http://www.shortsalesriches.com
* Follow me on Twitter: http://www.twitter.com/mclaughlinchris
************
Investors – tired of losing your short sales and REO
flips to 30 day seasoning rules… or the deal dying
on the vine when it takes too long to close?

And, you’re locked out of an important group of buyers –
FHA – because you have to own the property for 90 days
before you can resell it!

Now we have a solution to all these problems, which have
left too many investors high and dry. And the Encore begins
at 3 PM ET, NOON PST this Saturday!

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

Keep the $8000 tax credit, say realtors

A large majority of the nearly 1,000 real estate agents surveyed in a recent Weichert poll say the first-time homebuyer tax credit of up to $8,000 has had a significant impact on spurring consumer interest in getting into the housing market. Some even called for an expansion of the program past its current expiration date and to homeowners that do not yet qualify. 71% indicated the credit was the single largest factor motivating the buyers they’ve worked with so far in 2009, 20% of respondents said affordable home prices were the motivating factor, and 8% indicated low interest rates played a major motivating role. 92% said the market will decline if the tax credit expires at the end of November while 97% of respondents favored extending the credit through Dec. 31, 2010. “The tax credit is working to restore confidence and stimulating the overall economy but we still have a long way to go before we return to a normal market,” said James Weichert, president and founder of Weichert. “As this survey shows, many in our industry are concerned that we will lose much of the ground that has been made toward a recovery if the tax credit is not extended.”

30-Year Mortgage Rate Falls to 4.94%

According to Freddie Mac’s latest survey of data through October 1, the average 30-year fixed-rate mortgage (FRM) had a 4.94% interest rate with an average 0.7 points, down 10 basis points (bps) from 5.04% last week. The 15-year FRM averaged 4.36% with an average 0.6 points, down 10 from 4.46% last week. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42% with an average 0.6 points this week, down from 4.51% last week. The one-year FRM averaged 4.49% with an average 0.5 points this week, also down from 4.52% last week. A separate rate survey conducted by Bankrate.com of major US banks and thrifts indicated rates fell for a fifth week, dipping to their lowest levels since spring. The 30-year FRM slipped 11bps to 5.25%, while the benchmark 15-year FRM fell 10bps to 4.65% this week. “This is as good a time as any to refinance because Uncle Sam will make it more difficult and more expensive to refi in a few months,” said Bankrate’s Holden Lewis in weekly commentary.

Unemployment hits 9.8%

The national unemployment rate inched up to 9.8%, another 26-year high. The Labor Department said there was a net loss of 263,000 jobs in the month, up from a revised loss of 201,000 jobs in August. Economists surveyed by Briefing.com had forecast losses would fall to 175,000 jobs. The labor market had shown slow but relatively steady improvement since a record loss of 741,000 jobs in January, and this is only the second time this year that job losses rose from the previous month. However, September marked the 21st consecutive month that the number of workers on payrolls has shrunk, a period during which 7.2 million jobs have been lost. Even though many economists, including those at the Federal Reserve, say there are signs that the economy is growing once again, today’s jobs report shows that job losses could continue well into the recovery, limiting the strength of any economic turnaround.

GSE REO Portfolio Near 100,000

According to 10-Q filings with the Securities and Exchange Commission (SEC), Freddie Mac’s portfolio is nearly 35,000 properties, while Fannie Mae’s is closing in on double that figure at nearly 64,000. Fannie’s REO portfolio nearly doubled from the first half of 2008 compared to H109. Fannie held 33,729 properties during H108. The number of properties increased in all regions of the US except the Midwest, which experienced a decrease from 15,265 to 14,626 properties, but the rate of growth in the two portfolios has declined. Freddie acknowledges it expects to experience further losses from REO properties: “While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended,” the Freddie filing said. Freddie said its pool of Alt-A interest-only loans, as well as 2006 and 2007 vintage loans comprise the biggest share of its portfolio and “continue to be larger contributors to our worsening credit statistics than other, more traditional loan groups,” because of factors like declining home prices. Freddie’s REO properties are concentrated in the West region of the country, and homes there comprised 27% of the unpaid principal balances of Freddie’s single-family mortgage portfolio as of June 30, 2009, but accounted for 46% of its REO acquisitions in the first half of 2009.

