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Existing homes sales fall

admin — Fri, 23 Jul 2010 20:08:49 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 23, 2010

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Existing homes sales fall

According to the National Association of Realtors (NAR), existing homes sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8% higher than the 4.89 million-unit pace in June 2009. Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.” AR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors® bring to buyers and sellers in this market.”

Most Americans think things will get worse

A nationwide survey from Citigroup shows that nearly two-thirds of Americans believe that the economy has yet to hit bottom, meaning a double-dip recession is expected. The quarterly report, conducted by Hart Research Associates, revealed that 62 percent of people asked were still not counting on a rebound, which is 3-point decline from the March reading and almost as bad as last September’s result of 63 percent. The survey also showed that Americans’ expectations for when the economy will stabilize for their households have been pushed further into the future. Nearly two thirds think that their households will not see a stable financial situation for at least two or three years, it said. On the positive side, Americans’ views on current economic conditions and the outlook for their own personal financial situations are improving or holding steady, the survey said. Twenty-four percent said that the local economy where they live is good or excellent, which is up from 19 percent in March, the report said. “The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?” he added.

Inventories up, sales down

A NAR practitioner survey shows that first-time buyers purchased 43% of homes in June, down from 46% in May. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers. All-cash sales were at 24% in June compared with 25% in May. Total housing inventory at the end of June rose 2.5% to 3.99 million existing homes available for sale, which represents an 8.9-month supplyat the current sales pace, up from an 8.3-month supply in May. Single-family home sales fell 5.6% to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5% above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3% from a year ago. Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged. Existing condominium and co-op sales slipped 1.5% to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5% higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June.

Bush did it … another perspective

In office 18 months, Obama is still running against the policies of George W. Bush and cites “nearly a decade of not paying for key policies and programs” such as the wars in Iraq and Afghanistan, big tax cuts and a costly Medicare prescription drug program. Bush came to office with a $236 billion budget surplus in 2001, says Obama. “The day I took office, eight years later, America faced a record $1.3 trillion deficit.” But blaming the country’s economic woes on Bush tax cuts and spending is a stretch. It ignores the fact that as recently as 2007, the budget deficit was just $162 billion — long after Bush’s tax cuts of 2001 and 2003 kicked in and spending on the two wars and on the Medicare program was in place. Furthermore, the projected surplus reflected a continuation of the bubble economy of the late 1990s, when the stock market was soaring, high-tech businesses were on a roll and corporate profits were surging. Those surpluses would have evaporated no matter who became president in 2001. The rise in the annual deficit from $162 billion in 2007 to over $1 trillion now is largely due to collapsing tax revenues from the recession that began in December 2007, and stimulus and bailout spending by both Bush and Obama, said Brian Riedl, a budget analyst at the Heritage Foundation. The Bush tax cuts and other policies are “a convenient scapegoat for past and future budget woes,” he said, but can’t be blamed for today’s trillion-dollar deficits — or future ones. “Over the next 10 years, virtually 100 percent of the rising deficits” will be driven by “entitlement” programs such as Social Security, Medicare and Medicaid and interest payments on the $13.2 trillion national debt, Riedl said.

Olick – don’t be fooled

“Don’t be fooled by the little uptick in home prices in today’s Existing Home Sales report from the National Association of Realtors. Even the always glass-is-half-full chief economist Lawrence Yun made clear several times in the briefing before the report’s release, that he expects home prices to come under significant pressure over the coming months, as inventories rise. The report today showed inventories up 2.5 percent to 3.99 million units. At the current sales pace, that represents an 8.9 month supply. The current sales pace ticked down 5 percent in June, even though those numbers are still under the sway of the home buyer tax credit (remember, EHS represent closings in June, so contracts likely signed in April before the credit expired). But more importantly, the Pending Home Sales Index, which represents contracts signed, fell off a cliff in May, down 30 percent, indicating that closings will be way off as well. Bottom line, experts who follow housing are having a hell of a time predicting just where home prices are headed nationally.”

“A new monthly report, Macro Markets Home Price Expectations, a venture by price guru Robert Shiller, found that the results for 2010 vary widely, anywhere from plus 4.9 percent to minus 12 percent. “In July 60 percent of the panelists projected negative home price growth for 2010,” writes Shiller in the report. The longer-term results, however, were less optimistic. “Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory,” writes Terry Loebs, MacroMarkets Managing Director. “This new consensus suggests a less robust housing recovery scenario – one that, all other things equal, would result in U.S. household wealth by year-end 2014 being about $500 billion less than the level implied by the average of panelist responses just two months ago.”

Now for our real estate education section…

Friday File – 15 Minute Short Sales Resolution…is Your LinkedIn Profile a Liability?

For this week’s 15 minute short sale resolution, it’s time to take a critical look at your LinkedIn profile…specifically, your professional headline.

Face it, if you are like most people, yours probably leaves a lot to be desired. In fact, it might just be a liability if you tend to use it like most people. Find out how you measure up and how to transform your LinkedIn profile from a lackluster liability to a lightning fast lead with this quick quiz:

Question: Do you have a professional headline?

Response: If not, it’s time to get one…NOW!

Actionable Item: Assuming you have a LinkedIn professional headline, continue to the following questions…

1. Did you include a title in your professional headline?

and/or

2. Did you include the name of your company?

Response: Your headline probably needs work!

Gotcha right? Yes, traditional wisdom holds that you should include your name or the name of your company in the headline but is this always true? Let’s examine the wisdom of this little gem for someone named “Joe Smith”. Great name, easy to remember…even easier to forget. Oh yeah, and shared by a zillion others of the same name.

Likewise, title is meaningless. Are you a big title in a little company or a little title in a big company. Perhaps you have some really odd title that tells the reader next to nothing. See the point? Plain and simple, titles and names don’t always mean a lot. So, what should you do to make a great professional title?

3. Explain what you do and why the reader will care. Use a bit of flair and keep it short and simple. Use the WIIFM approach to explain “What’s in it for me?” to the reader. Not sure how to write a great professional headline? Check out our free webinar or other social media marketing for real estate and short sales to learn more.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
   * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
  * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Failed HAMP may benefit from HAFA

admin — Thu, 22 Jul 2010 16:06:30 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 22, 2010

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Failed HAMP may benefit from HAFA

With the amount of canceled trial modifications in the Home Affordable Modification Program (HAMP) passing permanent conversions, some are anticipating that the Home Affordable Foreclosure Alternatives (HAFA) program will be more effective in keeping homeowners out of foreclosure. As you’ll recall, HAFA was designed to give borrowers who failed to make those payments a chance at a short sale or deed-in-lieu of foreclosure. Based on survey data of the eight largest HAMP participants, the Treasury found that 45% of the canceled trials from HAMP are in an alternate modification. More failed HAMP modifications could enter HAFA after falling into delinquency after the conversion into permanent status.

For modifications that have been permanent for more than six months, 6% have fallen into 60-plus day delinquency again. The default rate, or the percentage of modified loans that are now 90 or more days delinquent, is less than 2% at six months after the conversion. Cary Sternberg, president of Excellen REO, an asset management firm and subsidiary of Titanium Solutions, said that HAMP was designed for those who want to stay in their home, but as prices continue to deteriorate, more homeowners are looking for a way out, either through short sale or deed-in-lieu. “Then comes HAFA. In recognition of the fact that some borrowers simply could not make payments even if the payment were lower, a more dignified exit strategy was created,” Sternberg said. “It is too early to tell what the success rate of the HAFA program will be, but I am betting it will be far better than HAMP,” Sternberg said. “HAMP is a Band-Aid, HAFA is an exit strategy.”

Dodd-Frank Act bad for business

Surprise! The Dodd-Frank Act signed yesterday by President Barack Obama could have a range of unintended consequences on the mortgage securitization market, according to various commentaries. Standard & Poor’s (S&P) president Deven Sharma warned the legislation could expose rating agencies to greater liability for — and lawsuits over — ratings of mortgage-backed deals. According to Barclays Capital analyst Joseph Astorina, Moody’s Investors Service, Fitch Ratings and S&P “have instinctively pulled back from the new issue securitization market until they are better able to asses this new liability.” The law’s reforms concerning securitization are designed to remove the incentive of the “originate-to-distribute” model, according to a client alert from law firm K&L Gates.

Other “unintended” consequences cannot be known until the legislation is enforced, noted accounting firm Deloitte in commentary. “By way of example, a driving element of the law has been to address the ‘too big to fail’ issue, reducing the risk that large firms might take excessive risk because they are in effect guaranteed to be bailed out in the event of a failure,” the firm said. “But because this is an extremely complicated problem, no one actually knows what the consequences of the new law will be — the new systemic regulator will probably make this a central issue as it sharpens its mandate in the coming months.”

Jobless claims up

The Labor Department says there were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week. The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000. The 4-week moving average of initial claims, which is calculated to smooth out volatility, was 456,000, up 1,250 from the previous week’s revised average of 454,750. The government also said 4,487,000 people filed continuing claims in the week ended July 10, the most recent data available. That’s down 223,000 from the preceding week’s upwardly revised 4,710,000 claims. Economists surveyed by Briefing.com expected ongoing claims to edge lower to 4,600,000 from the unrevised 4,681,000 in the previous week. The 4-week moving average for ongoing claims fell by 21,500 to 4,567,000 from the preceding week’s revised 4,588,500.

