Treasury Secretary Paulson has changed the terms of the bailout. After promising that the 700 billion would be used to purchase troubled home loans in order to keep Ameri”¬cans in their homes he has now reversed course. Instead, it was announced today that the money WILL NOT be used to purchase troubled loans, but rather simply given to the banks to encourage them to lend. It’s a typical bait and switch as far as I’m concerned and Wall Street seems to agree. When will people learn that giving all the money to those already rich and powerful does not help the little guy down the line? This is a big disappointment and deserves a big backlash.

Loan modifications are the big buzz as it becomes clear that lenders are not aiding home owners who need to mod”¬ify their mortgages. After doing several weeks of research into how modifications work and the various methods modification companies are using, I’m pleased to announce that I’ve located two in particular that I can refer clients to. My favorite is a law firm who has been doing modifications for 14 years with success. Most importantly, the process this firm uses does not damage the credit of the borrowers involved and protects them legally. Fees run less than refi”¬nancing and can be paid in payments over time if needed. Contact me for more information.

Last week it was finally announced that we are officially in a “recession”… BIG SURPRISE, eh? New stimulus plans are being worked on in Congress as the global recession worsens. Europe, and especially China, have all introduced rate cuts and economic stimulus packages. Today it was an”¬nounced that US auto makers are going to get some bailout money as well. American Express has decided to become a bank, a trend among many financials.

How does this affect you? There are still jumbo loans avail”¬able at excellent rates. Loans under $417,000 still have the best rates and easiest qualifying. It remains to be seen if the December 31st deadline for closing “agency jumbo” loans (those between $417,000 and $729,750) will stay intact. If it does then the new limits on January 1 for “high cost” areas like Marin will go to $625,500 on one unit prop”¬erties for Fannie and Freddie loan products. One thing is certain. Unless the secondary mortgage market is restored to functionality real estate values will continue to contract.