Regulation Z statutes in effect

The Federal Reserve’s long awaited Regulation Z statutes went into effect yesterday after more than a year of preparations by the mortgage industry. Regulation Z is a truth-in-lending regulation to protect consumers who buy higher-priced mortgages with annual percentage rates (APR) above the average prime offer rate for a comparable transaction by at least 1.5 percentage points for first mortgages, or 3.5 percentage points for second mortgages. Lenders now have to provide additional disclosures when their customers purchase these loans. In addition, lenders will now evaluate the borrower’s ability to repay, verify income and assets, establish escrow accounts for taxes and insurance, and won’t have prepayment penalties for two years on most loans.

Taxes looming?

Remember the taxes the President promised no one but “the rich” (making over $250,000/yr) would have to pay? Well, no matter how much you make, reach for your wallet. An increasing number of influential Democrats and fiscal-policy experts have signaled that lawmakers will have to get a handle on the deficit, and they recommend seriously considering the creation of a value-added tax (VAT) on top of the federal income tax. That would mean more money out of everyone’s pockets when buying virtually anything — sweaters, school books, furniture, pottery classes, and dinners out. A VAT is tax on consumption similar to a national sales tax, but it’s not just paid at the cash register. It’s levied at every stage of production, so all businesses involved in making a product or performing a service would pay a VAT. And then the retail customer gets hit as well. Paul Volcker, the former chairman of the Federal Reserve who heads President Obama’s tax reform panel, (among others, including liberal think tanks, of course) said that when it comes to getting control of the country’s debt burden, “I think if we can’t do it on the cost side, we’ve got to go on the revenue side. And it’s too early to do it, but it’s not too early to begin wondering.” Well, we all knew deep down that the “no new taxes” shtick was too good to be true, didn’t we?

Now on to our real estate educational section…

What’s Better…Short Sales or Savings?
No, this isn’t a trick question nor are we opposed to savings – in fact, liquidity is an essential survival strategy that helps investors at all levels ride out tough economic times; however, it is possible to take anything to the extreme including savings.
As Americans across the nation embrace savings for the first time in years, there is a growing need for rational financial reasoning especially when it comes to investments. For years consumers were content to spend money they had not earned then simply make credit card payments or take out a second mortgage. Today all that changed as the rate of savings has gone from literally less than zero to nearly ten percent within the past two years.
While paying down debt and getting one’s financial house in order is always a good thing – it is not the same as investing. Setting aside money for a rainy day and keeping a little extra on hand for emergencies is also a solid strategy but should never be confused with growing your money.

Let’s take an up-close and personal look at short sales versus savings to see how it will impact the average investor. We will use a hypothetical case study of Mr. Saver versus Mr. Short Sale to see how each strategy plays out over time.

Mr. Saver

Mr. Saver is like most average American’s; he is fortunate enough to still be employed and has an “average” household income that just happens to reflect the nationwide median – $50,000. Mr. Saver is 30 years of age with 1.3 children (the third child is a very spoiled dog), married and wishes he had more time to spend with friends and family. Mr. Saver has another 35 years to work before qualifying for Social Security (actually 37 more years but who is counting) and puts away a whopping 10% of his income each and every year….which is far above the national average but we are going to use extremes to show the very real difference in expectations.
At the end of the year, Mr. Saver has put $5,000 into savings and plans to continue with this same habit for the next 30 years. Current interest rates are roughly 2 percent (if you are lucky). At the end of 30 years Mr. Saver will have a balance of $215,750 after managing to save $156,200. Sounds pretty good right? Well, not really. First of all you need to take inflation into account. Using a historical 30 year adjustment, that same $215,750 will only be worth approximately $73,000 in today’s dollars. Yes, we know that is less than what you paid in but that is how inflation works…it robs your money of value over time. To add insult to injury, Mr. Saver must pay taxes on the earned interest. Using a conservative estimate from today, that would eliminate at least another $10,000 to $12,000 leaving roughly $205,000 or less than $70,000 in inflation adjusted purchasing power. Wow…Mr. Saver worked hard and did without for 30 years just to set aside about 18 months of income. He better hope Social Security is in good shape by then because he is going to need it!
“Wait a Minute” you might argue, “Interest rates are likely to go up after the economy recovers”. That is certainly true but by definition, interest rates typically lag behind inflation rates or the banks could not afford to lend money. Additionally, most people tend to save less when prices rise – remember, just a few years ago the national average for savings was literally below zero. However, for the sake of debate, we will use a historic interest average of 5 percent. At the end of 30 years the total balance would be just under $370,000 with the same $156,200 contribution and $212,000 interest earned. Taxes on interest would conservatively run $25,000 leaving a total of $345,000 or $116,000 equivalent adjusted for inflation. It’s Better… but not by much.

