the interest rate; it's a much cheaper option than having to pay to foreclose on tons of properties. Nobody wins in those situations.

Several proposals about how to handle the mortgage meltdown are floating around on Capitol Hill. But politicians are not interested in helping people because they have big hearts. The talk of bailouts is to prop up the banks and lenders -- who are big political contributors -- yet it's being done under the good-natured guise of rescuing the borrowers. Does this sound cynical? Just follow the money and you'll see what Clark means. Remember that economics is often called "the dismal science." That's because the reality is that our country will suffer if we do exotic things to keep people in homes they can't afford. Look at Japan. The government over there decided to bail out the commercial speculative real estate industry and went into a recession for 2 decades as a result. Japan is still struggling 20 years later to come out of it. That example teaches us that there must be an actual business reason to do a bailout with someone.

Clark recently spoke to a man who was just days away from foreclosure and wanted advice. But he could not give the man false hope; some people have never even been able to make their initial teaser payments. The typical homeowner who is in over his or her spends between 45 and 55 percent of their pre-tax pay on their mortgage. Clark knows of woman who has a payment that's higher than her income. What is a bank doing making that kind of loan? Either the paperwork was forged or she didn't have to disclose her finances to get the loan. The mortgage broker, meanwhile, probably made a huge commission on that deal. These ugly abuses are the reasons why the feds should not save an industry that partied too hard during the good times and now wants a helping hand. The fact that it's being done under the guise of helping homeowners is tragic. It's really about helping cronies in the mortgage and banking worlds.

In the latest session of Clarkonomics, our favorite penny-pinching guru offered tips for homeowners looking to maximize their resale value in an increasingly tough market. The latest data shows that housing sales are definitely down, but not as much as you'd think. Some 5 million people (at an annual rate) closed on homes last month across the nation. But from the headlines, you'd think that number should be zero. Prices are definitely around 5 percent down, but all real estate is local. Areas such as Tampa, Miami, San Diego and Detroit are down over 10 percent, while Las Vegas, Phoenix and Los Angeles may be down between 15 and 20 percent. Yet if you're in Atlanta, Charlotte, Dallas, Portland or Seattle, you'll find that home values are fairly stable. Also, keep in mind that widespread housing recovery probably won't come until 2009.

So what should you do if you're trying to sell your home? First off, consider owner financing if you own your home free and clear. You'll take on the role of being the bank, and you may get a better price and a quicker sell, plus a higher rate of interest back from the buyer. But beware that you have to get between 15 and 20 percent down to protect yourself. Second, be realistic about your listing price or you'll scare people away. Finally, try doing a FSBO (for sale by owner). Just know that sellers will come looking for a real steal, so be aggressive in sticking to your pricing. It might be better to hire an agent.

The investment world is in a buzz with a loss of confidence and a lot of fear. Citibank was recently rescued by Middle East investors who put a lot of money in to keep the bank afloat. HSBC is also in a similar bind. The problem is that over the last few years, people started to get really cute with Wall Street investments. That's the heart of the housing/mortgage meltdown. Lenders just wanted to package mortgages and resell them for a profit -- they didn't care if the loans were ever paid. The drop in lending standards also really took a toll on the market. Home values in California are now down 15 percent from their peak and they're expected to go lower.

Economists now are talking about the possibility of recession. The foreclosure epidemic is a personal tragedy for families and neighborhoods alike, but the big test for the economy is if the stock market hollows out too. Beware of a bear market, where the value of stocks falls 20 percent from peak prices. The combo of a bear market with a housing slump could definitely lead to recession. It's been about 25 years since we as a nation have had really tough economic times. If you came of age during the last 20 years, you don't know the level of discomfort that could be yet to come. So what should you being doing right now? In a word, have your act together. The recent "in" thing to do was to take out a home equity line of credit and make your house a piggy bank. But now that piggy is tapped out. So you must pay off the debts you may have developed. Ask yourself how much you have in savings and how much debt you've accumulated. Have a plan in place in the event of a job loss. If you're looking ahead to retirement soon, move your retirement savings into safe havens. If retirement is many years away, then stay the course and keep putting money into your 401(k) plan. Doing that during lean times is like buying merchandise at a deep discount.

Clark recently received an offer in his mailbox to get a mortgage on his house for 1.5 percent interest! It's like 2004 all over again when the weirdo loans were rampant. It turns out this is a new trend among mortgage companies. Lenders have seen the volume of business fall so much that they're getting increasingly desperate -- hence a slew of mailings trying to get you to treat your house like an ATM. Clark received a mailing from Countrywide offering $511,000 for a refinance. Meanwhile, The Los Angeles Times reports that lenders are also sending out mailings about option payment loans again. These are the kind where the balance rises over time instead of declining. What is going on here? When Clark looked closely at the first offer, he saw it was a teaser rate that's only good for 90 days. So beware that these mailbox offers can financially blow up in your face. Remember there is no free lunch. Clark wants you to learn in his school, rather than the school of hard knocks.

Clark was recently heartened that the U.S. House voted to enact truth-in-lending laws in the mortgage business. This was a bipartisan effort to avoid a federal bailout of those who are in foreclosure. But now some banks are fighting to get a veto from Pres. Bush or stop this bill in the Senate. Certain unethical lenders are opposed to fiduciary responsibility, which means that the broker would have to do what's in your best interest -- not what will put huge kickbacks into his or her pocket. Banks are also opposed to letting people income qualify based on the maximum monthly payment amount. They'd rather qualify you on the teaser rate. But we have a real problem when 1 in 5 homeowners are delinquent on their loans.

Prospective homeowners need more information to make educated choices. The American Enterprise Institute has drawn up a mortgage cheat sheet (and definition of terms) that you can use as a plain-English disclosure when getting a loan. No surprise that the mortage industry also opposes this kind of disclosure! But Clark is also disappointed that Bush is opposed to such disclosures. Clark wants to see legislation that bans brokers from putting you into bad loans for kickbacks; adopts a clear language form like the one from the AEI; ban lenders from putting people into loans based on teaser payments alone; and eliminates all pre-payment penalties.

The fallout from the recent California fires has exposed more ugliness for homeowners who've been facing evacuation, temporary homelessness and charred ruins. To add insult to injury, some 40 percent of homeowners may be ruined because they didn't have enough insurance on their homes, according to the California Department of Insurance. Several times a year Clark will advise homeowners to raise their insurance limits. It's one of those good ideas that most people never get around to doing. Say you purchased your home 10 years ago for $100,000. Now your home may be worth $250,000. But your insurance has not kept pace. So you'll be destroyed financially if you have a catastrophic loss. It gets even worse if you have a mortgage on the property. You can lose your home, be foreclosed upon and get sued by the lender for losses on the loan. Is Clark scaring you? That's his intention.

You need to have your homeowners insurance limits raised every 3-5 years -- even though it will raise your premiums. The scary thing is that the insurance company is not required to rebuild your home if you're grossly underinsured. Clark has been in his house for 11 years, and he's had to fight his insurer three times to get them to raise the insurance limits. An appraisal demonstrated that his home had greatly appreciated in value and needed to be better insured. But he still got pushback. Sometimes insurance companies are scared you'll torch your house for a financial gain. Do what you must to get your insurance limits raised. Don't end up like the California homeowners with no meaningful coverage and no way to rebuild their homes.

A lot of people in real estate love doing 1031 Exchanges. If you're not familiar with the term, 1031s allow you to sell an investment property and roll your gains over into a new investment property -- rather than paying taxes on your capital gains. There are certain rules governing 1031s. The money must go directly into the hand of a qualified intermediary. You have 45 days to identify a new property, and you have 180 days to actually acquire that property. But there have been a lot of problems with 1031s because some qualified intermediaries are running off with the cash. Now The Washington Post reports that the IRS is retroactively disallowing some 1031s as a precaution.

Clark's real advice is to not do a 1031. People are so obsessed with avoiding tax that they lose sight of the bigger financial picture. For example, right now the max tax you'll pay when you sell a property is 15 percent. That's the best deal we've had in years. With the Democrats likely to get into office in 2008, most of their candidates are talking about capital-gains taxes of 28 percent. So doing a 1031 now to defer paying 15 percent when you'll later pay 28 percent is not "Clark Smart." Instead, just harvest your gains and pay your taxes! Clark knows everyone will tell you the opposite. But he believes the tax rates are only likely to go higher. This is best it's ever been; it's probably not going to get better -- only more expensive.

Orphan subdivisions are a topic that Clark spoke about frequently in the late 1980s and early 1990s. Now there's reason to be concerned about them again. Throughout most of the country, developers buy up land and put in streets and utilities before selling off to builders or developing new homes themselves. People often wanted to be early buyers in these burgeoning developments when the housing market was going strong because they could get better deals. But now the danger is that builders are going broke and abandoning developments midstream. Clark's fond of saying that you should only live in a swim or tennis community if you can swim in the pool and play tennis on the courts. Anybody can woo you with a four-color brochure that has pictures of a pool, a clubhouse, and other amenities that are supposed to be built. But it's all smoke and mirrors until you see it for yourself.