Commercial real estate coming back?

Analysts have been warning for months that commercial real estate could be the next shoe to drop in the subprime mortgage collapse that came to a head in 2008, but there may be some good signs in the thawing of securitization markets and indications that investors are ready to come to auction when properties are on the block. Marc Halle, managing director of real estate investments for Prudential Financial executives, acknowledged that distressed conditions are likely to intensify in the market but does not expect to see “wholesale foreclosures.” Instead, real estate investment trusts could become a more attractive asset class in a slowing economy as interest rates stay low and REIT dividends remain solid. The banks are expected to launch $1.4 billion in two offerings of commercial mortgage-backed securities, according to a report Wednesday in the Wall Street Journal, which cited sources familar with the planned sales.

The offerings pale in comparison to the more than $1 trillion coming due in maturing debt over the next five years, but offer some glimpse that Wall Street may be getting back on board. Uncertainty among borrowers regarding whether banks will go back to more normalized lending practices is at the root of criticism against the Frank-Dodd financial regulations that President Obama signed Wednesday. Banking analyst Dick Bove, at Rochdale Securities, said there is a persistent rumor that the Federal Reserve is looking at loosening capital requirements. Bove, a harsh critic of the new law, said that would be a welcome development. “It demonstrates that the Fed understands that it must help the banks so that the banks can help the economy,” Bove said in a note to clients. “It implies that the Fed will not be very hasty in putting into effect the onerous rules being mandated by the banking legislation. If the Fed truly understands this, the outlook for banking and, more importantly, the economy is beginning to change in a positive manner.” Banks themselves have been voicing some slightly encouraging sentiment regarding the direction of commercial real estate.

20% of Americans suffered major economic loss

The new Economic Security Index, constructed by Yale political scientist Jacob Hacker and a team of researchers, estimates that 20% of Americans suffered a significant economic loss last year – the highest level in the past 25 years. The Index looks at the interaction of three key variables that have a direct bearing on a person’s economic security: income loss, medical expenses and debt. The ESI defines people as economically insecure when their situation meets two criteria. First, within a year’s time they have lost 25% or more of their available gross income. Available gross income is the money they have left over after paying for medical costs and debt. Second, they don’t have enough in an emergency fund or other liquid reserves to make up the difference. According to the index, which tracks Census Bureau data since 1985, 12.2% of Americans were economically insecure in 1985. By 2009, Hacker and his team estimate that 20.4% of Americans could be classified that way. The actual number of people affected increased by more than half, from 28 million in 1985 to roughly 46 million by 2007, the last year for which hard numbers were available. In the past, some economists, such as Stephen Rose of the moderate-progressive think tank The Third Way, have conducted research that counters the broadly negative view about how the middle class has fared economically over the years.

Now for our real estate education section…

How to Price Any Property for Maximum Profits

Although the classic definition of the “right price” is whatever a willing buyer is willing to pay a willing seller (yes, we know it’s redundant), pricing is also a value proposition. In order to price a property for maximum profits, it’s essential to understand how to communicate and evaluate the value proposition to both the buyer and the bank.

What to Measure

1. Capacity – Any given area or builder has a set capacity. The more less capacity, the higher the price assuming demand is in place. During the height of the real estate boom, savvy builders capitalized on desirable locale’s by creating a sense of urgency related to capacity…often to the detriment of the eventual buyers who later learned there was a glut of unsold condo’s or other properties waiting in the sideline. However, despite the recent decline in real estate, many markets and specific neighborhoods remain highly desirable with limited capacity.

2. First Offering – Closely related to capacity is the concept of “first offering”. Face it, everyone likes something that is “brand new” but have you ever stopped to ask yourself why? A new house or neighborhood is somewhat “unproven” but the excitement of being “first” tends to create anticipation that can be tapped into. Take a note from developers that routinely price high to create a sense of value, then discount to provide customers a sense of a “good deal”.

3. Enhanced Value – Everyone likes to feel like they are appreciated and nothing says “appreciation” like a free upgrade or other valuable service. Make a list of amenities included in the sale of the property and/or consider including a few low-cost additional enhancements. Popular ones include free lawn-care for a year, electronic device or home warranty.

What to Exclude

1. Acquisition Cost – Without a doubt, this is one of the most common mistakes made by novice investors; the tendency to use acquisition cost as a basis for the sales price of a property. As millions of Americans have learned, what you pay for a property may have little to no bearing on the eventual price of a property….good and bad. Although the media is filled with horror stories about people that paid too much for a property (of more often…obtained bad financial terms), there are equally impressive numbers of people that made a lot of money after paying very little for a property. Price the property based upon value…not acquisition cost.

2. Expenses – If acquisition cost is the most common errors, surely expenses are the next. The tendency to add up the cost of repairs, insurance, broker and agent fees, taxes and other expenses in order to derive a figure is outdated at best and limiting at worst. Again, price the property based upon perceived value rather than cost or expenses. It’s often possible to perform inexpensive upgrades that dramatically alter the appearance (and desirability) of a property for very little investment. Don’t deny yourself the benefit of a fully priced property if in fact, it’s possible to price higher.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

HAMP still a failure

admin — Wed, 21 Jul 2010 19:49:28 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 21, 2010

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HAMP still a failure

An increase in foreclosures, combined with the recent drop in housing sales, could send home prices plummeting again. Some 91,118 people in trial modifications were canceled in June, bringing the total to 520,814 since the program began in the spring of 2009. More than 60% of those who dropped out last month had been in trials for at least half a year. Homeowners usually are kicked out of the mortgage modification program because they don’t make the required payments, meet the qualifications, or submit the needed paperwork. Once their trials are canceled, about 45% of homeowners receive alternate modifications, often one from their loan servicer.

Some 8.9% had foreclosure proceedings started against them and 1.3% lost their home in foreclosure. Only 364,077 troubled borrowers remain in the trial phase, some 38,728 of whom entered the program in June. Nearly 166,000 have been in trials for at least six months. 51,205 troubled homeowners received long-term mortgage modifications in June, bringing the total to 389,198. 8,823 homeowners had their permanent modifications canceled, 195 of whom paid off their loans. “I feel like a broken record, but HAMP continues to perform very poorly,” said John Taylor, head of the National Community Reinvestment Coalition, an advocacy group. “The permanent modification numbers are simply too low, while foreclosure filings continue above 300,000 for the 16th month in a row.”

Unemployment bill passes

A bill that pushes back the deadline to file for extended unemployment benefits until the end of November passed a key procedural hurdle in the Senate yesterday. The vote was 60-40, the minimum margin needed to end debate on the measure. Sens. Olympia Snowe and Susan Collins, Republicans of Maine, switched sides to support the bill. Carte Goodwin, the newly appointed Democratic senator from West Virginia who replaced the late Robert Byrd, gave his party the 60th vote. Democrats had stripped the unemployment insurance measure down to the bare essentials for Tuesday’s vote, a do-over of a tally taken late last month. The Senate could put its final stamp of approval on the bill on Wednesday, after which it would go back to the House. It is expected to pass both chambers and be sent to President Obama for his signature. Final passage in the Senate requires just 51 votes.

Democrats tout the economy-boosting effect of unemployment checks since most beneficiaries spend them immediately. But the numbers amount to less than one-quarter of 1% of the size of the $14.6 trillion economy, and are far smaller than last year’s $862 billion stimulus legislation, which appears to have done little good for the economy. Republicans say they do favor the benefits but insist they be paid for with spending cuts elsewhere in the government’s $3.7 trillion budget. As Senate Minority Leader Mitch McConnell puts it, “What we do not support—and we make no apologies for—is borrowing tens of billions of dollars to pass this bill at a time when the national debt is spinning completely out of control.”

Loan demand up

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 16, 2010, increased 7.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 19.5% compared with the previous week, which included the Independence Day holiday. The Refinance Index increased 8.6% from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The increase in total refinance applications was driven by a 10.7% increase in conventional refinance applications, while government refinance applications decreased by 4.2%.

The seasonally adjusted Purchase Index increased 3.4% from one week earlier, driven by an 8.0% increase in government purchase applications. Conventional purchase applications were essentially flat, increasing just 0.3% from last week. The unadjusted Purchase Index increased 15.3% compared with the previous week and was 35.7% lower than the same week one year ago. “As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey, refinance activity increased last week. The refinance index is up almost 30% over the past 4 weeks, but is still well below the peak seen last spring,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans. The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower downpayment requirements.”

Michael Boskin – Obama’s economic fish stories

“President Obama says “every economist who’s looked at it says that the Recovery Act has done its job”—i.e., the stimulus bill has turned the economy around. That’s nonsense. Opinions differ widely and many leading economists believe that its impact has been small. Why? The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama’s vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories. So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.