Mr. Short Sale

Mr. Short Sale also is employed with a household income of $50,000, 1.3 children and no other debt. Instead of putting his money into a low interest savings account, Mr. Short Sale decides to invest the same $5,000 toward purchasing his first modest short sale home. He decides to rent it out and allow someone else to pay for the mortgage so is able to take hefty tax write-off’s after combining the PITI plus depreciation and closing costs. For the sake of simplicity we will assume he rents the home for just enough money to allow the home to pay for itself without making any profit…in reality, it would be much more likely to create a positive cash flow.
Mr. Short Sale continues to purchase a home every 2 years rather than putting the money into a savings account. At the end of 30 years Mr. Short Sale own 15 homes each generating a steady income that pays for itself. One home is paid in full and every 2 years another mortgage is paid off adding to the total number of paid in full homes. Mr. Short Sale can either continue to collect rent every month or sell one or more properties to fund his retirement.
Because real estate is a tangible asset, it has continued to appreciate in value each and every year so those purchased early in his investment career are now worth substantially more in value. In fact, let’s assume Mr. Short Sale purchased very modest starter homes for only $50,000 in 2009. In 30 years when he goes to retire, that same property should be worth at least $150,000 due to inflation….that represents only one year’s savings compared to 10-15 years worth by Mr. Savings above. Remember, every two years Mr. Short Sales will have another mortgage paid in full.
Ask yourself, how “safe” are your savings compared to short sales?

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
**************
Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches
*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog
*************************************************
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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris
–

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

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

YOU MUST SEE THIS!  The move celebrated real estate

investing movie of the year:

http://www.housewarsmovie.com

Investors – tired of losing your short sales and REO

flips to 30 day seasoning rules… or the deal dying

on the vine when it takes too long to close?

And, you’re locked out of an important group of buyers -

FHA – because you have to own the property for 90 days

before you can resell it!

Now we have a solution to all these problems, which have

left too many investors high and dry.  And the Encore begins

at 8:30 PM ET, 5:30 PM PST tonight!

Prepare yourself to become a Jedi Knight of the Real

Estate flipping wars… and get the keys to kingdoms

of wealth!  Because with this system, you’re going to

make more money than you ever dared dream possible…

https://www2.gotomeeting.com/register/342341202

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

Freddie Mac door knocking delinquents

Freddie Mac has contracted Titanium Solutions, a third-party servicer, to go to the homes of delinquent borrowers to get the missing information and documentation necessary to start three-month long trial repayments under the Home Affordable Modification Program (HAMP).  “By meeting with our borrowers, one on one, Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods,” said Ingrid Beckles, Freddie Mac senior vice president, default asset management.  As a fraud prevention measure, Titanium representatives will not be allowed to accept mortgage payments or any other money from borrowers, Freddie Mac said. Representatives will also carry a copy of the solicitation letter the borrower initially received from their servicer, which contains unique information about the borrower’s loan.  In addition to the door-to-door campaign, Freddie Mac sends representatives to foreclosure mediation events put on by the Treasury Department and has hired Home Retention Services, a subsidiary of Stewart Lender Services, to process the backlog of modification applications from distressed borrowers with Freddie Mac mortgages.

Job losses keep slowing

According to Automatic Data Processing, a payroll-processing firm, private-sector employers cut 254,000 jobs in September, down from a revised 277,000 in August.  It was the smallest monthly total since July 2008, but more than the 200,000 loss economists surveyed by Briefing.com had forecast.  The good news is that the difference was “not statistically meaningful,” according to Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC.  Large businesses, those with 500 or more workers, let 61,000 workers go.  Medium-sized businesses, with between 50 and 499 workers, shed 93,000 jobs.  And small businesses, those with less than 50 workers, reduced payrolls by 100,000.  “The pattern of improvement in headline number is undeniable at this point,” Prakken said.  Private sector payrolls will continue to decline at a slowing rate for the next few months before modest job growth resumes “in the first few months of 2010,” he added.

MBA – Mortgage Applications down

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 25, 2009 decreased 2.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 3.1 percent compared with the previous week and 44.3 percent compared with the same week one year earlier.  The Refinance Index decreased 0.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 6.2 percent from one week earlier.  The unadjusted Purchase Index decreased 6.9 percent compared with the previous week and was 10.6 percent lower than the same period one year ago.  The four week moving average for the seasonally adjusted Market Index is up 3.9 percent.  The four week moving average is down 0.6 percent for the seasonally adjusted Purchase Index, while this average is up 6.8 percent for the Refinance Index.  The refinance share of mortgage activity increased to 65.3 percent of total applications from 63.8 percent the previous week.  The adjustable-rate mortgage (ARM) share of activity decreased to 6.2 percent from 6.7 percent of total applications from the previous week.  30-year borrowing rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group.  A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.