These orphan subdivisions will be a problem especially in the South and West as developers go insolvent and dump their projects. Nothing good comes of it even when the lenders come in and take over. Lenders really aren't in the real estate development business. One of the worst scenarios that Clark has seen involved a large development of more than 1,000 high-end home that were two-thirds of the way built when the builder went belly up. The insurance company that took over sold the land to the highest bidder, who in turn built townhouses and starter homes. That made the home values of the existing owners plummet. Now imagine the lender can't find anyone to step in at all. You could be living next to scarred earth that's been homogenized for development and looks awful. So Clark has a simple rule when it comes to orphan subdivisions: Buy at the tail end of a build, never at the start of a development. Don't be a speculator -- unless you get an absolutely phenomenal deal.

People often assume the house you own is a ticket to wealth. But the reality is that the more you spend on your home, the less wealthy you'll be in the long run. Houses depreciate, they do not appreciate. The land they sit on may go up in value, but the houses themselves decline. One of the keys to gaining wealth is trying to keep your housing expenses low. Forbes has analyzed all the major markets in the nation and come up with a unique list of the Most Affordable Places To Live Well. The emphasis on the last three words is what's really important here. These are all places that offer affordable housing, great cultural opportunities, exceptional quality of life and a low cost of living.

So what's the top city? Minneapolis! The editors at Forbes obviously don't know about the winter in Minnesota! Indianapolis, Cincinnati, St. Louis, Milwaukee, Pittsburgh and Columbus, Ohio also made the cut. So that means 7 of the Top 10 selections are Midwestern cities. Several emerging Sun Belt cities also round out the list. Houston, Dallas and Atlanta -- 3 of the nation's fastest growers -- are unlike the others in that they come with some traffic and air pollution problems. The one common link among all 10 cities is that housing is a deal. Being wealthy involves limiting the amount you spend on the roof over your head, the taxes on that roof and all the assorted utility bills every month.

Renters are about to enjoy the benefits of more competition for their cable business. The FCC plans to announce that landlords can no longer rip-off tenants by dictating which TV/cable/Internet providers they can use. Landlords previously could receive huge kickbacks from little private cable companies by signing exclusive deals for their buildings. When it comes to cable service, we don't have a lot of choice in this arena to begin with thanks to monopolies. The FCC's upcoming move will afford renters a little more wiggle room. Very rarely has a landlord dictating who you can go with for cable been a positive thing. In one unusual case, Clark's executive producer Christa once lived in an apartment where the management company offered her cable service at below-market price. Right now there's no telling how soon renters will feel the benefit of the upcoming FCC decision. On a related note, renters already have the right to go the satellite route. Under the Satellite Home Viewers Act, you can get satellite if you have a clear shot of the southern sky.

In the latest installment of Clarkonomics, Clark examined Countrywide's decision to modify the loan terms affecting tens of thousands of homeowners facing foreclosure. The mortgage lender was one of the prime exponents of weirdo exotic loans across the country. Now 80,000 homeowners will be offered a refinance option so they can go into fixed loans and keep their payments affordable. Countrywide is not doing this out of charity. It's pure capitalism at work; lenders lose money when they foreclose. Meanwhile, sales of homes are declining. A new study shows that used homes sales have dropped to their lowest pace since recordkeeping began. There's a glut of houses on the market and the average one will now sit for 11 months before being sold. Keep in mind that much of what Clark is talking about does not affect most Americans because they're not planning to move or sell anytime soon. There's so much focus on the losers in the housing market. But the winners include buyers, particularly first-time homebuyers, and those who are very careful when buying distressed property. This latter group does not include the "Dare To Be Great" set, but rather those who stick to the fundamentals. You must buy below fair market value, know the neighborhood and have the property inspected. Be sure to know exactly how much you want to pay and not exceed it. Don't get caught in the heat of the moment if you're at an auction of distressed property. You want to buy with ice water in your veins!

The rate of delinquencies on mortgage loans is on the rise now that people who got adjustable-rate mortgages in the mid-1990s are being hit hard by interest-rate resets. This is a cyclical problem and it will probably continue through mid-2008 until it settles down again. Money magazine reports that calls to foreclosure counselors are up 1730 percent as people face massive increases in their monthly payments. Clark has advised people to call their lenders early and often if they're having trouble with their payments. Many folks have been complaining that the lenders don't want to hear it. Yet the mortgage lenders one by one are coming around and developing some workouts. A workout means that the lender will modify the terms and conditions of your loan to make payments possible for you moving forward. The lender gives up a lot of money on paper, but you win because you avoid foreclosure and can protect your credit rating throughout the process.

The Los Angeles Times reports that people who make the best candidates for mortgage workouts are those who made every payment on time before their interest-rate reset blew them out of the water. Lenders won't be inclined to help those who haven't been able to make payments from the very beginning of their loan. The second situation when you may be able to get a workout from a lender is if you've made timely payments and suddenly lose your job. Lenders will usually help you out for three months, but it's difficult to work things out any longer than that. Keep in mind that not every lender is willing to do a workout. But the smart ones will embrace workouts so they don't wind up paying to foreclose on a house they don't really want. HSBC, which was one of the big lenders of weirdo exotic loans, has been trying workouts. HSBC's model involves reset your interest rate based on a calculation of your basic expenses and how much other income is left to pay the mortgage. So Clark's advice stands. Call your lender persistently if you're in trouble. You do not, under any circumstances, want to just bury your head in the sand!

The troubles in the mortgage market are having an unexpected side-effect on renters. It all starts when people who own homes and condos that they can't sell become involuntary landlords. Those folks rent out their places while waiting for the market to recover so they can sell down the road for a profit. But what happens when an investor who buys multiple properties on spec gets into this situation? Even if those investors have tenants in their properties, they usually can't recoup all their costs when multiple mortgages come due every month. So they sometimes stop paying the mortgage on one of their properties while continuing to make payments on their others. You're going to find an eviction notice on your door if you're unlucky enough to rent at a property that's facing foreclosure. Tenants in this situation have fewer rights than if they didn't pay their rent for months.

Clark was in this situation at age 22 when he rented a condo with an option to purchase from a divorcing couple. One day he came home after playing tennis and found a notice on his door ordering him to vacate in just seven days. His landlords were taking his rent every month and not paying their mortgage. So Clark called the mortgage company's lawyer and asked for more time than seven days to vacate. He was denied extra time, but wound up working out a deal to purchase the townhouse for $36,000 with a five percent down-payment. He also got great loan terms because the bank didn't want to deal with a foreclosure. His mortgage payment actually wound up being lower than what he'd paid in rent! So out of adversity there can be opportunity. Clark still owns this property, which has been long since paid off. He's been renting it out for 25 years and it's been a cash cow for him.

When it comes to buying a second home or a vacation home, it's best to know the cycles of the market where you want to buy. There are certain times of year that are better to buy than others -- and it's all based on your desired location. The best times of year are generally the opposite of peak season. For example, try looking between the summer and the fall if you want a vacation home in a mountain state that has winter ski activity. But conversely, midwinter is the best time to buy in the Great Lakes, the Northeast or Canada; hardly anyone else will be looking and you may meet up with a desperate seller. So if there's a particular lake, ski resort, beach or mountain that you want to own on, study the rhythms of the local market and know when to strike. Knowing the calendar could save you tens of thousands of dollars.

In the latest session of Clarkonomics, Clark discussed how the housing market may not always be as bad as it seems. Much of the country is in a difficult situation, but it's not a dire one. The states that are in absolutely dire shape (because their bubble markets popped) include California, Nevada, Arizona, Florida, parts of Washington D.C., Michigan, Ohio and Indiana. The rest of the 40 odd states are experiencing sluggish sales with home values sliding slightly and an oversupply of houses. Most people who bought in 2005, 2006 or earlier this year financed 100 percent and are in weirdo exotic loans. That's the true picture of what's going on -- though it makes better headlines to say the sky is falling.

Some people are frightened by a new statistic that says the rate of houses closing once they go to contract has slipped from the traditional 97 percent to a hair under 90 percent. On the one hand, it's a huge change because the number of deals not closing has tripled. But on the other hand, nine out of 10 houses under contract still will go through. One thing Clark has noticed is that there's a window of opportunity right now if you're interested in a new home. New home sellers are sitting on a wounded duck. They're carrying large construction loans and bleeding money every month when deals fall through. They just want to get out with their shirts on. Clark's latest book, Clark Smart Real Estate, talks about why used homes are a better buy than new ones. But right now there's a strong possibility that you might find the opposite is true. Just one caveat about buying new in the bubble market states: It's not clear when the bottom will come and we're probably not there yet. So make sure you plan to own for a minimum of seven years in those markets to make it worth it. Otherwise, don't buy yet -- wait until the deals get better late next year.