The president does not say that economists agree that the high future taxes to finance the stimulus will hurt the economy. (The University of Chicago’s Harald Uhlig estimates $3.40 of lost output for every dollar of government spending.) Either the president is not being told of serious alternative viewpoints, or serious viewpoints are defined as only those that support his position. In either case, he is being ill-served by his staff. Mr. Obama’s economic statements are increasingly divorced not only from competing viewpoints but from those of his own economic advisers. It is surprising how many numerically challenged pronouncements come from this most scripted and political of White Houses. One slip is eventually forgiven, but when a pattern emerges, no one believes it is an accident. For example, on the anniversary of the stimulus bill, Mr. Obama declared, “It is largely thanks to the Recovery Act that a second Depression is no longer a possibility.” Yet his Council of Economic Advisers just estimated the stimulus bill’s effect on GDP at its trough was 1%-2%. On his recent “Recovery Tour,” Mr. Obama boasted, “The stimulus bill prevented the unemployment rate from “getting up to . . . 15%.” But the president’s own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%. So Mr. Obama claims that the stimulus bill was several times more potent than his chief economic adviser estimates. The president badly needs to make more realistic pronouncements. No one expects him to say his policies have failed (although most have delivered far less than claimed at large cost). A little candor about the results of experimentation in uncharted waters would go a long way. But at the very least, his staff needs to avoid putting these exaggerations on the teleprompter. It undermines confidence and raises concerns about competence. It’s doing nobody any good—not the economy and certainly not Mr. Obama.”

Wall Street Journal – reasons for a flat housing market

Even falling interest rates aren’t enough to whet consumer appetites for housing. Last week, the average rate on a 30-year fixed-rate mortgage was quoted at 4.57%, according to Freddie Mac, the lowest since its survey began in 1971. But demand for home-purchase mortgages sits near 14-year lows, according to the Mortgage Bankers Association, down 44% over the past two months. Economists aren’t singling out one reason for the stalling housing market. A variety of factors have led to flagging confidence, they say, including sluggish labor markets, global economic turmoil and falling stock prices. While the housing downturn dragged the economy into a recession nearly three years ago, now it is the economy that is pulling down housing, says economist Patrick Newport at IHS Global Insight.

Without sustained job growth, the housing market likely won’t improve. That in turn will ricochet across manufacturing, retail and other trades heavily dependent on home building and consumer spending. The government last fall extended tax credits worth up to $8,000 to home buyers who signed contracts by April 30, causing sales to surge early this year. Those buyers had until June 30 to close their sales until Congress, concerned that the backlog of sales wouldn’t close in time, extended the deadline through September. Analysts long expected the withdrawal of a federal tax credit, which had juiced sales, to lead to a slower-than-usual summer. “It’s the magnitude that’s been the issue,” says Douglas Duncan, chief economist at Fannie Mae. “The drop-off in activity has surpassed expectations.” Affordability gains have been offset for many buyers by tighter lending standards, particularly for “jumbo” loans that are too large for government backing. Banks are requiring down payments of 20% and more and strong credit scores because they must hold jumbo loans in their portfolios.

More broadly, the housing market faces two big problems: too many homes and falling demand. More than seven million borrowers are 30 days or more past due on their mortgage payments or in some stage of foreclosure. Rising foreclosures will keep pressure on prices as banks put more homes on the market. Last month, nearly 39,000 borrowers received government-backed loan modifications, but more than 90,000 borrowers fell out of the program, the Obama administration said on Tuesday. Moreover, the pool of potential buyers remains constrained by the unprecedented number of homeowners who are underwater, or who owe more than their homes are worth. To add to it all, mortgage-finance giants Fannie Mae and Freddie Mac are starting to push more repossessed homes onto the market. The companies owned 164,000 homes at the end of March, up 80% from a year ago. Finally, unrealistic sellers have flooded the market” after reports of bidding wars and home-price increases earlier in the year.

Tenant Act extended to 2014

The financial reform bill passed by Congress will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014. PTFA, originally enacted in May 2009, allows renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease. Without the new extension in the financial reform bill, the law would have expired at the end of 2012. The new law also clarifies the date of a notice of foreclosure as the date of a completed title transfer: “The date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.’’

When the PTFA was enacted last year, it completely changed the way REO evictions are conducted, said Robert Jackson, president and managing attorney at the Irvine, Calif.-based Jackson and Associates law firm, while speaking last month at REO Expo 2010. Under the Dodd-Frank bill, any lease or tenancy created prior to the change of title as a result of foreclosure is protected by PTFA, according to The National Low Income Housing Coalition (NLIHC), a tenant-advocacy group that supports the changes. Whether the PTFA has caused tenants to sign long-term leases immediately before a foreclosure — tying up disposition of a property — is a subject of concern for the default servicing industry.

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

By the time you are reading this, the new 2300 page financial reform bill is likely to be making the headlines. The Senate has already approved the new bill and President Obama is expected to sign it into law this week ..despite the fact that many of the provision related to specific regulations have yet to even be written. If that sounds faintly disturbing, don’t worry…your concern is noted and shared by many experts through the nation. However, there are sweeping changes that are already apparent despite the lack of specific details.

Although broad in scope, home buyers and sellers are likely to be among the first impacted by the new provisions. They represent one of the most comprehensive – top to bottom changes to the finance, valuation, types of mortgage products offered and how lenders are compensated to take place in decades. In fact, there are even new rules for investors that provide capital for the purchase of mortgages.

A few of the most important points likely to make immense impact to buyers, sellers and investors is the language dealing with any type of mortgage outside of the “traditional” or “plain vanilla” category. Unfortunately, regulators have yet to fully define what will constitute a “traditional” mortgage under the new plan but it is clear that the line will be drawn to reduce the number of sub-prime borrowers as well as offerings of owner finance and other alternative forms of finance. Experts predict an immediate severe impact on many minority and low income borrowers; many who have already been impacted by far less severe measures. For example, according to FHA, rejection rates for African American and Latino borrowers have substantially increased among non-FHA loans.

The new FDIC and other regulatory oversight standards contained in the bill are expected to provide safer mortgage(s) instruments but at a higher cost and more stringent requirements for both banks and individuals. It is estimated that only five banks currently control more than 65% of the current mortgage market; the new bill is expected to further consolidate this trend by favoring big banks over small. In part, this is due to the belief that big banks are easier to regulate. However, at the same time, new controls and rules regulating private investors are also expected to take another two to three years to fully define…leading many to believe the bulk of mortgages will still be backed by the United States government for the foreseeable future.

See you at the top!

Chris McLaughlin
**************

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About the author:

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Housing starts down

admin — Tue, 20 Jul 2010 19:46:41 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 20, 2010

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Housing starts down

The Commerce Department says housing starts dropped 5.0% to a seasonally adjusted annual rate of 549,000 units, the lowest level since October. It was the second straight month of decline in activity and was well below market expectations for a 580,000-unit rate. May’s housing starts were previously reported as a 10.0% drop, but are now revised down to show a 14.9% decline. Compared to June last year, starts were down 5.8%, the biggest decline since November. Driving the June decline was a more than 20% drop in the volatile condominium and apartment market. Construction of single-family homes, the biggest part of the market, was down slightly by 0.7%. The only positive sign in the report was an unexpected 2.1% rise in applications for building permits to a 586,000-unit pace in June.

That followed a 5.9% drop in May and compared to analysts’ expectations for a slip to 570,000 units. Still, the slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after tax credits that spurred sales expired at the end of April. “Despite record low mortgage rates, housing is at risk of a double dip unless job growth strengthens soon,” said Sal Guatieri, senior economist at BMO Capital Markets. Economists had had predicted that construction would fall to a rate of 580,000 and had projected that building permits would sink to a rate of 570,000, according to Thomson Reuters. In a typical economic recovery, the construction sector provides much of the fuel. But not this time. While developers have cut back on construction and the number of new homes on the market has fallen dramatically, they still must compete against foreclosed homes selling at deep discounts.

Consumers will pay for new rules

Up until recently, bankers have remained mum on particular reform measures, saying that regulators will first need to write specific rules. But Bank of America broke ranks on Friday, detailing the impact of several provisions, including the so-called Durbin amendment, named after sponsor Sen. Richard Durbin, D-Ill., which will limit the fees banks collect from debit card swipes. Bank of America executives said the new rule would reduce fees earned from debit cards anywhere between 60% and 80% starting in the second half of 2011. This year, the company said it expects to produce $2.9 billion in revenue from that business. “We now fear that the Durbin bill could have a great negative impact on bank revenue than we had originally estimated,” BMO analyst Lana Chan wrote in a note to clients Monday.

Even though BoA is hit hard, , the biggest hit was expected to fall on major regional players such as Regions Financial, KeyBank and Fifth Third. Each institution generated over 3% of their overall revenue from interchange fees last year, compared to Bank of America’s 2%, according to Chan. Analysts suggested that perhaps the company most exposed to the new measure was the Minnesota-based lender TCF Financial. In 2009, more than 10% of its revenue came from interchange. FBR’s Paul Miller projected Monday that TCF’s earnings could fall by as much as 40 cents a share as a result. Banks have not been sitting idly by. A number of major financial institutions have reportedly started to eliminate free checking accounts, as well as imposing new or higher fees, ultimately putting the cost of the forthcoming new laws on the consumer. “That is probably what is going to happen here,” said TCF Financial CEO Bill Cooper said during a conference call with investors last week. The bad news is that the Durbin rule is just one small piece of an ongoing effort to rewrite the rules of the road for the financial services by this administration and congress.

