Dear Friends,

As a real estate consultant my job is to analyze the present real estate market conditions
and provide you with specific data and insights. This is my primary objective in addition
to specifically advising you about your particular real estate wants and needs. In this
incredibly volatile and confusing economic environment being an important resource to
you is most challenging. The complexity of these issues before our country and the
world is enormous. As you know there is an almost unlimited number of articles, books,
and videos to peruse concerning our present economic state.

Having attended a five-hour seminar and follow-up discussion group on Wednesday of

last week I am able to provide you with the following information and insights that I hope
are of value to you.

Michael S. Miller, an Associate Professor of Economics at DePaul University presented

the following analysis that he capsuled in the following slide:

“From uncertainty to certainty: a recession is upon us

• The Fed has taken extreme measures to prevent collapse of financial markets

• They have been successful in preventing catastrophe, but not preventing a

recession (not that they can stop a recession!)

• Credit quality and availability, real estate, oil prices, and creation of new jobs
have been the center of attention throughout”

Dr. Miller provided graphs to support his points that showed the ups and downs of the
GDP that are relatively moderate, the steep decline of industrial production in this
country in the last year, and the recent downturn of payrolls and retail sales.
Interestingly, the personal income of people in this country has only tapered off a small
amount. And, not surprisingly, consumer sentiment is extremely low from an historic
perspective. In fact, the downturn now is comparable to the opinions held during The
Great Depression.

And, what provided this downturn? Dr. Miller identified a multitude of factors including,
of course, the sub prime mortgages, the Alt-A mortgages (ones that require less
documentation and are riskier than conventional loans), the Fannie Mae and Freddie Mac
debacle, credit default swaps and the general housing bubble.

In conclusion Dr. Miller stated that the federal government’s extreme actions in buying
up banks and moving into the commercial paper markets were essential and stopped a
total collapse of the financial markets. On a hopeful note Dr. Miller feels that with credit
flowing again between banks and customers, eventual reductions in the housing
inventory, and with the stabilization of equity markets that will allow banks to get capital
from private sources, household wealth will increase and help stimulate the economy.
Dr. Miller provided the following for his sources:

Bureau of Economic Analysis: bea.gov

Bureau of Labor Statistics: bis.gov
Federal Reserve Beige Book:
http://www.federalreserve.gov/fomc/beigebook/2008/20080903/default.htm
FRED: http://research.stlouisfed.org/fred2

For an additional source, here is the site for the recent testimony by Fed Chairman Ben
Bernanke.
http://www.federalreserve.gov/newsevents/testimony/bernanke20081020a.htm

The panel discussion that I attended also included two mortgage lenders from different
companies and, David Hanna, the President of the Chicago Association of Realtors.
There was a similar perspective articulated by all three of these presenters.

In summary their views dealt with the following topics:

FHA

FHA is providing a third to 40% of all loans now. In 2007 there were 2,411 applications
accounting for $362 million, and for year-to-date October 2008 there are 5,491
applications for a total of $932 million. The reason for this increase has to do with the
FHA guidelines that allow for lower credit scores and lower down payments.

Therefore, many condo sellers will want to consider putting their homes on the market
with an FHA approval of their building or unit. I am familiar with the guidelines and will
be happy to assist you in evaluating if your property can be sold to an FHA buyer. Please
call me if I can answer any questions in this regard.

Credit Scores in general

More than ever your credit score is paramount in evaluating your ability to purchase
property. The first step is determining your credit score; the second step is taking steps to
improve your score if it is below 680. I am available to meet with you to discuss a plan
of action.

Rates

Rates are presently at historic lows. Conventional ones are hovering around 5-3/4% and
even jumbos are from 6-1/4% to 6-1/2%. (These rates are subject to daily changes.)
Both of the mortgage lenders believe that rates should be below 6% for the next six
months (subject to unexpected circumstances).
Down Payments

Despite information to the contrary about down payments, mortgage loans can be
obtained still with very small down payments if you have excellent credit and an
adequate, substantiated income. Yes, there are even 100% loans available although
putting down 5% to 10% is more likely and, perhaps, more desirable.

Foreclosures

All members of the panel discussed the myriad of issues related to these phenomena. It is
a complex house of cards that has set off this financial crisis throughout the world.
Municipalities in small European towns are facing financial collapse because of securities
that they had purchased that held toxic sub prime mortgage loans. It is an international
problem that is most apparent when viewed in the international stock markets.

In regards to purchasing foreclosure properties it is most often a long, tedious process.

At a minimum the closing time takes four months. Because the foreclosed property may
be owned by several entities it takes an inordinate amount of time to get approval for the
sale. Sometimes the terms of the sale are changed before it closes. A good alternative to
purchasing a foreclosed property is to buy from a motivated seller. Many sellers are
willing to take less than market value for their property, and the ability to close is more
certain.

In this difficult economic and political climate I am convinced that that the conclusion of
this long presidential campaign and the stabilization of the financial markets will bring
optimism and hope to all of our citizenry. With the foreclosures occurring throughout the
country, jobs being lost, and uncertainly being the current trend we can look to our
country’s history of overcoming tremendous obstacles, and conclude with optimism and
hope that better times are, indeed, ahead for us.

On another note, if you didn’t see this compliment to our fair city, Chicago, please read
this recent article from the Chicago Tribune.

http://www.chicagotribune.com/business/chi-tue-chicago-image-jul29,0,7252900.story

Please email or call me if I can provide additional information for you regarding the
above topics. More than ever, having an advocate who is willing to act on your behalf is
an asset in these turbulent times. And, despite the current economic downturn I agree
with Warren Buffett that sometimes the best opportunities exist when times are uncertain.
Specifically, see his statements here.

http://www.comcast.net/data/fan/html/popup.html?
launchpoint=Search&repeat_search_query=warren%20buffett&v=894211341
In particular, I believe that there are wonderful buying opportunities in Chicago right
now. If you would like to discuss the possibilities or have friends that are in need of our
services please contact David and me.

With warm regards,

Pat Spaulding
cell: 312-909-8298
David Kaplan
cell: 773-401-2657

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