Did you know that about two-thirds of all loans are not done by the lenders themselves? They're done instead by mortgage brokers. Mortgage brokers don't have the cash, but they're like the retailer who sells you a loan. Meanwhile, there's a new report out that says about half of all sub-prime mortgage holders could have qualified for good loans at good rates. So what happened? Some mortgage broker conned them into it a sub-prime loan. Washington Mutual has issued a new policy that requires brokers to tell people the truth about whether their interest rates will change, if they'll face a prepayment penalty and if the broker will receive kickbacks (aka bribes) from the deal. Whenever Clark talks to people who are in weirdo exotic mortgages, he always asks them if they knew beforehand that they'd have a prepayment penalty. You have to be sure that this is disclosed to you before the closing. WaMu is also going to call each borrower before the closing and verify that they aren't being ripped off by the broker.

The best way to protect yourself is to shop around for a mortgage. This is a huge field where many people are ethical, but there are some who engage in criminal behavior. Clark thinks two steps should be taken to help out: First, prepayment penalties should be banned. If you find out before closing that you'll be subjected to one, walk away from the negotiating table. That's what Clark did once when he was almost about to be hit with such a penalty. Second, the Department of Housing and Urban Development needs to develop a clear disclosure form to explain in plain English the details of a mortgage. Until they do it, there's a disclosure form that Clark really likes developed by The American Enterprise Institute.

Many years ago, Clark saw a bumper sticker that read, "He who has the gold makes the rules." There's a real truth to that phrase. For example, sometimes companies are so large that they get federally bailed out. That's what happened to Chrysler in 1979 when Lee Iacocca grabbed the company's reins and used taxpayer money to get things back in shape. Taxpayers (and Chrysler!) eventually benefited from this move, but Clark is never happy when a federal bailout is needed to help out a capitalist enterprise. But that's the core of the unwritten "too big to fail" rule: If a company is so big that going under would have negative repercussions on an international level, then that company must be kept afloat.

Today we have a modern variant of the "too big to fail" rule in the housing market. Call it the "strength in numbers" phenomenon. Wells Fargo -- the second largest mortgage lender -- is looking to arrange workouts with homeowners who can't make their mortgage payments. Why? Because there are overwhelming number of homeowners with mortgages in default. All the delinquencies are forcing Wells Fargo to find alternate plans. Homeowners who make the best candidates for these workouts are those who fell behind on their mortgage but now are in a position to make payments again. But beware if your loan was sold off by your mortgage lender. The rules of the sale may have stipulated that no adjustments can be made to the loan terms. You may need to get a waiver from the current loan holder -- if you're able to track them down -- to get the benefits of the Wells Fargo workouts.

The question of who's going to rescue the two or three million families who are facing foreclosure is the hot potato that everyone's tossing around right now. Going into foreclosure affects more than just the people who are thrown out on the street; the average home value in a neighborhood that has foreclosures drops one to 1.5 percent. President Bush has been talking about a proposal to help out. The Federal Reserve is putting pressure on the banks to come up with workouts such as changing loan terms and stretching out payment plans. All of this will help some, but many families will still be in over their heads. That's because a lot of loans may have been securitized, or bundled together into a collateralized debt obligation (CDO) and sold off by a mortgage company. The rules of the CDOs usually state that the loan terms can't be modified.

The best solution would be to help people avoid getting into loans they can't handle. To that end, the state of Illinois has come up with a plan that Clark really likes. The Chicago area is facing major foreclosure problems, so the state is now requiring candidates seeking loans with pre-payment penalties and adjustable rates to go to independent counseling and learn about the dangers of their choices. The mortgage lenders, meanwhile, are going berserk over this new rule, and they're trying to have it thrown out because many of them want to continue ripping people off with exotic loans. Clark gets worried when he hears presidential candidates talking about federal bailouts to solve the foreclosure problem. Wouldn't it be better if people were educated not to make the wrong loan choices from the start?

Have you been approached by a representative from a company called either Metro Dream Homes, POS Dream Homes or Metropolitan Grapevine promising to help you pay off your mortgage in about seven years? This offer is yet another scam that's come to Clark's attention. All you have to do is pay $5,000 and agree to give up 15 percent of your home equity! Metro then says they'll invest your money in credit card machines, ATMs and other "revenue-generating devices" and use the profits to pay off your mortgage in five to seven years. Once the mortgage is paid, you then have to give Metro half of the new equity in the home. The state of Virginia recently crunched the numbers and found that they are mathematically impossible. Meanwhile, The Washington Post reports that Virginia and Maryland are seeking temporary injunctions and cease-and-desist orders against Metro. Don't buy into the pipedream being pushed by the company.

We've all be hearing about how tough it is to sell a home right now. Clark's read a number of articles that give some advice to sellers that he's been championing for years. Before you go to market, you should hire an inspector to carefully vet your home. Then fix whatever it is that needs repair, and have the inspector's report and your receipts available for prospective buyers to examine. As a seller, you have to psychologically try to get inside the head of a buyer. Even though a buyer may consider a used home, they still want it to be perfect like a doll house. Imagine that a corner of your roof needs repair and you don't spend the money to fix it. When their inspector finds it, the buyer is more likely to blow the potential repair cost out of proportion and make a lower offer on your house accordingly.

What should you do if you're upside down in your home -- that is, you owe more on it than it's worth? Some lenders will permit you to do a short sale, where you sell your property for a lower value before it financially takes you (and the lender) under. This idea came from the government's FHA program, which would allow people to sell for less than they owed on a property and walk away clean without going into foreclosure. Now private industry is learning from the government's short sale idea. Remember that the average foreclosure costs a lender $70,000, so they don't really want to foreclose. A short sale could be a win/win option for everyone.

Clark owns a mortgage that he collects payments on much like a bank would. Recently he's noticed that he is getting mail and phone calls from note buyers. These are people who are involved in the latest dare to be rich scheme. They've heard a pitch in a hotel ballroom somewhere about how you can score quick cash by approaching someone who owns a mortgage and offering to buy their note right now. They typically ask the note holder to sell his or her interest for anywhere between 70-90 cents on the dollar. Clark admits there is a very, very small legitimate business opportunity here. But most of these note-buying schemes are rip-offs.

On a related note, the median home price in the United States -- the level at which half of all homes are more expensive and half are less -- has declined this year for the first time since the feds started keeping records in 1950. Home prices are expected to get lower still in 2008 and even lower in 2009. There are some markets like Portland, Seattle and Charlotte, N.C., that are still increasing. But bubble markets such as Phoenix, Las Vegas, lots of California, lots of Florida, the Washington D.C. metro area and Boston are hurting. The only bubble market that hasn't burst yet is the New York metro area. Expect the average price of a home to decline about 1-2 percent per year for the foreseeable future. Just remember that you have nothing to fear if you're in a home and have no intention to move or sell. That being said, two million families will still be put out on the street this year alone. The only silver lining here is that the bulk of the foreclosures are not owner-occupied. They instead belong to speculative owners who may never have seen the properties they're losing. This housing "correction" is actually healthy because it will allow the country to get back to a place where home prices are more affordable to the average person. Finally, Clark denies that the media has caused the housing slump. The market is slumping because it was built on irrational loans that stretched people too far and too many houses going up on spec.

How should you deal with a builder who doesn't honor the terms of your warranty after you close on your home? For the past 15 years, Clark has been advising people to picket the builder at their developments. You used to have to call your jurisdiction to find out how to go about picketing, and make sure that you never said slanderous things about the builder's character. But today instead of physically picketing, people take their ire online. Business Week did a report on homeowners who have set up gripe websites. Some builders have even fought back by trying to put clauses in their contracts that aim to silence you if you do business with them. That's an infringement of free speech. A builder who is afraid of the truth is not someone you want as a business partner.

Clark knows that building a house is difficult and involves a lot of micro-management with all the day laborers and subcontractors. He advises people not to close on their home until all the contractual items are complete. If you're getting pressure to close anyway, consider hiring a lawyer to withhold money in escrow to cover any outstanding issues. This practice, known as retainage, is a standard set at 10 percent in the commercial market. Just remember that once a builder completes your house, you're yesterday's news. The only reason they have to care about you is their reputation. So consider taking your battle online if need be.

Clark's Consumer Action Center has been receiving a lot of questions about accelerated mortgage offers. People are wondering if these offers are a new kind of scam. Clark thinks "scam" is too strong of a word, but he does think this is a serious rip-off -- and he wants to show you how to avoid it! First, let's take a look at the offer. It arrives as a friendly letter inviting you to pay off your mortgage years quicker than you normally would. The deal is that you have to pay your bank or an appointed marketing company $200-$400 to set you up on a bi-weekly payment plan. It also stipulates that you'll be billed another couple bucks each time you make a payment, or alternately that you'll pay nothing up front but every bi-weekly payment will be assessed a fee. This plan will have you paying half your monthly mortgage payment every two weeks. That's equivalent to 26 half-payments in a year. At the end of year, the marketing company on behalf of your bank makes one additional payment toward your mortgage. So the end result is that you pay 13 months in a 12-month period. But because you probably paid an initial fee to set this up, the bank held some of your money all year long and got rich off the interest.