Olick – Jumbo loans are back

“After several years of stagnation in high-end housing, thanks to the disappearance of the jumbo market, things are moving yet again. A quick check on Bankrate.com shows the 30-year fixed jumbo at around 5.50%, and Citibank last week reported applications for jumbos up 30% just over the last 60 days. “It is the overall weak economy driving the 10 year lower, which is the proxy for most mortgage loans,” says FBR’s Paul Miller. “This is still probably the best of the best getting loans at these low rates, but Jumbo activity is still very, very low.” Miller says it’s good for the market, but only “marginally better,” as banks are desperate to find good loans to put on their books. But how long will it last? Probably only as long as investors remain nervous about the economy. “Preliminary signs of life in the secondary market are a good indication that the narrower spread between jumbo and conforming loans will stick around,” says Bankrate.com’s Greg McBride. “However, the level of mortgage rates will hinge more than anything on the demand for Treasuries.” Bank of America tells me that applications and fundings for jumbo loans rose over 10% from May to June. They say they’ve always been the leader in jumbos, which could be why Citi is getting more aggressive.”

Home Builder Confidence Plummets

Builders have been feeling increasingly pessimistic of late. The National Association of Home Builders (NAHB) said yesterday that its monthly reading of builders’ sentiment about the housing market sank to 14 — the lowest level since March 2009. Readings below 50 indicate negative sentiment about the market. “We continue to see a lull in home buying activity following the expiration of the federal home buyer tax credit program, as many of the sales that would have occurred this summer were likely pulled forward to meet that program’s deadline,” said NAHB chairman Bob Jones, a homebuilder in Bloomfield Hills, Mich., in a press statement. “In addition, builders are reporting continuing consumer hesitancy regarding home purchases due to uncertainty in the overall economy and job markets.”

Paul Dales, a US economist at the Toronto-based Capitol Economics concurred that the tax credit’s expiration is impacting the housing market. “It is becoming increasing clear that without the government’s artificial support, the US housing market is struggling to stand on its own two feet,” Dales wrote in commentary Monday. ” The fall in the NAHB housing index…shows that demand for new homes has weakened further.” Specific factors contributing to the negative view include hesitation on the part of homebuyers, tight consumer credit and continuing competition from foreclosed and distressed properties, according to NAHB chief economist David Crowe.

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
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http://www.youtube.com/shortsalesriches

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About the author:

Chris McLaughlin is widely known as America’s top
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Diana Olick – Home prices being slashed, more coming?

admin — Fri, 16 Jul 2010 16:48:42 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

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Diana Olick – Home prices being slashed, more coming?

“As of July 1st, 24 percent of sellers on the market had cut their asking prices at least once, according to Trulia.com. That’s up 9 percent from the previous month and represents about $27 billion worth of vanished national home equity (or home equity hopes). “The market is going to maintain a relatively flat trajectory, if not more like a saw tooth trajectory, for the near future, and meaningful recovery may not happen until some time in 2011, 2012,” says Trulia’s Heather Fernandez. We knew the price stabilization was largely due to increased buying activity on the low end from the home buyer tax credit. The issue now, front and center, is foreclosures. We’ve already seen a few reports, and I expect we’ll see more, that show new foreclosures “stabilizing,” while bank repossessions are increasing.

Let’s face it, banks don’t want to be homeowners, and they certainly don’t want to shell out even more of their dwindling cash on lawn services and handymen. Whatever incentives there are out there to turn these properties over to homeowners who can actually afford them are certainly welcome. The trouble is that there appears to be a dangerous disconnect in the housing market right now: Housing stats are at an all-time low and yet the home vacancy rate is rising. The only way that can happen is if the number of households is shrinking more than we know. Add bank repossessed homes to that mix, and I’m guessing home prices will dip more than some are expecting.”

Foreclosures fall as bank repossessions quicken

According to RealtyTrac, the number of foreclosure filings of all types — including notices of delinquency, auction notices and repossessions — fell during the first six months of 2010. There were 1,654,634 properties with foreclosure filings during that time, a 5% decline compared with the previous six months. That equates to 1 out of every 78 homes. However, the pace of bank repossessions quickened, creating nearly 270,000 homes lost to foreclosure during April, May and June, a 5% increase over the three winter months. James Saccacio, CEO of RealtyTrac, called the report a “tale of two trends.” He pointed out that the filings data showed improvement because fewer properties were entering the foreclosure process. Part of that is because lenders are now more committed to modifying defaulting mortgages or allowing homeowners to sell their homes for less than they owe.

However, there is still much inventory to move through the system and experts aren’t sure how big it will be. “While the foreclosure problem is being managed on the surface,” Saccacio said, “a massive number of distressed properties and underwater loans continue to sit just below the surface, threatening the fragile stability of the housing market.” One in 17 Nevada households, or 64,429, received a filing. That’s the highest rate of any state. The number of California homes with filings came to more than 340,000, the highest total of any state. Florida had more than 277,000 filings, or 1 for every 32 households; Arizona had more than 91,000, or 1 in 30 homes. Lenders repossessed 45,000 Calif. homes during the three months ended June 30, more than in any other state. Nevada, with a much smaller population, had nearly 11,000 repossessions, about twice the rate of the Golden State.

Business vs Obama

A letter posted to the US Chamber of Commerce’s site slammed President Obama’s economic policies yesterday, saying administration officials “took their eyes off the ball” and “neglected” to focus on job creation. The letter further pointed out that the administration “vilified industries while embarking on an ill-advised course of government expansion, major tax increases, massive deficits and job-destroying regulations.” The letter also included “some different approaches to unlock frozen capital and jolt our economy back to life.” The six suggestions are: create a growth and jobs tax policy; restore fiscal health; expand trade and export-driven jobs; rebuild and expand infrastructure; ease regulatory burdens; and eliminate uncertainty for business owners. In a speech at a jobs summit of 500 business leaders, Chamber president Tom Donohue focused on what he considers a glut of recent legislation, including financial reform and health reform. “We must address the cumulative job-killing impact of over-regulation,” Donohue said, stressing the uncertainty he considers rampant in U.S. businesses. Donohue also said lawmakers were “spending at astronomical levels — we’re setting ourselves up to be the next Greece.”

Lost decade coming?

Disappointing job reports, weakness in housing and consumer spending, and problems in world financial markets have raised concerns about the U.S. economy stalling out later this year. Now some economists are starting to talk about an even worse fate: a prolonged period of very weak growth, a so-called “lost decade.” “The probability of a lost decade is significantly greater than a double dip,” said Sung Won Sohn, economics professor at Cal State University Channel Islands.

“We don’t have too many engines of growth functioning right now — housing, consumer spending, exports are all sputtering. I have a hard time seeing where we can get 3% economic growth back.” A lost decade, or something like it, could feel like a never-ending recession to many Americans, as the economy does not grow fast enough to recoup lost jobs, and investments like homes and stocks continue to lose value. The most famous lost decade occurred in Japan in the 1990s. From 1992 through 1999, the Japanese economy grew by less than 1% a year. It has yet to fully recover from the economic weakness and falling prices it suffered during that period.

1 in 200 mortgages may be fraudulent?

According to projections in the July 2010 edition of the CoreLogic, one in 200 conforming loan applications could still contain misrepresentations in the file that could lead to default. Overall mortgage fraud peaked in Q306, CoreLogic said. But when subprime mortgages were removed from the equation, the peaked shifted to Q309. CoreLogic said its data shows mortgage fraud in prime lending was still on the rise through the peak in Q307, even when many of the largest subprime lenders were going out of business. Since that time, non-subprime mortgage fraud is down 25% at the end of 2009.

The timeline below tracks non-subprime mortgage fraud, along with various milestones in the industry. “Lenders’ aggressive stance against fraud is having an impact. Our 2010 Fraud Index indicates that mortgage fraud risk is on the decline. But with an estimated $14bn in fraud losses experienced in 2009 alone, fraud is still a major issue for the mortgage industry,” said Tim Grace, CoreLogic senior vice president of Fraud Analytics, said in a press statement. “While the industry has done good work there is evidence that fraud patterns are changing and becoming increasingly better hidden,” Grace added. “By sharing fraud patterns with each other through CoreLogic fraud consortium members’ meetings and by statistical pattern recognition fraud scoring, lenders can help stay on top of these new trends and keep risk down.” CoreLogic said its research finds a correlation between fraud risk and subsequent default rates. Of the 12 states with the highest instances of mortgage fraud in 2007, nine were among the top 12 states with the highest mortgage default rates in 2009. Florida, South Carolina, North Carolina, California and Georgia are the highest-ranking states for mortgage fraud, CoreLogic said.

Jobless claims and wholesale prices drop

The Labor Department said Thursday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008. But much of that was the result of seasonal factors. General Motors and other manufacturers skipped their usual summer shutdowns. It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week.

Separately, the Labor Department said that wholesale prices fell for a third consecutive month, pulled down by another drop in energy costs and the biggest plunge in food costs in eight years. But excluding those two volatile commodities, inflation was relatively flat. Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions. Another concern is that the latest drop may be the result of temporary seasonal factors. A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of year.

Now for our real estate education section…

Becoming an Angel Investor

Do you have what it takes to become an angel investor? Perhaps it’s time to take your own portfolio to the next level by multiplying the returns of both time and money while helping others realize their own dreams. Find out if you have what it takes to become an angel investor with this quick quiz:

1. I have a desire to give back to others. Research found that 15% of angel investors had a strong desire to simply give back to others; altruism is its own reward for those that have gained so much in life. The satisfaction of seeing others realize their dreams and make a difference in their lives…and the lives of their family…is integral to a significant number of angel investors.