Here's what you should do instead. Clark wants you to keep making monthly mortgage payments and add one-twelfth extra in the additional principal box on your monthly coupon. So if your monthly payment is $1,200, pay $1,300 instead. That way you'll do for free what your bank wants to charge you for -- and you'll bring your principal down quicker. There's one more possible bank rip-off related to your mortgage that you should avoid. They're going to try to sell you "croak and choke" insurance -- otherwise known as mortgage life and disability insurance. It states that if you buy their policy and die, they'll pay your mortgage. But Clark sees two problems here. First, you're paying an insurance premium to protect the bank. At the time of your death, there may be better uses of your money for your heirs. So you're better off with a standard term life insurance policy. Second, the bank charges a premium that's about 10 times as much as your plain old life insurance policy. Sometimes Clark wonders where the ethics in banking have gone!

With the financial and housing markets in turmoil, people always wonder about the likelihood of a recession. While a lot of reputable sources are saying that it won't come to that, Clark has noticed that the interest you earn on a CD or treasury is actually higher for shorter-term investments. Historically, recession has followed when short-term investments like a 90-day treasury pay better returns than a 30-year treasury. In addition, the stock market may be ready for what's termed "correction" -- when it drops by 10 percent. On the real estate front, we've been binging on the housing punch bowl for years and it's starting to dry up. Normally, a home's value goes up by the rate of inflation plus a smidge more for the fact that there's a limited amount of land. So in the past a house would appreciate about three percent per year. But more recently it hasn't been uncommon for a home to appreciate three percent per month.

For example, Clark's oldest brother lives in a Phoenix suburb. He and his wife bought new construction and during the nine months it took to build their home, the value went up $100,000. Then the next year the value went up $150,000. But when Clark recently visited his brother, there were a ton of houses for sale in his neighborhood with no willing buyers. If the housing market gets ahead of itself and people can't afford anything, it has to correct. Think of the market as a ladder, where people enter on the first rung with a starter home, condo or townhouse. But when you can't even reach the first rung, the builders have a tough time selling. So the builders themselves have gotten into the mortgage business and lowered the lending standards so that people can qualify for homes that may be out of their price range. The problem is that homeowners now can't sell for close to what they owe on a loan and they can't refinance. As many as five million people across the country are in a similar situation and could face foreclosure. So where's the silver lining? Well, the long-term benefit is that when we're done with this "correction" period, homes will become affordable again for the typical family. The question is how long will this process take? Meanwhile, Clark doesn't profess to be an economist, but he does think the odds of a recession are better than 50/50.

It's no secret that the nation's housing market is in bad shape. Foreclosures in California are at an all-time high, and the market is equally hurt in Nevada, Arizona and Washington D.C. How did we get in this mess? Well, after 9/11 people became nesters and saw their homes as safe harbors. The tech bubble in the stock market had just burst and people psychologically started clinging to "real" estate in the tangible form of their homes. The home improvement industry enjoyed a surge in popularity as a result. But in the middle of it all, the standards for home lending fell apart. People with bad credit who had no money got horrible loans with low teaser payments that were like ticking time bombs. After two years, there was a huge increase in the mortgage payment and they could no longer afford it. Foreclosures started to become more common. There was a false demand for houses, and speculators bid up the prices. Also, all speculative buyers used to have 30 percent down. But that requirement was relaxed during this time, too. Clark says he knew we were in trouble when he started hearing about people buying houses they'd never seen and property in states they've never visited.

Thankfully, the teller window is now closed for people with bad credit and no money down; those who can't document their income; and those who want to buy on spec with no money down. Clark thinks this a good thing. He's just amazed that now the feds are starting to make noise about wanting to ban these kinds of lending so late in the game. Capitol Hill wants to make it so that when you take out a loan, you have to get an explanation of all the details in plain and simple language. But the funny thing is that the feds aren't considering making hard-and-fast rules -- just some proposed guidelines. Well, the American Enterprise Institute beat them to the punch by drawing up a mortgage cheat sheet (and definition of terms) that tell you exactly the right questions to ask of your lender. Clark really likes the AEI's version because it helps homebuyers avoid getting ripped off. He also thinks it's so much easier to understand than the feds' guidelines.

It's no secret that right now it's a tough time in the housing market for sellers and a confusing one for buyers. If you're selling and you have a lot of foreclosures in your neighborhood, you've probably noticed the value of your home declining. And if you're buying, you're facing a variety of exotic weirdo loans with adjustable interest rates, option payments and more. But relief may be around the corner in a market phase called capitulation. Look at markets like Denver, Salt Lake City, Houston and Southern California. These are all places that suffered through a bad real estate depression, but recovered and thrived. How did they make a comeback? Well, the ultimate measure of whether or not a real estate market will thrive is job growth.

It's also important to remember that the mortgage market is not a monolith and some segments are already in good shape. For those with decent credit seeking a conventional 15, 20 or 30 year loan, the rates are now lower than they were just a few weeks ago. What it comes down to is that a lot of speculative markets had bubble growth and it will take time for them to unwind. So if you're considering buying a home before the year is out, you may want to just wait a little bit longer until 2008. Likewise if you're in a cold climate, once winter comes there will be more opportunity, according to Clark. Think of the push toward capitulation like a baseball game; right now we're in the third inning of a nine-inning game, Clark says.

Through the years, some con artists have gotten rich by selling people swamp land in Florida. They were really selling people a dream, and they found a way to get them to suspend belief and buy the land without seeing it. The new equivalent of swampland in Florida is desert land in Utah. The New York Times reports that charges will be filed against cons who sold parcels in Utah over the phone and Internet to people in the United States, Europe and Australia. The land was supposedly adjacent to a very metropolitan city. But when people would go to Utah to see their new homestead, they'd find that the city didn't even exist! Worse still, the land they'd purchased could not be developed.

This new twist on the old rip-off scheme started when cons learned about a Utah land rush and bought up property that couldn't be developed. Then they subdivided the land and sold five-acre spreads to rip people off. Clark has two simple rules to follow when buying land. First, never buy property without first seeing it. Second, make sure the land has water rights or it's going to be useless to you. This second caveat is especially important if you're buying in one of the mountain states. The New York Times article was cute in a way, according to Clark. They sent a reporter to find one of these "conveniently located" parcels in Utah. The reporter got to the location -- some 150 miles away from Brigham City -- and found an area where the only inhabitants were a snake, a beetle and a lot of large ants! Let the buyer beware!

Clark is fond of saying, "All real estate is local." That means that home values are stable in some places around the country, while in other areas they're down the toilet. Speculative markets where people bought with no money down, had adjustable loans or option payment loans have really been hurt. The option payment loans -- which are big in California -- are loans where the balance rises over time. The only way not to get clobbered is if the home value rises quicker than the loan balance, which is usually not the case. So option payments lead to a lot of foreclosures -- unless you can arrange a short sale with the mortgage lender. In the case of a short sale, the lender agrees to accept less than the loan balance if you can get the place sold. Why would a lender want to do this? Well, it turns out that it costs a lender $70,000 on average to foreclose on one home, according to industry estimates!!! So a short sale is something of a win/win situation for lender and borrower alike. The neighborhood also wins in this situation because for every house foreclosed on, the average selling price of other homes in the immediate area drops 1.5 percent. Foreclosure is like a cancer that spreads in a neighborhood, but it can be healed with prevention by contacting your lender and setting up a short sale to actively market the property before the fact. An answer of "no" today may be "yes" tomorrow, as the lender may have to first get a waiver from someone they sold the loan to in order to permit that short sale.

Meanwhile, a Zip Realty survey has found that listings around the country are up significantly. This means trouble if there aren't enough buyers around. In fact, the average home value will drop between 1.5 and 2 percent this year around the nation. Of course, it's bound to be worse in the bubble markets like the Miami condo market, parts of Phoenix, Southwest Florida and elsewhere. One thing to keep in mind is that if you're not actively moving or selling, none of this matters to you. You don't have a big issue unless you're selling, and then you're selling into weakness. If you're staying put, you're fine.

There are now new rules about mortgages in place after all the problems with the "fake-a-bake" loans that poisoned the marketplace. "Liar's loans" (also called Alt-A loans) will now be stopped. "Liar's loans" got their name because you didn't have to prove anything about your financial situation to the lender. You paid a little higher interest rate and the lender just gave you a wink and a nod to whatever you said about your bottom line. Meanwhile, there are new laws for sub-prime loans now in place. In the past, lenders had fake opening rates so that people could qualify initially, but then they would reset at a higher rate forcing homeowners into foreclose. In fact, one in five loans made to people with damaged credit is now in delinquent status. So now, thankfully, the banks have to actually qualify people based on what the rate will become after the low introductory period.

Clark would like to have seen the regulators do even better by saying that people would have to qualify based on what the highest possible rate could be -- but the banks would have balked at that model. The result of the new regulations is that people will be qualifying for smaller, less expensive homes now. This is a good thing; people are not helping themselves by being forced into foreclosure and being put out on the street. Lenders now have to make sure that the loan makes sense for the customer. Another alternative is the one presented by Bruce Marks and the Neighborhood Assistance Corporation of America. The NACA makes loans to people only after they've saved money for a year to demonstrate that they can handle their mortgage. It's almost like being on probation. Say for example your rent is $800 and the home you want to buy will have a monthly payment of $1,200. You've then got to save $400 every month to prove yourself ready for a loan from Marks' organization. NACA rates are often three-quarters of a percent below the standard rate.

Are you buying a new house and worrying about what to do with your old home? Clark knows what it's like to have two houses and two mortgages -- it's a burden he once carried for 14 months. But what if there was a way to avoid the double payout headache? Clark recently read a story in Money magazine about a Southern California homebuilder who has started a trade-in program. You can trade your old home in and buy your new house in the same day. There are no real estate commissions on the sale of your home, which is important because they don't pay you market value. Rather, they offer a little more than 90 percent the value of your home. But you get the certainty that you're out from under having to make payments on two houses.

There's no way to gauge if this practice will pop up elsewhere in the country. What we do know is that a lot of homebuilders are desperate right now to unload their product. On a related note, the National Association of Homebuilders reports that there are offers available from a small number of builders that have a long-term guarantee. That means that if you're stuck with your house on the market for too long, the builder of your new home will buy your old one at somewhere below fair market value. The trade-in plan is obviously more to the advantage of the consumer. The downside for the building company either way is that they have to be financially strong enough to carry your home until they can sell it off.

The real estate market around the country is in the doldrums. The number of homes for sale increased in May, which is unusual, since most people prefer to move in the summer. If no other homes went on market, it would take 9 months to sell all the homes currently out there! Plus, the cost of a mortgage is more expensive than it was, with interest rates rising. In reality, it's not that homes aren't selling - 6 million a year change hands - it's just not a good time to be a seller. If you're a buyer, there will be some real deals as people slash prices. Home prices are down about 2% from a year ago. To balance this, builders are reducing the number of homes they're building, and people are choosing not to put their homes on the market right now. If you simply have to sell, one thought is to do what lots of people are doing, and rent the place out while you wait for the market to stabilize. This isn't an option for many condo owners, as some have rental restrictions, and the rent you would get generally doesn't cover the cash outlay per month. So now is the time to buy condos, since the market has fallen out under them. In general, the real deals on single family homes will be coming this fall and into 2008, as we move out of the prime summer selling period. This winter will be especially friendly for buyers...but not for sellers.

To say that homes are “on sale” right now is not silly. The statistics are fantastic if you’re a buyer, and dismal if you’re a seller. The number of homes that are sitting unsold on the market are up about 30% from a year ago. That’s a huge increase in available inventory, putting you in a position to drive a hard bargain. Over a third of houses have had price cuts in the asking price. Sellers are becoming increasingly desperate to move the house. Markets that are really hurting include Seattle, California, Washington D.C. and Baltimore. The psychology has shifted. When a market is in turmoil, either running up or down in value, that’s when opportunities exist if you do the research. The National Association of Realtors is expecting home sales to decline 5 percent this year for existing houses. For new homes, sales are expected to drop 20 percent. So, do your homework, know your market and you may just steal a deal.

Typically in a news cast, there is only time to give a gloomy report. That is especially true of the housing market these days. According to recent reports, construction of new homes has plunged by the largest amount since 1990. The housing market is having a lot of problems because of rising listings and falling sales. In Nevada, the sales decline is up 27 percent. In parts of California, it’s up about 50 percent year after year. The condo market is even worse in many parts of the country. This could pose potentially dire consequences for people who own and great opportunities for those who’d like to buy. In the Washington D.C. area alone, the current inventory of condominiums would take until 2011 to sell off if no more complexes are built. So, if you’re in the market for a condo, you could get a great deal before 2007 is over. And, if you’re a renter, some of the condos that were converted from apartments are going to be converted back to apartments. Also, involuntary landlords are offering rock bottom rents because they don’t want to be in their current position.

When Clark travels around, listeners always ask him what’s going on in the real estate market. There is some level of anxiety and he wants to put your mind at ease. Yes, people will lose their homes. In fact, projections are that between 1 million and 2 million households will have to go through foreclosure. That’s a conservative estimate. But there are more than 100 million households in the U.S., so in the overall picture it’s not a huge number. So where are we headed with housing? Most areas will see sluggish real estate markets for the next five to seven years. In other words, values won’t really go anywhere. Housing values and land values shot up way beyond their value in recent years, so the market is now taking a breath. If you have no need to move, it’s of no consequence to you. In fact, if property taxes are adjusted you will benefit. But for brand new subdivisions, and in the condo market in Florida and Washington D.C., there will be steep declines. If you are looking to buy either as a tenant or real estate investor, you will find great deals. Just make sure that if you buy troubled real estate at auctions, you keep your wits about you. People get so caught up in winning that they overbid. A deal on a home is 20 percent below market value. A deal on a condo is 30 percent below market value.

Clark gets a ton of questions about the housing market, as he travels around the country. There is a lot of uncertainty in the market and people wonder what is going to happen. Despite the fact that a few places such as Salt Lake City and Atlantic City are still doing well, housing prices have had the biggest year-over-year drop on record. As a result, some lenders are closing up shop because they had so many “non-performing” loans from people who couldn’t pay their mortgage. So what does it all mean? Great opportunity is coming for homebuyers. Homebuilders are cutting costs because they aren’t getting as many customers. Foreclosures will start popping up, and condominiums will be a huge deal if you know how to negotiate. Condos rose the highest in value, so they have the farthest to fall in price. You don’t want to pay more than 70 percent of what the peak price was in the area on condos. You’ll start to see the best deals in what were the hottest spots of the real estate boom. This won’t happen until late 2007 and early 2008, but keep your eyes open.

The housing market continues to be all over the news, and it’s not a happy topic for many. The drop in home prices has been dramatic. In fact, some accounts say prices have dropped to the lowest level ever. That is true in some areas including, Naples, Las Vegas, Phoenix, Washington D.C. and New York. Even if you’re not in one of these areas, there is a condominium bubble that is much more widespread. Many people bought condos before they were constructed with the hopes of flipping them. But more condos were built than could be occupied. In addition, a lot of apartment owners converted to condos to make money, resulting in an even bigger oversupply. People buy condominiums as a transitional buy – after an apartment and before owning a home. But condos should be a more long-term purchase if it’s going to be worth your while. What about delinquencies? Detroit, Dallas and Atlanta have the highest number of mortgages in delinquency than any of the 27 markets. None of these are bubble markets, so it’s a bit of an enigma why these areas are suffering. So, have we hit bottom in the housing market or do we have further to go? Clark is guessing, but he doesn’t think we’ve hit bottom.

A brand new report out from the Census Bureau shows that Americans are spending an exorbitant amount of their money on housing. In some states, people are spending more than 30 percent of their income on housing. It’s a direct result of the housing bubble that many parts of the country have been in for a few years now. So, what do people do? Do they sell their homes at a much lower price or hold out and see if things get better? It’s a tough spot. Clark wants to make an educated guess about what people should do. Just remember that it’s just his prediction – it’s not fact. So, if you want to get out, you cut your price and take the loss or turn your home into a rental. If neither of those are options, you must be prepared to hang in for another five years minimum. That’s when the value of homes in mountains, lakes and beaches will return.

The real estate industry is still trying to fix the price of real estate commissions. The National Association of Realtors is constantly trying new tactics to get fixed commissions. They’ve tried to control access to the Multiple Listing Services, for instance. And the NAR has tried to get states to pass laws making it illegal for people to use alternative services for buying and selling homes. Kentucky passed one of these laws, but Clark is happy to say that the state has now eliminated that statute. South Dakota has done the same thing. Texas, however, still has a very harmful law in place. Consumers lose anytime an industry tries to fix prices, and the Justice Department is going after the NAR. But the truth is that the marketplace will decide what happens. People want choices and these bully tactics aren’t going to work. One piece of advice from Clark is you do not want to buy early in a new development. It could end up as an "orphaned subdivision," and you are stuck.

Is it a smart idea to buy a condo, home or townhouse in a “new urbanist community?” These are the hottest real estate concepts in the country, with a “Main Street” look and immaculate appearances. In addition to being convenient and cool, they are also safe. And they’re appearing everywhere, especially in the South and West. With these areas, it’s no longer a risky urban life or a dull suburban life. Some have said that they look sterile or fake, but Clark has been to these “live, work, play” centers and he thinks they are really neat. In terms of real estate, it might be a good idea to rent for a while in one of these places.