2. I have the desire to remain involved in an industry I love…but at a different level. Retirement is a terrific way to enjoy life once you have made your mark on the world but that doesn’t mean you don’t miss the energy and vitality of wheeling and dealing. Angel investors often find the mentoring (and money) provides the perfect balance between involvement and independence.

3. I have the desire to network in a new industry. High net work individuals may benefit from becoming an angel investor by the ability to network in a new industry while still generating impressive returns for their own portfolio. Real estate is an exceptional area to try out since it appeals to such a wide spectrum of other professionals.

4. I have a desire to maximize profits while minimizing involvement. For those that are not satisfied by average returns (and who is these days?), becoming an angel investor is the perfect way to obtain the profits you seek without the excessive time and energy required to do it yourself.

5. I have the desire to make a difference in society. Many angel investors provide funding to entrepreneurs or investors that adhere to a specific societal function, outlook or other value near and dear to the heart of the angel investor. Whether it’s affordable housing for the elderly, eco-friendly sustainable living for the urbanite or something else in between, make the world a better place by supporting those on the cutting edge.

6. I am able to deal with risk and loss. Sometimes you win, sometimes you lose and sometimes you just break even…successful angel investors understand their personal level of risk and are able to emotionally and financially handle it.

7. I have a financial fitness plan in place and can stick to it. Finally, and perhaps most importantly, a successful angel investor has a personal plan in place for their own portfolio and the determination to stick with it. Don’t be swayed by every investment, instead, wait for those that meet your criteria. According to research, the most successful angel investors obtain more than just a return on their money…they enjoy and take personal satisfaction from the entire process.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

Wells Fargo leaves a gap in financing

admin — Tue, 13 Jul 2010 17:25:31 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 13, 2010

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Wells Fargo leaves a gap in financing

The closure of much of the Wells Fargo Financial consumer finance operations, which we reported on a few days ago, will result in a gap of funding that may never be fully replaced, according to a weekly credit outlook today by Moody’s Investors Service. “The contraction of the traditional consumer finance industry leaves a hole that will not be filled by regulated banks with tighter underwriting standards,” said Curt Beaudouin, a senior analyst at the firm in commentary. “A withdrawal of this form consumer lending is credit negative and suggests the prospect of slower economic growth and a stubbornly gradual decline in unemployment.” The housing and subprime mortgage crises also eliminated residential mortgages — particularly cash-out refinancing — and the ample supply of wholesale funding. Wells’ closure of the Wells Fargo Financial branch network is just the latest move in an industry-wide contraction of consumer finance.

And the gap it leaves, particularly in non-prime mortgage lending, may never be filled. Beaudouin did, however, note several means of meeting the consumer lending demand left by Wells’ restructuring. Traditional banking operations — like Wells’ newly expanded community banking network — will likely look to fill the gap. Retailers will similarly look to fill the gap by offering “creative financing” and other promotions like discounts on retail chain credit cards. Finally, the void left by the decline of traditional consumer lenders potentially leaves room for new non-bank participants, although Beaudouin noted funding will continue to constrain operations.

Small business loans drying up

According to bank financial reports submitted to the Federal Financial Institutions Examination Council, loans to small businesses dropped from more than $710 billion in the second quarter of 2008 to less than $670 billion in the first quarter of 2010. Ben Bernanke, chairman of the Federal Reserve, says there are several factors behind the contraction in small businesses lending. He cited weaker demand from Main Street businesses worried about taking on more debt during tough times, “deterioration in the financial condition of small businesses during the economic downturn,” and a lack of supply of available credit.

Throughout dozens of similar forums, a couple of issues came up repeatedly. In particular, banks noted they are stuck between a rock and a hard place. On the one hand, banks are being told to increase their small businesses lending, while on the other hand bank regulators are telling banks to tighten lending standards. For small business owners, the collapse in the real estate market has also created another roadblock to obtaining a loan, since many depend on the value of their real estate as collateral for loans. Additionally, many manufacturers also rely on the value of their equipment as collateral for loans — and those values have fallen off sometimes more than real estate.

More mortgage bureaucracy in LA

The city of Los Angeles passed a city ordinance last week allowing for fines up to $100,000 to lenders and servicers of properties under foreclosure for failing to adequately preserve properties. RealtyTrac, an online marketplace of foreclosure properties, reports new foreclosure filings in Los Angeles grew by nearly 3,000 properties in May. The state of California is listed as the highest ranked state for foreclosures, on the firm’s website. However, data compiled by RealtyTrac finds that of the 72,030 properties in default, 15,946 are in real-estate owned status – meaning ownership is now transferred back to the lender. The average sales price for a LA home in foreclosure is $400,000. “The LA ordinance is an example where lenders, servicers now have one more piece of paper to push around in what is becoming a compliance nightmare,” says Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

“The city is essentially asking firms to take responsibly for homes that they technically don’t own yet.” The passage of a California state law last year, Senate Bill 1137, slows down the foreclosure process by adding an additional 30 day window to satisfy “due diligence requirements” and “in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” One servicer said Monday that the additional time means the risk of damage to the property will increase as borrowers grow more disenchanted with the status of the property.

Businesses hire workers because of tax breaks?

According to the Treasury Department, businesses have added 4.5 million workers under a new program that provides tax breaks for hiring unemployed workers. The bill, which was passed in March, exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2% social Security payroll tax through December. Employers get an additional $1,000 credit if new workers stay on the job a full year.

The administration released the report, which looked at the period from February through mid-May, in hopes, it says, of raising awareness about the credit – and of course not because it sounds good before November’s congressional election. Unsurprisingly, the report does not estimate how many of those jobs would have been added without the tax break, since businesses run by anyone who has mastered 2nd grade math are not going to hire people just to get a fraction of their wages back through a tax break. Alan Krueger, the Treasury Department’s chief economist, says, “”I would be cautious about attributing [additional hiring] to the HIRE Act.” Indeed.

DSNews.com – Mortgage firms close

During the first half of 2010, the number of mortgage-related firms to close or fail jumped by more than a quarter from the same time last year, according to industry data released week. The increase was driven by financial institution failures as the number of non-bank lenders to close has dwindled. Based on information tracked by the online industry resource Mortgage.com, the period between January 1 and June 30 of this year saw 109 mortgage-related failures and closings. The figure represents a 27% increase from the 86 closings reported during the first half of 2009.

Bank and credit union failures have both doubled when compared to the first six months of last year, with the number of banks to go under tallying 86 over the last two quarters and credit union collapses at 11. Non-bank closings, on the other hand, fell by more than two-thirds during the same period to 12. An analysis by MortgageDaily.com of bank failures and regulatory orders suggests this year’s bank failures will end up between 175 and 200. FDIC Chairman Sheila Barr has indicated that bank closings will likely pick up pace and peak during the latter half of this year.

NFIB – Business optimism down

The National Federal of Independent Businesses’ (NFIB) says that the small business optimism index fell by 3.2 points in June, dipping to 89, after posting several months of gains. The report is based on 805 responses to a random survey of NFIB members. “70% of the decline this month resulted from a deterioration in the outlook for business conditions and real sales gains,” the NFIB survey concluded. The survey showed that only 10% of firms plan new hiring, down 4 points from May, and about 8% of firms plan to reduce their workforce, up one point from the previous month. Small businesses account for a major share of jobs in the U.S. economy. The number of business owners planning to make capital expenditures over the next few months fell a point to 19%, 3 points above the 35-year record low, the NFIB said. “This indicates that the ‘inventory’ stimulus in this cycle is likely fading,” the report concluded.

Now for our real estate education section…

When to Seek Outside Investors

Novice short sale investors typically rely upon traditional mortgage products to fund their short sales; combined with personal loans, hard money lending and savings this strategy is more than sufficient to build a strong portfolio. However, there comes a time when outside investors may be the wisest choice. Learn when to seek outside investors and when to go it alone with these quick tips:

1. Seek outside investors when your growth strategy requires capital beyond your ability to self-fund. Sounds simple enough but a surprising number of short sale investors continue to struggle with traditional mortgage loans and slow self-funding mechanisms rather than turn to outside investors. This is primarily due to the following fallacies:

The belief that finding investors is hard work and will take longer than planned. The reality is a large number of people are searching for ways to obtain better than average returns without the headache and hassle of timing the market or dealing directly with real estate. Show them the money and you will be surprised at the number of investors able and willing to fund your next purchase.

The belief that you will be at the beck and call of the investor. While it’s only natural that an investor take an active interest in how their funds are performing, the reality is they do not want to be bothered with the minutia and mundane tasks involved in the investment. Most investors simply want a return with the least amount of time and effort required. The last thing they want to do is micro-manage every detail of your daily life.

2. Seek outside investors when the level of input equals or exceeds the anticipated output. What this means is that the deal needs to be big enough to attract the interest of an investor that is seeking higher than average rates of return.

3. Seek outside investors when the investors experience or contacts can accelerate your growth. This is the essence of “smart money” and a critical component to growing from a small-time investor to a major player. In fact, this is such an essential criteria that many novice investors deliberately seek out deals just to attract the interest of highly qualified investors with good contacts or experience. Remember, “dumb money” only brings money to the table whereas “smart money” bring experience, contacts and otherwise fills a much needed void in your long term investment strategy.