Clark discusses the latest report from PMI Group, which identifies the safest and riskiest places to buy real estate. Listen up and do your homework. Be sure to disable your pop-up blocker in order to hear.

Clark talks about various real estate markets and which ones are the most affordable for what you want. Listen now! Don't forget to turn off your pop-up blocker first.

The number of unsold homes sitting on the market has jumped almost 50 percent on the past year. The sale of single family homes is down 3 percent while condo sales are down 11 percent. And that’s just in the past few months. If you are trying to sell your home, this is a bit discouraging. But it really depends on where you are. If you on either coast, in a beach area, or in Washington DC and Florida, you could be in for some frustrating times. People are mostly renting in these bubble markets, so selling a home is even tougher. But the sky is not falling, so don’t fret. Even in a time when supply outruns demand, prices don’t drop like a rock. They just hang around, and that’s what you should do. As for buyers, opportunities are plentiful in these bubble areas, especially if you are looking at a condo.

Real estate agents are in the midst of a civil war over whether to have fixed or floating rate commissions on properties. The traditional real estate industry is terrified of the free market and the national Association of Realtors is fighting hard to keep things the same. A recent profile in the Wall Street Journal featured an agency in Ohio that started discounting commissions and was basically ousted by other agencies in the area. The Los Angeles Times also featured a story on another agent who has decided to provide full commission service for half the money. How will it work? Basically, the woman will get paid on salary instead of commission. Technically, price fixing is illegal, but the traditional real estate industry ahs been able to fix commissions by browbeating agents involved. But things are changing. Pretty soon you will be able to get whatever level of service you want with a comparable commission rate. No longer will be it a market where you either sell-it yourself or pay full commission to a real estate agent. In addition, the U.S. Justice Department is currently suing the NAR for the price-fixing techniques it pushes. The marketplace needs to decide what happens here, not the real estate industry.

The housing market is in a holding pattern in many areas of the country. There is no crystal ball to predict what will happen. But Clark read a very clear story in USA Today, detailing what’s happening in different areas of the country. The reality is that the era of very large increases in home prices is almost certainly over. Now, that doesn’t mean that prices will decline. It just means they won’t gallop like they have been doing. Prices have gone up way too much in certain areas. Phoenix, the area with the biggest increase, went up 47 percent; Cape Coral, Fla. – 45% ; Palm Bay – 45%; Orlando – 36%; Sarasota - 34%; Reno - 32%; Miami - 32%; and Daytona Beach – 31% Those are not sustainable increases because they outstrip people’s incomes. It doesn’t mean you need to panic sell either. The number of homes on the market in Phoenix has increased 220 percent in the last 20 days, so people are clearly thinking they need to cut their losses and get out. But if you’re not a speculator and you just own a home because you want to live there, relax. You are fine. People in many markets will lose faith in real estate. But it was overdone to begin with. We're moving into a new cycle, but long term real estate will be fine.

As the population of the U.S grows, the challenge of where to build neighborhoods and homes becomes a challenge. It means that people may have to build on flood plains, despite the risk of it. Is there a smart alternative? Well, both the Wall Street Journal and the New York Times have written stories about an idea from the Dutch. In Holland, where much of the country is under sea level, residents are building homes that basically rise up on buoys when the streets flood. It’s almost like a houseboat. Most of the time, the houses sit on regular foundation and they come in all shapes and sizes. But it’s been a great alternative. Maybe we should consider this idea on low-lying areas of America.

You’ve probably heard Clark talk about the bubble markets in the country. He thinks there are many cities in the country that are in a real estate bubble, meaning home values are inflated much more than the average income in the area. Now, a story in Fortune magazine provides more proof that certain areas are in a bubble. The magazine’s cover story this month is about Tom Barrack, whose nickname is “The King of real Estate.” Barrack has made billions in the U.S. real estate market, but the kicker of the story is that he’s cashing out. Barrack thinks many markets in the country are overvalued, so he’s selling off his real estate before the values burst. So, where are those areas? Well, according to Money Magazine, many of them are in California, including Chico, Stockton, Modesto, San Diego and Sacramento. West Palm, Miami and Las Vegas are also on the list of Money’s bubble markets. Another company, PMI, also lists Boston, Long Island, of course, the same cities in California. Other towns are a great deal right now. The No. 1 deal on real estate in the country is in Pittsburgh followed by Salt Lake City, according to the various publications. Memphis, Cincinnati, Cleveland, Milwaukee, New Orleans, St. Louis, Kansas City, Houston and Chicago are also good deals. So, clearly the Central Time Zone is hot right now. If you are wondering about you area, Clark recommends that you read the Forbes story. It could help you save – or make – a good deal of money.

Since World War II, people have lived an automobile centered life. But a movement called “Live, Work, Play” has been gathering steam in some areas of the country. It’s also known as “New Urbanism,” and the idea is that people can do everything they need to in one small area. The problem is that most city planners and designers learned the same ideas in school, so separation has been the main idea. But congestion is creeping up and new urbanism seems much smarter. The University of Michigan is taking the idea a step further and has created a new program in its real estate school. The idea is to keep everything within a “walkable distance” if communities want that. If you want to get something to eat and you don’t want to get in your car to get there, you shouldn’t have to.

If you’re offered a transfer in your job or given a chance to move to another city, how do you know if it’s worth it? You may be making more money, but the cost of living is much higher. Housing is a big factor. Taxes play a big part, too. So, what do you do? If you’re thinking about relocating, you need to find out how much you’ll need to live comparably in another city. Homefair.com allows you to compare online and figure out exactly what you’ll need. And, the National Housing Conference conducted a study into housing and income. The site nhc.com allows you to see the median home price for various markets, the typical annual income and what you will need to afford a house. It can be a serious wake-up call if you’re moving to a high-cost housing market, so be sure to check it out.

The Wall Street Journal and New York Times both have a daily briefing called “The Real Estate Bubble.” Economists surveyed overwhelmingly believe we are in a bubble right now, which means that housing prices are moving up way beyond people’s paychecks. That can go on for a while, but it cannot be sustained. Eventually, the bubble will burst. Japan is still trying to recover from a bubble that happened about 15 years ago. Now, our bubble in the U.S. is only happening in about 15 areas of the country, so it’s not as big. But basic economic logic is at work here. Home values are likely to drop about 40 percent over the next decade, according to the New York Times. So, inflation essentially erodes the value of our real estate. Clark doesn’t mean to be alarmist, but markets can only defy economics so long. He wants you to be prepared and to be smart about decisions. Don’t buy on spec and be careful buying raw land. Also, don’t get into interest only or “optional payment” loans. And especially be careful of buying in an overheated market if you don’t plan on staying there a while. The longer you plan to own, the smaller the risk.

Clark has heard a lot of complaints from people who were taken advantage of in their mortgage loan. At the closing table, it’s hard to know what you’re signing. And how do you prove that what you signed is not what you wanted? Well, there is an organization called The National Mortgage Complaint Center that helps people before they get swindled. The center will evaluate your good faith estimate and tell you if it’s accurate and fair or not for $35. But you need to do some homework first. First of all, when you’re applying for a refinance, you must demand a good faith estimate of settlement costs. It’s supposed to tell you what loan you’re going to get and what fees you will pay. Under federal law, the lender has to give it to you within three days of the closing. But many lenders try to blow off customers who ask for this. So, you must be your own cop on this beat. Only one in four borrowers is being given their estimates. And of the 25 percent who do, they’re getting it at closing or just before. So, those people cannot challenge anything in time and banks hope you just go through with it regardless. About 97 percent of homeowners don’t know there are hidden charges in their loans. The average person is ripped off for $1,250 as a result. Make sure you’re fighting for your rights.

The National Association of Realtors has been in a conspiracy to price fix the cost of real estate and agent commissions for years. For everyone thinking about buying or selling a home, you need to know about this. The NAR is trying to make it impossible for consumers to participate in online real estate databases used by agents who are willing to take a discounted commission. The association is trying to basically get rid of agents who will not agree upfront to charge anything for full commission. This is a horrible injustice and breech of trust. To that end, the U.S. Justice Department is getting ready to sue the NAR for anti-trust violations, and Clark says it is way overdue. Consumers should decide what commission they are willing to pay and what level of service they want when buying or selling real estate. If the real estate industry is able to price fix, who knows which industry will be next. The deadline for this initiative is this summer, so pay attention!

Economists have been wondering how much danger there will be in real estate markets where housing prices have increased dramatically in short periods of time. Bradenton, Florida has had the highest increase in prices in the country and Sarasota, Florida has had the second greatest increase. Both areas’ values have increased by roughly 50 percent. Economists wonder if the increases will cause a bust or a soft landing. Clark believes the chances of a full bust are limited, but there are chances of scattered declining markets. If you plan on staying in your home, you have nothing to worry about. At the same time, banks have become more careless in lending money to people who cannot afford their new homes. So new regulations are forcing banks to looks at factors other than credit scores and reports.