Think of short sale investing like any other small business start-up; who you bring to the management team and/or board of directors is just as important (perhaps even more important) than the actual product or service. With the right people, nearly any endeavor can become a raging success. To learn more about finding and working with outside investors as well as other information you can use to grow your real estate portfolio, attend one of our free webinars.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
   * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
     Wealth Building
  * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
-

Foreclosures to persist

admin — Mon, 12 Jul 2010 19:20:00 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

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**********************************************************
Foreclosures to persist

According to authors at the Federal Reserve Bank of Cleveland, the nation’s high foreclosure rate is likely to persist. The Fed article looks at the changes in foreclosure and unemployment rates across states, noting the differences in the timing of the movements. The conjecture that the high foreclosure rate will persist is based in part on the observation that states that experienced boom-bust housing cycles in the past (Texas, Oklahoma, Massachusetts and California) had elevated foreclosure starts for years after the peak in foreclosure starts and inventory. These previous boom-bust cycles “were small in comparison to the current cycle,” the article said. While the recession has left deep scars in the housing and labor markets — with the unemployment rate doubling and the foreclosure start rate roughly tripling — the timing of the movements differs over the cycle, according to the abstract, written by Timothy Dunne, a vice president at the Federal Reserve Bank of Cleveland, and Kyle Fee, a research assistant.

Credit scores down

According to FICO Inc., 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. With scores like that it’s unlikely they’ll be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. FICO’s latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO’s 300-to-850 scale weren’t as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis.

Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com. On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9 percent, which is notably above the historical average of 13 percent, though down from 18.7 percent in April 2008 before the market meltdown. There’s also been a notable shift in the important range of people with moderate credit, those with scores between 650 and 699. The new data shows that this group comprised 11.9 percent of scores. This is down only marginally from 12 percent in 2008, but reflects a drop of roughly 5.3 million people from its historical average of 15 percent.

Olick – NYT caught with its pants down

The other way we posted an article claiming the rich were the worst defaulters. Diana Olick says it ain’t so: “The data show that while one in 12 mortgages under a million dollars are delinquent, “more than one in seven homeowners with loans in excess of a million dollars are seriously delinquent.” Shall I wax on about how the rich care less about their credit ratings than the not-so-rich, or how many of these luxury homes are second homes that the owners don’t really need, or how rich folks don’t give a hoot about their communities and see these homes purely for their investment value?

Nah, I’d rather do a little math. Here’s my problem with the thesis of this article: A little less than 14 percent of the loans outstanding in the U.S. are “jumbo,” meaning over $417,000, according to government statistics (FHFA). The number of loans that are over $1m are even less than that. So when we’re talking about rates of default, you have to factor in the share of the market that you’re looking at and the bottom line numbers. Yes, the rate is higher, but it’s a far smaller share of borrowers, and that makes the numbers far more volatile. Just 1.7 percent of all home sales in May were of homes over one million dollars. That just gives you an idea of how small that marketplace is. Yes, we can always find the odd celebrity that squandered away all their millions and defaulted on the loan, but I would take a big step back before I come to the conclusion that the ‘rich: are more likely to default on a loan than the “unrich.’”

CMBS Delinquency Rate Exceeds 8%

The US commercial mortgage-backed security (CMBS) delinquency rate ticked up 17 basis points to 8.14% in June, according to Fitch Ratings. It marked the smallest increase in 11 months, and the fifth straight month of loan resolutions in excess of $1bn. Fitch noted $1.5bn of loans leaving the index helped to offset the $2bn of new delinquencies, bringing the total net increase in delinquencies to $512m of loans. Newly delinquent loans in June bore smaller average balances of $10.1m than the index’s overall $13.1m average. No loans with a balance in excess of $100m became newly delinquent in June. “While delinquencies slowed for the month, this trend is not expected to continue,” said Managing Director Mary MacNeill. “The number of distressed properties continues to grow, and if borrowers are unable to access capital for leasing costs or are unable to restructure their loans to a leverage level commensurate with sustainable property values, they may stop subsidizing debt service payments.” Loans continue to transfer to special servicing at an elevated rate, with a net increase of $4.2bn in performing specially serviced loans in June. In total, $23bn of loans in special servicing remain less than 60 days delinquent but face an increased risk of default. The multifamily delinquency rate rose to 13.82%, from 13.65% in May, while the office delinquency rate grew to 4.84% from 4.59%. The retail delinquency rate grew 16 basis points to 6.19% from 6.03% in May, while the industrial delinquency rate grew 41 basis points to 5.48%, from 5.07% in May. The rate of delinquency in hotel loans grew a single basis point to 18.62%.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Are you putting the power of social media marketing to work for your real estate business? If not now-when? If you have been sitting on the sidelines waiting for the perfect time to take the plunge, here are a few stats and facts that should provide all the inspiration required:

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.

The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.

Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.

Over half of YouTube users are under 20 years of age.

Take Away’s…

1. Make mobile a priority when using social media websites. Mobile users on both Facebook and Twitter are more active, linked to more people and increasingly interact exclusively via applications outside of the web interface.

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

5. Put an “I” in social media marketing. Effective marketing is an extension of your professional “voice” but that doesn’t meant it must take a lot of time and effort. Learn how to put the power of social media marketing to work for your real estate endeavors by joining one of our webinars or other informational sessions.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

Home delinquency rate increases

admin — Wed, 07 Jul 2010 14:29:08 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

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IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

* Best part — with this new strategy, it’s like it’s 2008 all over again… where you can generate an autopilot, dependable, predictable, and steadily soaring income that’ll create enough wealth to retire for good!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect you to obtain the free DVD and tune in to the encore Wednesday at 8:30 PM ET, 5:30 PM PST:

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Home delinquency rate increases

According to a report by Lender Processing Services, Inc. (LPS), there’s a 2.3% month-over-month increase in the nation’s home loan delinquency rate to 9.2% in May 2010, and early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010. According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO. The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in “shadow” foreclosure inventory.

After a two-month decline, deterioration ratios increased, with 2.5 loans rolling to a “worse” status for every one that has improved. The number of delinquent loans that “cured” to a current status declined for every stage of delinquency, except in the “greater than six months delinquent” category. This improvement was likely the result of trial modifications made through the Home Affordable Modification Program (HAMP) that transitioned into permanent status. LPS manages the nation’s leading repository of loan-level residential mortgage data and performance information from nearly 40 million loans across the spectrum of credit products. Diana Olick says, “Oh good, so the HAMP program is helping “cure” those 6 month+ delinquencies. No, they’re just delaying them yet again, since we know that the re-default rate on HAMP is only rising. Forget cure and think remission.”

MBA – Refinances increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 2, 2010 increased 6.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6.5% compared with the previous week. The Refinance Index increased 9.2% from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0% from one week earlier. The Purchase Index has decreased eight of the last nine weeks. The unadjusted Purchase Index decreased 2.3% compared with the previous week and was 34.7% lower than the same week one year ago. “Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30% compared to April, the last month in which buyers were eligible for the tax credit.” The four week moving average for the seasonally adjusted Market Index is up 6.4%. The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 8.3% for the Refinance Index. The refinance share of mortgage activity increased to 78.7% of total applications from 76.8% the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4% from 4.7% of total applications from the previous week.

Credit card delinquencies down

The American Bankers Association (ABA) says the number of consumers behind on their credit card payments fell to an eight-year low in the first quarter of 2010, and delinquencies across a wide-range of consumer debt categories have also fallen. High unemployment and plummeting home values during the financial meltdown appear to have spurred consumers to shore up their finances and banks to limit their lending, resulting in fewer Americans being late with payments, the industry group said.

About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year — the first time since 2002 that the rate has fallen below 4%, the ABA said Wednesday. And ABA’s composite ratio, which tracks delinquencies across eight key categories, fell to 2.98% from 3.19% the previous quarter — a sign of modest improvement in the U.S. economy, the group said. “Consumers are doing a much better job managing their finances, building their savings and spending and borrowing less,” ABA Chief Economist James Chessen said. The Commerce Department’s most recent reports on personal spending and income also showed that consumers stashed a higher portion of their earnings into savings in May than they did a month earlier.

Shopping center vacancies rise

According to research firm Reis Inc, the vacancy rate in U.S. strip centers during the second quarter rose 0.10 percentage point from the first quarter to 10.9%, slightly below the 11% in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday. Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space. That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis.

Asking rents fell 0.3% from the first quarter to $19.07 per square foot, the lowest since the end of 2006. Factoring in months of free rent and other perks landlords offered to attract and retain tenants, effective rent fell 0.5% to $16.58 per square foot, the lowest in nearly five years. Reis said that roughly half of its clients plan to take advantage of the cheap rents in their expansion plans. At large U.S. malls, the vacancy rate rose 0.10 percentage point from the first quarter to 9%, the highest since the first quarter 2000, when Reis began tracking regional malls. Asking rent fell 0.2% to $38.72 per square foot, marking the seventh straight quarter of decline. Asking rent was the lowest in more than four years.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.
The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.
Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.
Over half of YouTube users are under 20 years of age.

Take Away’s…

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

$8000 tax credit gets a last gasp

admin — Tue, 06 Jul 2010 00:45:06 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 5, 2010

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

**********************************************************

IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect you to obtain the free DVD and tune in to the encore Saturday at 8:30 PM ET, 5:30 PST:

https://www2.gotomeeting.com/register/159690035

**********************************************************
$8000 tax credit gets a last gasp

On Friday President Obama signed a law giving consumers three extra months to close the deal and still get a popular tax credit from the government – assuming they’re already in the process of buying a home. Homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases. The Senate approved the measure on Wednesday just hours ahead of the earlier deadline and one day after the House of Representatives approved the measure.

The $8,000 tax credit for first time homebuyers and $6,500 credit for others purchasing a new primary residence was a highly popular temporary measure by the Obama administration to jump start home sales during the economic recession. Real estate agents said as many as 180,000 homebuyers would miss the June 30 deadline because banks and settlement offices were struggling to deal with the volume of people rushing to close on their deals signed before April 30. Critics say the three-month extension is an invitation for fraud, providing prospective home buyers time to back date contracts to a date before April 30 and subsequently closing on those contracts by the new September 30 deadline. “The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit,” the Internal Revenue Service said.

Bankruptcy filings up

Bankruptcy filings surged 14% during the first half of 2010, according to the American Bankruptcy Institute. Filings totaled 770,117 through June, compared to 675,351 during the same period last year. The institute also said that bankruptcies totaled 126,270 in June, a jump of 8.5% from the same month in 2009, when they totaled 116,365. The institute relied on data from the National Bankruptcy Research Center for its information.

Samuel Gerdano, executive director of the institute, says “Years of rising consumer debt and low savings rates, combined with the housing and unemployment crisis, are causing bankruptcy levels not seen since the 2005.” In 2005 Congress amended the Bankruptcy Code, making it harder for Americans to file and sparking a rush to file by October of 2005, when the amendments kicked in. In 2005, bankruptcy filings totaled more than 2 million. By comparison, Gerdano expects there will be more than 1.6 million new bankruptcy filings by the end of 2010.

HAUP now active

As of July 1, homeowners have been able to apply for assistance from the Home Affordable Unemployment Program (HAUP). HAUP provides homeowners a forbearance of monthly mortgage payments, either reducing them or suspending them for at least three months. Servicers can extend the timeline depending on regulatory guidelines. In June, the unemployment rate edged down to 9.5% from 9.7% in May, according the Department of Labor. Homeowners who qualify for the program have a first-lien mortgage originated on or before Jan. 1, 2009. The unpaid principal balance on a single-unit primary residence must be equal to or less than $729,750, and the mortgage has to be in default or in imminent default.

HAMP requires borrowers to be employed with some income for the modification to be reduced down to 31% of the monthly income. But once the borrower finds another job or the borrower is 30 days from the end of the HAUP forbearance period, the borrower can be revaluated for a HAMP modification. Those who have already gone through the Home Affordable Modification Program (HAMP) process are not eligible for the HAUP. HUAP joins the Home Affordable Foreclosure Alternatives (HAFA) program, which provides incentives to servicers for providing short sales and deeds-in-lieu of foreclosure, as another net to catch borrowers who fall out or fail the HAMP program.

Factory orders drop more than expected

The Commerce Department said Friday that orders for manufactured goods decreased 1.4 percent in May. It was the biggest drop since March 2009. Excluding the volatile transportation sector, orders fell 0.6 percent. That number fell 0.7 percent in April, the worst showing in 13 months. Overall orders in April grew a revised 1.0 percent. Orders for big-ticket durable goods were down 0.3 percent, after a 2.0 percent increase in April. Electronics and commercial aircraft were among the weakest performers.

Demand for those goods expected to last less than three months fell 2.1 percent. Lower gas prices were partly to blame. But there were significant losses for makers of clothing, drinks and tobacco, and chemical products. The overall decline in orders was bleaker than the 0.5 percent drop expected by economists surveyed by Thomson Reuters. Manufacturing has been a rare bright spot, helping lead the country out of recession with increased hiring and productivity. However, economists fear joblessness and less demand for exports could sap the sector’s strength in the coming months.

DSNews.com – Delinquencies inch up in May

The seasonal improvement period for delinquencies and foreclosure inventories has come to a halt, according to an industry report released last Thursday by Lender Processing Services (LPS). The Florida-based analytics firm’s monthly Mortgage Monitor report found that the total U.S. delinquency rate jumped to 9.2 percent in May, inching up 2.3 percent from April and 7.9 percent higher than the same month last year. Herb Blecher, VP of LPS Applied Analytics, said the slight increase on the delinquency side was expected as this is the period when rates start to pick up. He said delinquencies will likely continue to increase all the way through the end of the year. The foreclosure inventory rate remained stable from the month prior at 3.18 percent, but it was 13.5 percent higher than May of 2010. Blecher explained that while some stability has been achieved in the foreclosure inventory rate, a further decline over the coming months is unlikely.

The national noncurrent loan rate, which reflects both foreclosures and delinquencies, came in at 12.38 percent. Not including REO properties, nearly 6.3 million loans were noncurrent in May. When REO properties were included, the total jumped to nearly 7.4 million. On a state-by-state basis, Florida and Nevada continued to hold the most noncurrent loans in May, with rates of 22.4 percent and 21.8 percent respectively. On the other end of the spectrum, the lowest noncurrent loan rates were seen in North Dakota, at 4.1 percent and South Dakota, at 5 percent.

Now for our real estate education section…

Life, Liberty, the Pursuit of Happiness & Real Estate

By the time you read this, the entire nation will have once again celebrated another Fourth of July with all of its star spangled glory, hoards of hot dogs and rainy day fireworks. This year it is also a good idea to stop and reflect on what the founding fathers really had in mind when declaring independence and the self-evident concept that all men are created equal. While life, liberty and the pursuit of happiness might seem an odd topic for a real estate investing newsletter…real estate played a critical role in the creation of what was to become the “American way of life”. In fact, real estate is so critical to the plans of the founding fathers that to tamper with ownership is to change the very fabric upon which our society was based.

Throughout history, societies have risen and fallen based upon land rights and ownership. “Free men” were nearly always landowners while serfs, servants and peasants were those forced to eek out a living without the benefit of owning raw assets or the land upon which the based a livelihood. During the formation of this nation, land rights were closely associated with the ability of a man (or woman) to determine their own fate, pursue a life of individual meaning and the very essence of freedom itself. The rights of property ownership include:

The right of possession, the ability to control the property, the right to enjoy the property, the right of exclusion and disposition. Unfortunately, many of these same rights upon which the nation was built are now under attack from a variety of sources. Not only does the erosion of land ownership and property rights impact the individual but also society at large. From runaway zoning regulations to the actions of eminent domain, land rights in the United States have eroded over decades but never to the extent seen in recent years. For example, the same bill that allows a judge to modify a mortgage contract is seen as a potential threat to the very foundation of contractual law…creating a more risky (and therefore more costly) lending environment for future loans. Squatters rights which are plaguing many cities across the nation have severely undercut the foundational right of enjoyment, exclusion and disposition. Even the newly proposed (and passed) regulations concerning required training, licensure and/or certification for everything from lead laws to owner financed properties is expected to have dramatic impact upon the rights of the individual to control and dispose of their own properties.

What does this mean for real estate investors and other property owners?

Change. Perhaps not the exact type of change the nation had in mind during the last election but change just the same. However, change isn’t always bad. In many instances it present unprecedented opportunity for those that are prepared to act. If history is any measure, excessive regulations tend to add ever increasing cost and growing scarcity over the long run. The new lead laws are a prime example; be requiring additional certification for anyone (including the property owner) to perform even rudimentary work on a home built prior to 1978, the cost of renovation is likely to increase even without putting more money into the pockets of the property owner.

Houses built post 1978 just became slightly more valuable if for no other reason than the lack of headache associated with them. Likewise, foreclosed properties plagued by squatters are at a distinct disadvantage…but may represent a golden opportunity for new investors long on time and short on funds. Savvy real estate estate investors would do well to keep an eye out for buying opportunities and price their bids accordingly. In the meantime, congratulations in exercising one of the most fundamental rights enjoyed by every red blooded American throughout the history of our great nation…the right to buy and sell property. It’s the cornerstone of what made this nation strong and what has been the foundation to wealth over the eons.

See you at the top!

Chris McLaughlin
**************

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

Real Estate News & Commentary by Chris McLaughlin, October 6, 2009

admin — Tue, 06 Oct 2009 17:01:18 +0000

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris
************
Tomorrow Night!

Nathan J. Interviews Damian Lanfranchi on his
Deals Done For You System!

See the BIG Miss 96% of Investors Are Making When
It Comes To How-To Use The Internet To Get Deals
(You Can Literally Be Destroying Your Chances Of
Success Before You Start!)

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Short Sales Plan closer to finalization

According to a US Treasury spokeswoman, The Treasury will soon finalize the long awaited plan to expand its incentives for mortgage companies to use “short sales” as a way to stem a rising tide of foreclosures. Short sales eliminate the problem of negative equity and help alleviate fears that a second wave of foreclosures is in the pipeline. Only 12 percent of eligible homeowners have had their loans reworked, leaving millions more foreclosures to come. Lisa Marquis Jackson, a vice president at Irvine, California-based John Burns Real Estate Consulting says, “What they are trying to do is move some of these foreclosures in the pipeline, and bring them to a resolution before (foreclosure) happens. 12 percent of these being modified isn’t enough to clean the[m] up.”