Americans are taking on home equity debt like there is no tomorrow, and it’s expected to get worse. Home equity debt is up 35 percent in the last 12 months, according to The Wall Street Journal. And because the market is growing, that debt is expected to go up another 20 percent each year through 2010. To give you a better idea, the average home equity debt is $78,000. A few years ago it was just $57,000. So, there is a lot of money available out there and apparently people are taking advantage of that. If you’re considering this, Clark wants you to step back and think about why and when it would be appropriate to have a home equity line. You are creating more debt for yourself when you borrow against your home to take a vacation, buy a boat or other purchase. The only legitimate reasons you would want to take out a home equity line of credit against your home is to do home repair or renovation.

Clark was reading the Orange County Register recently when he ran across a story about an old scam that is unfortunately coming back. Because of the run up in housing prices, people are trying to buy more house than they can afford. The loans these buyers get can often cause major problems because they are known as “Negative AM” loans. These loans were big in the ‘80s and they led to a wave of foreclosures in Houston, Salt Lake City, Denver and Atlanta. This time, they are affecting coastal regions, mostly in California. What happens is the lender teases buyers into a loan, offering very low interest rates. People can then qualify for a loan that allows them to buy a much bigger house. The problem is that the loan only stays that low for about six months. After that, people have to pay money up front to “buy down” the loan. The interest rate starts rising, but people continue to pay the same amount on the advice of the lender. Then, people ending up owing more money on their homes than they are worth. So, be careful with your future and avoid these kinds of loans

Full commission stock brokerage houses are making it impossible for you to do business if you have less then $50,000 to invest. The stock brokerage houses are even punishing brokers who open accounts for customers who have less then $50,000. And, if a broker opens one of these accounts, he or she has to work on the account for free, even if the account earns money. Some houses make you have a minimum of $250,000 in assets before they will take you. There is a major split in the investment community. There is a major commission war going on between Charles Schwab, E-trade, Ameritrade, and Fidelity. They are cutting trade costs in an effort to gain more customers. So on one side, the full commission stock brokerage houses are not accepting clients under a certain amount of money, and on the other side the discount brokers are lowering costs for customers. Clark says that if you are just starting to invest, you should look at commission free mutual funds that have extra low costs. If you want to buy a single stock, then you should use a discount broker.

Coming out of Washington is the idea that private developers are allowed to seize land and build roads wherever they want. This is also known as "Eminent Domain." The private developers pay whatever they want to for the property. The Texas legislature has pushed a bill through allowing private developers to take people’s property and build super-roads. These super-roads will be designed to be ¼ of a mile wide and will contain tollbooths. Texas plans to turnover 4,000 miles of private property for future roads. Clark thinks this is absolutely outrageous!! They are stealing people’s property for their own benefit. Politicians are selling the idea of Eminent Domain by promising the roads will have traffic congestion relief. But it's simply not true.

The Orlando Sentinel reported that the number of people who have become real estate agents and are members of the National Association of Realtors has surpassed one million people. The agents who are fresh to the market are taking new approaches to selling real estate. Many are charging differently for their services. While there used to be a legally fixed market with a 6% or 7% commission, the market has changed so that agents helping FSBOs (for sale by owner) are only charging 1.5% to list a house. Clark believes the marketplace should set what services you provide and what you pay for. While there used to be only two choices: FSBO or a full commission broker (the agent handles everything in your estate), now you can pay a flat fee and pay additional fees (brochures, open houses, etc.) only if you want them.

Over the past 18 months, Clark has strongly discouraged listeners from taking out interest only mortgages. These kinds of mortgages always blow up on people, whether it be a rate resetting or with the inflated cost of homes. It’s like sentencing yourself to payment prison because after a designated amount of time, your payment will double or even triple. If you’re planning to live in a house for only 2 years, an interest only house can work. But under no other circumstances should you take out an interest only loan. There is always a direct risk to your financial future when you select a loan that does not pay principal toward your home. Huge increases in home prices are not a sure thing, so it’s just not smart. The smart thing is to look for a solid fixed loan with a low interest rate and refinance. The window is there so take advantage of it.

Americans are taking on home equity debt like there is no tomorrow, and it’s expected to get worse. Home equity debt is up 35 percent in the last 12 months, according to The Wall Street Journal. And because the market is growing, that debt is expected to go up another 20 percent each year through 2010. To give you a better idea, the average home equity debt is $78,000. A few years ago it was just $57,000. So, there is a lot of money available out there and apparently people are taking advantage of that. If you’re considering this, Clark wants you to step back and think about why and when it would be appropriate to have a home equity line. You are creating more debt for yourself when you borrow against your home to take a vacation, buy a boat or other purchase. The only legitimate reasons you would want to take out a home equity line of credit against your home is to do home repair or renovation.

There are some odd movements going on in the financial industry that may directly affect you. Basically, short-term interest rates are rising, while long term interest rates are dropping. So, if you are in any kind of variable interest loan, you have a window to get out right now. Job losses are increasing in a number of states in the country, and oil prices have gone up at wholesale. These things are draining the economy, and there is not as much long-term inflationary pressure. That’s why shorter term rates are moving up while long term rates are moving down. So, if you are going to be in your home for up to five years, consider doing an ARM. The 5/1 ARM is about 4.5 percent right now, and it’s fixed for five years. If you are going to be in a home longer than five years, and you can afford a 15-year loan, you will get a rate of between 5.14 and 5.25 percent. If you need to stick with a 30-year-loan, you can secure a rate of about 5.58 or 5. 78 percent. So, everything fixed starts with a 4 or 5 percent. Now, you may be wondering why you would you dump your current lower rate and go into a higher rate. You do that because you don’t want to be a sitting duck when interest rates skyrocket back up. Even if you are paying a higher monthly payment after your refinance, it’s okay. It is better to be in that kind of rate for the long term because you reduce your risk.

You may have heard Clark talk about arbitration clauses that some companies are imposing on their customers. Some of the industries that have shamed themselves the most are banks and mortgage lenders. There are a number of rotten players in those industries that make you sign paperwork, waiving your rights to seek restitution in court. If money has been stolen from you, you have no recourse to get that back. But, there may be a silver lining to this cloud. The two largest mortgage underwriters, Fannie Mae and Freddie Mac, have instituted new guidelines that prohibit lenders from forcing you into mandatory arbitration. For people who have already completed their loans, unfortunately you will not be protected. But for future loans, you are covered. Another major issue is pre-payment penalties. Financial writers also report that lenders are no longer able to charge pre-payment penalties if people sell their homes. It’s also a move by Fannie Mae to straighten out the lending business.

The Federal Reserve has raised interest rates again, but the rate is still below the rate of inflation. The economy has hit a bit of a slowdown right now, with job growth still tough and pay rates running low. But in the overall scheme of things, interest rates are headed up. Home equity lines of credit will move up. Variable rate credit cards will move up in rates. But, interestingly, mortgage rates have taken a much less drastic hike. They went up for a while and then came back down. Rates are about 4 percent right now. And if they fall to around 3.75 percent, then we’ll have another opportunity for people to refinance. That would pump more money into people’s pockets and give a boost to the economy. But, overall rates are still very, very low. In fact, they are at about the same place they were two years ago. So, we’ll keep you posted on what’s happening.

When Clark answers questions on the air, he often makes a recommendation but he also tells you how he feels about the issue at hand. One of those topics is “no money down” loans. In fact, in 2005 there will be more opportunity to buy a home without paying one cent down, and this is scary. There will be subsidies, such as “The American Dream Down Payment Act.” Income requirements will dictate who is eligible. But the problem is that homes are actually more expense than people imagine, especially if they put no money down. First of all, the foreclosure rate on a no money down purchase is incredibly high. Maybe one in three of the people who buy this way will enter into foreclosure. The alternative takes more time and effort, but it’s worth it. Save something over time, and put some money into the deal. Syndicated financial writer Kenneth Harney writes about something called “The Single File Mortgage.” People with little cash but very high credit ratings often get involved in these mortgages, and they are very expensive homes – up to $650k. If you have the higher score, you can get this kind of loan. The market place is trying to adjust to the risk involved in such loans. In the long run, however, one is almost always better off by saving the cash before getting into the mortgage.

If you are considering buying a house, Clark urges you to have your own inspection. First-time homeowners often skip the inspection because they think government workers have somehow inspected the house. Although they have, these kinds of inspections are not enough. Think about when a hospital, school or office building is erected. There is a construction manager who makes sure things are being done as they should be. You want someone who does the same thing for you. It's especially important if you're having the house built. And be sure that you don't hire an inspector that your real estate agent recommends. Recent reports show that 70 percent of people hire the inspector recommended by their real estate agent. Agents only suggest inspectors they know will not kill their deal, and that is not in your best interest. You want someone who will kill the deal if the house is not in good shape. Two sites that offer great referrals are ashi.com and nibil.com. NIBI requires that its inspectors carry Errors Inspectors Insurance. This means that if they mess up, they are responsible for it. You also want someone who is CABO certified, which means they are code current. Spend some additional money when buying a house and get an inspection. It's worth it. And before you sign a contract with a home builder, make sure you inspect the contract. Some builders forbid you from hiring an inspector and that wording is included in the contract. So, if you see it in there, give that builder the boot.