How will these incentives help? Negotiating a short sale can take four to five months to complete, and buyers often walk away from sales because banks are slow to respond, or balk at the offer. The incentives will be calculated on recent declines of local home prices and average home prices in these markets, the Treasury said in May. They would add to other incentives that servicers can receive for reducing loan payments. In May, the Treasury proposed that lenders would receive $1,000 for allowing the owner to sell the house for less than the amount owed on the mortgage, and accepting the proceeds as full repayment. They will also receive $1,000 for accepting a similar deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure. Borrowers who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs. Treasury also said it will pay second lien holders up to $1,000 to relinquish their claims in such transactions.

Good news on winter heating costs

The U.S. Energy Information Administration (EIA) says the average U.S. household will pay 8 percent less in heating fuel costs this winter — a savings of about $84 — with natural gas and propane users enjoying the biggest drop in cost. All this is to cheaper fuel prices, plenty of fuel supplies and expected slightly milder weather compared with last winter. “Inventories of all heating fuels are currently well above levels seen at the start of last winter,” the EIA said. The agency’s forecast covers the U.S. winter heating season that runs from October through next March. Large fuel inventories will help mitigate any increases in energy prices if the winter is colder than expected. Winter expenses are forecast to be 11.8 percent ($105) lower for natural gas, 2.2 percent ($40) less for heating oil, 14.2 percent ($280) cheaper for propane and 2 percent ($20) less for electricity. At the same time, demand for natural gas is expected to be down 1.1 percent this winter, with consumption of heating oil down 1.9 percent, propane down 0.6 percent and electricity up 0.1 percent, the agency said.

MBS purchase program winding down

The Federal Reserve has started to wind down its agency mortgage-backed securities (MBS) purchase program, announcing $2 billion fewer purchases for the week ending September 30, while a separate Fed program, the Term Asset-Backed Securities Loan Facility (TALF) continues to have a strong impact on the commercial mortgage market and has already pulled spreads lower. Through HAMP, the Treasury Department allots capped incentives to servicers who pursue modifications for borrowers at risk of delinquency. Many of those modifications still await permanent modification status within the three-month trial modification period used to determine borrower ability to repay modified terms. Recent analysis by Amherst Securities Group indicates it may take much longer than three months to determine the ultimate performance of HAMP modifications, as historic 12-month recidivism sit at about 70%. Amherst analysis of some 7 million loans “destined to liquidate” was not optimistic about the ultimate success of HAMP modifications.

HomeSteps’ Closing Cost Assistance Program Ends Soon

Freddie Mac’s offer to pay a portion of the closing costs for house buyers in the HomeSteps program is about to expire. HomeSteps is Freddie Mac’s real estate sales unit that sells real estate-owned (REO) properties the government-sponsored enterprise (GSE) owns throughout the US, and under the SmartBuy program, Freddie will pay up to 3.5% of buyers’ closing costs when they purchase a single-family home through HomeSteps. The SmartBuy offer is a two year warranty on HomeSteps purchased properties, and includes electrical, plumbing, air conditioning and heating systems, as well as ductwork and many major appliances like water heaters, stoves, washer and dryers, dishwashers and refrigerators. But to take advantage of the closing cost offer, buyers must submit an initial purchase offer by October 30 and close by December 31, although the warranty offer will continue after the closing cost promotion expires.

Holiday sales expected to be down

The National Retail Federation (NRF) expects 2009 retail industry sales to fall 1 percent this year to $437.6 billion in the months of November and December. Last year, sales in the period fell 3.4 percent to $441.97 billion. If the decline does occur, it would mark the first back-to-back drop since the group began tracking such figures in 1992. “There’s a lot of weakness in the consumer sector because of the employment situation, because there’s no income growth and so consumer confidence is, I would say, wavering.” The unemployment rate now stands at 9.8 percent, and that figure is “just not going to look better in the near term,” Wells said. That will pressure holiday sales, she said, despite signs that the U.S. economy started to grow in the third quarter after four quarters of contraction. The year-end holiday shopping season is a critical one for retailers, and can account for 25 percent to 40 percent of full-year sales. The 2008 holiday was a disaster for retailers, as a financial crisis swept across the globe in September and consumers cut spending on nearly everything but bare necessities.

Now on to our real estate educational section…

Mortgage Modification Bill May Impact Foreclosures
The newly proposed “Preserving Homes and Communities Act of 2009” introduced by Senators Jack Reed (D-Rhode Island), Dick Durbin (D-Il), Sheldon Whitehouse (D-RI) and Jeff Merkley (D-OR) limits foreclosures and requires lenders and services to offer mortgage modifications if the net present value of the modification is anticipated to be greater than the foreclosure value.
Additional provisions of the newly proposed bill include:
• Limits on foreclosure fees
• Creation of a nationwide database to track foreclosures
• Strict penalties for non-compliant firms
• State sponsored mediation programs
• Grant money for borrowers struggling to make payments regardless of current mortgage product.
• Capitalize the National Housing Trust Fund with $1 billion in proceeds toward preservation and restoration of affordable housing.
While advocates of the bill cite the growing increase in foreclosure rates across the nation as evidence of the need for further intervention, critics of the bill believe it will increase the burden on banks and lenders while simultaneously reducing fees associated with delinquent accounts.
According to Moodys.com, mortgage defaults are expected to rise to as many as four million with more than a third of new defaults associated with prime fixed rate loans rather than the original sub-prime concerns. Currently more than one in every eight homeowners are at least one payment in arrears; the highest level since the Mortgage Bankers Association (MBA) began tracking the data.
How Could This Bill Impact Short Sale Investors?
Potentially in several ways….both positive and negative in nature.
1. New mandates may dramatically reduce the number and availability of low-ball offers on existing loans.
2. Availability of direct grants households via “targeted mortgage payment assistance” may delay or create additional layers of lien-holders on properties which eventually default.
3. Open funding for repairs and renovations in distressed neighborhoods or other areas which quality for Housing Trust Funds (buy now before the price goes up!).
For more information or to read the proposed bill visit http://reed.senate.gov/.
See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com
P.S. : YOU MUST SEE THIS! The move celebrated real estate
investing movie of the year:

http://www.housewarsmovie.com
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Finally, a blog for Real Estate professionals
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting nearly
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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Short Sales Riches Blog » Investors

Existing homes sales fall

Smart Real Estate News & Commentary by Chris McLaughlin July 23, 2010

********************************************************** Existing homes sales fall

Most Americans think things will get worse

Inventories up, sales down

Bush did it … another perspective

Olick – don’t be fooled

Now for our real estate education section…

Failed HAMP may benefit from HAFA

Smart Real Estate News & Commentary by Chris McLaughlin July 22, 2010

Come learn from Nathan J.’s mentor who will do all your deals for you…

********************************************************** Failed HAMP may benefit from HAFA

Dodd-Frank Act bad for business

Jobless claims up

Commercial real estate coming back?

20% of Americans suffered major economic loss

Now for our real estate education section…

How to Price Any Property for Maximum Profits

What to Measure

What to Exclude

HAMP still a failure

Smart Real Estate News & Commentary by Chris McLaughlin July 21, 2010

Come learn from Nathan J.’s mentor who will do all your deals for you…

********************************************************** HAMP still a failure

Unemployment bill passes

Loan demand up

Michael Boskin – Obama’s economic fish stories

Wall Street Journal – reasons for a flat housing market

Tenant Act extended to 2014

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

Housing starts down

Smart Real Estate News & Commentary by Chris McLaughlin July 20, 2010

********************************************************** Housing starts down

Consumers will pay for new rules

Olick – Jumbo loans are back

Home Builder Confidence Plummets

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

Diana Olick – Home prices being slashed, more coming?

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

Fix A Flip Re Opens … If you want your deals funded beyond 1 day,

Diana Olick – Home prices being slashed, more coming?

Foreclosures fall as bank repossessions quicken

Business vs Obama

Lost decade coming?

1 in 200 mortgages may be fraudulent?

Jobless claims and wholesale prices drop

Now for our real estate education section…

Becoming an Angel Investor

Wells Fargo leaves a gap in financing

Smart Real Estate News & Commentary by Chris McLaughlin July 13, 2010

Going … Going … GONE!

The LA Investor Summit is SOLD OUT!

If you would like to put your name on our waiting list please do so ASAP:

********************************************************** Wells Fargo leaves a gap in financing

Small business loans drying up

More mortgage bureaucracy in LA

Businesses hire workers because of tax breaks?

DSNews.com – Mortgage firms close

NFIB – Business optimism down

Now for our real estate education section…

When to Seek Outside Investors

Foreclosures to persist

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

********************************************************** Foreclosures to persist

Credit scores down

Olick – NYT caught with its pants down

CMBS Delinquency Rate Exceeds 8%

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Home delinquency rate increases

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

It’s time to get excited…

********************************************************** Home delinquency rate increases

MBA – Refinances increase

Credit card delinquencies down

Shopping center vacancies rise

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Existing homes sales fall

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Failed HAMP may benefit from HAFA

**********************************************************
HAMP still a failure

**********************************************************
Housing starts down

**********************************************************
Wells Fargo leaves a gap in financing

**********************************************************
Foreclosures to persist

**********************************************************
Home delinquency rate increases

**********************************************************
$8000 tax credit gets a last gasp