Clark has been incensed regarding the unethical behavior of banks over the past few years. Under current federal law, banks and mortgage lenders can offer a quote on a mortgage loan called a good faith estimate. But when you get to the closing table, they change the prices and rip you off. And it’s all legal. The Department of Housing and Urban Development had created new rules that require that a lender tell you the truth. If a lender told you your closing costs would be $1,200, he or she could not charge you more than that amount, plus 10 percent for errors. But the industry squealed like pigs about having to tell people the truth, and the feds backed down. Only a few big mortgage lenders now offer people honest quotes. The first is ABN AMRO, which has what’s called the “One Fee Advantage.” With it, they quote you one guaranteed price, and it doesn’t change. ING Direct is the other company. They are doing loans with no lender closing costs at all. But you’ll usually pay a nominal amount. The third company is Di-Tech, a division of GM. They’ve been charging a flat fee of $395, and that’s it. According to syndicated real estate experts, people are taking serious advantage of these offers. ABN AMRO has now closed $30 billion with its “One Fee” program. GM and Di-Tech have closed $60 billion in flat fee loans. So, obviously people care about getting an honest quote. Congress should get the message that people want truth in lending.

Clark wants to warn you about “drive-by” or "fake" appraisals being done for home purchases these days. These are not legitimate appraisals because sometimes the appraiser may not even visit the property. Some just create a computer model of your home and pick a number. Others glance at the property as they're driving by at 35 miles per hour and come up with a number. Sometimes the numbers are way too high or way too low, which happened to Kevin, one of Clark’s producers. When he had two appraisals done on his home, there was a $68,000 difference between the two. Usually when you have a fake appraisal, you lose about 15 percent of the value of your home. As a result, you’re going to see a shift back to doing real appraisals, which is good news. But if you get an appraisal that is really low, go back to the lender and dispute it. Get information on other homes around you and find out the “comps” or comparable values.

Homebuilders are facing a huge burden because the cost of materials has escalated dramatically. Plywood, steel, aluminum and asphalt are all going way up in price. So, builders have come up with an idea in new home contracts that you may not know about. Let’s say you are buying a home for $200,000. When you get to closing, they spring it on you that you actually owe $235,000. They’ll cite a clause in a hidden subsection of the contract that gives the builder the right to pass on to you any materials costs above the expected total. It’s called an “escalation clause,” and it’s something many builders are adding to their contracts. According to the LA Times, the No. 1 request coming into the National Association of Homebuilders is for language to use in contracts for escalation clauses. This is why you should NEVER EVER sign a builder’s contract! They are very one-sided and you cannot control the outcome. And, don’t ever negotiate with a builder’s representative without have an agent working for you. Be prepared to negotiate a cap for what you agree to pay. If it goes beyond a certain amount you get your money back and can walk away. Having a construction attorney review the contract for you is smart, too.

Clark was startled to read about people who are still buying interest-only and floating rate loans because they are putting themselves in financial danger. People sign up for these loans because of the initial low teaser rate, but they will come back to bite you after awhile. Anyone in the financial industry knows that interest rates are about to go up. We’ve had unusually low mortgage rates over the past few years, and so people think it’s going to stay that way. But it will not. Over the next year or so, mortgage rates are going to go to about 7.5 or 8 percent for a 30-year loan. Home equity lines are at 4 percent right now, and odds are they will go to 7 percent. Not too long ago, 7 percent would have been very exciting. But we’re used to getting rates in the 4’s and 5’s. So what does it mean to you? You must take out a loan that matches how long you will be in your home. If you’re only going to be in your home one, two or three years, one of these risky interest-only loans is fine. But if you’re going to be there for five or six years, you want to look at a 5-1 ARM. If you’re closing in on the latter part of your mortgage, a 10-year loan may be good for you. If you already have a home equity line of credit with a lot of floating money, you need to figure out how you’re going to pay down that debt with the interest rates coming.

Salespeople, who claim they can turn homes into cash, are ripping off more senior citizens these days. They try to entice older folks into starting what’s called a reverse mortgage, which basically means that your house pays you instead of the mortgage company. It’s a very clever idea that could work in certain circumstances. If you’re short of cash and you want to stay in your home, for instance, reverse mortgages are a good idea. But reverse mortgages can have massive fees. Let’s say your house is worth $150,000, you could end up paying $13,000 to $15,000 in fees. The Department of Housing and Urban Development has a new rule going into effect next week that will reduce some of the fees if you’ve taken out two reverse mortgages. But it does not address the issue of the high fees involved with doing these mortgages. So, if you have a parent interested in doing this, do their research for them. Make sure they are going with a reputable company. And check out the Web site, reverse.org, for information.

Clark has an important warning for you about mortgage rates and lenders. Twice in the past 18 months, the staff has been bombarded by calls from listeners who have been swindled out of the great mortgage rate they thought they had locked in for their home. What happens is the lock-in time expires because lenders fail to finish the paperwork and secure the loan. And when customers find out, the lenders shrug their shoulders and say there is nothing they can do. Mortgage rates are really low right now, but the 10-year Treasury has jumped significantly from 3.68 percent to 4.16 percent in recent weeks. That half point jump translates into higher mortgage rates for consumers, and Clark is anticipating the next wave of calls about lock-ins falling through the cracks. Many people locked in last month, so the risk is high that lenders will start slacking off on lock-ins. If you are supposed to close this month or sometime early next month, don’t be afraid to bother your lender to the point of annoyance. Paper them over with all of the documentation you’ve received to make sure you get the rate they promised. First of all, make sure you give them any paperwork they ask for within 24 hours and confirm that they have received it. Send it by overnight delivery if you have to in order to show that it got there, Make sure they have no chance of putting the monkey on your back for losing the rate. If it’s a week until the lock expires and they’re not returning your phone calls, start scheduling meetings with the head honchos and threaten to file complaints with your state banking regulators. You must be active in the fight when it comes to your rate. If you’re buying a home, make sure the lender you’re dealing with is reliable, dependable and ethical. There is virtually no screening process in the lending business, so get a recommendation through word of mouth. And check with bank regulators in your state to see if complaints have been filed against the lender you’re using.

Clark talked with great excitement last year about a new rule that would require mortgage lenders to quote you a guaranteed price on your loan. It’s basically been legal to bait and switch people during the lending process, so that when they get to the closing table all the costs go up. The Department of Housing and Urban Development would have overseen the law that Clark was so excited about - called RESPA or the Real Estate Settlement Practices Act. The law would allow the lender to charge you less than the estimated closing costs, but not more. Unfortunately, the administration caved and has canned the new rules. So, there will be no fixed-price rules. And the industry will continue to take advantage of consumers. A few companies have adopted the new rules anyway. One is ING Direct, a European lender that guarantees your rate and your closing costs. Another one is DiTech. But most American companies are still in the clear. Therefore, it’s even more important that you do your homework. One positive note is that we have great mortgage rates today. You can borrow money on 15-year loans at 4.85 percent with no closing costs. ARMS are also great ideas for people planning to be in a home between four and six years. If you’ll be there longer, a 15-year loan would be great to do. No closing costs loans are a smart way to go. You basically pay a little higher rate but you have no closing costs. Only those with exceptional credit histories are granted no closing cost loans, so your credit must be good. But get a good faith estimate in writing when doing a loan. And always ask to see your HUD statement the day before your closing. It’s your right.

Clark gets a huge number of calls from listeners who have had serious problems with their mortgage lender. Lenders have been known to mess up loan balances and to fail to pay taxes on time and sometimes not at all. As a result, a homeowner’s insurance can be cancelled and the homeowner has to buy ultra expensive insurance because no one wants him or her as a customer. Then, when people try to sue them for fouling up, it’s not possible because, according to their documents, lenders only allow “arbitration” as a way to resolve disputes. And the arbitration process is fixed in favor of the lender nearly every time. But all that is about to change. Because of the incredible numbers of abuses, Fannie Mae and Freddie Mac are taking a stand and are saying that they won’t allow any lender writing loans for them to require mandatory arbitration. They will no longer be able to refer disputes to a third party arbitrator, and it’s about time! Clark doesn’t object to arbitration or mediation. Alternative dispute resolution, in general, is a great thing. But it should be the choice of both parties to go, and each party gets to decide whom they will use. Banks have been the greatest abusers of the arbitration system. One of the nation’s largest banks won arbitration 99.9 percent of the time. Now, that is ridiculous! It’s cynical, abusive and wrong. And now it won’t be allowed for nearly all mortgage loans written in the country. Clark saw information recently about how the public feels toward mortgage lenders. The industry received one of the lowest scores ever reported in the history of surveying customer satisfaction. So, let’s hope this knocks some sense into lenders’ heads.