GDP revised upward

The Commerce Department’s final estimate has been revised to show that gross domestic product fell at a 0.7% annual rate instead of the 1.0% decline reported last month.  Analysts had forecast GDP, which measures total goods and services output within U.S. borders, slipping at a 1.2% rate in the second quarter after dropping 6.4% in the January-March period.  According to CNBC, this will probably mark the last quarter of decline in output for the U.S. economy, which slipped into recession in December 2007.  The economy is believed to have rebounded in the July-September quarter.  With the second-quarter contraction, the country’s real GDP has shrunk for four straight quarters for the first time since government records started in 1947.  Consumer spending, which normally accounts for over two-thirds of U.S. economic activity, fell at a 0.9 percent rate in the second quarter—smaller than the previously estimated 1.0 percent decline.  Spending rose at a 0.6 percent rate in the previous quarter.

Multifamily sector hardest hit

According to commercial mortgage-backed securities (CMBS) and commercial mortgage information provider Trepp, the multifamily sector looks poised to post the worst performance of any major commercial property type this month, and delinquency levels in office and hotel properties are likely to come in “sharply” higher in September.  Credit-rating agency Realpoint noted that multifamily properties came in second only to retail delinquencies.  4.8% of the total multifamily outstanding balance was delinquent in August.  The total delinquent unpaid balance for CMBS rose to $28.16 billion in August from $25.68 billion in July, marking a 592% increase from the previous-year period and nearly erasing July’s $2.97 billion recovery from the June ‘09 12-month high.  3.47% of the $811.4 billion of unpaid principal balance for all CMBS pools was delinquent in August, up from 3.1% in July but slightly below June’s high of 3.5%.

Manufacturing down – slows stock rally

The Chicago Purchasing Managers Index, which is considered a precursor to the national Institute for Supply Management index to be released on Thursday, fell to 46.1 in September instead of  rising to the 52 that economists expected.  While GDP is up, the Chicago PMI data is fresher and therefore more troubling than the GDP reading.  And it reminded investors that the economy still has major obstacles to be overcome before a solid recovery can occur – driving a 100 points plus decline in the DOW as of this writing.  In the first hour of trading, the Dow fell 1.2 percent, Standard & Poor’s 500 index dropped 1.2 percent, and the Nasdaq composite index 1.2 percent.

Now on to our real estate educational section…

What’s Safer – Short Sales or Your Pension Plan?

They told you it would be safely set aside for when you needed it most; Guaranteed by the backing of Good Old Uncle Sam via the Pension Benefit Guaranty Corporation…another quasi-government entity that is ready to petition for their very own version of a big bail-out. You spent the best years of your life waiting for that money to mature only to learn it may not be there after all…or even if it is, you may be required to pay more in taxes, have access to fewer benefits or fight against the ravages of inflation. So, what is really safer…short sales or your pension plan? Let’s examine the facts to find out why relying upon a pension may not pay off in the long run.

1. The  PBGC – Pension Benefit Guaranty Corporation – has been underfunded each and every year since 2002. Remember, this is the main entity responsible for “making good” on pension plans when a corporation goes bankrupt.  Unfortunately, the downturn in the economy has resulted in the largest single short-fall in the history of the PBGC…in addition to the multi-year deficiency. In fact, experts predict it is a matter of months before the PBGC will be forced to petition congress for financial support. Can you count on them to be there when you need it?

High income earners are at even greater risk…if the PBGC is forced to take over your pension plan it already has a cap in place limiting payments to only $54,000 per year to anyone 65 or older – no matter what your original pension might have been!

1. Companies are cutting back, filing bankruptcy and attempting to reduce long-term obligations in any way possible just to remain afloat. Take a look at General Motors. How long can you count on your company to remain viable in a rapidly changing global economy in the midst of a total melt-down? Are you willing to bet your golden years on their ability to remain profitable for ten years? Twenty years? Longer?
2. Too many eggs in one basket. Earning a living is getting harder every day so why place all your eggs in one basket? It’s bad enough to lose an income but even worse to face unemployment lines and a loss of a pension plan should your company meet with an early demise. Remember, even if they stay in business but simply restructure debt, it could potentially impact your financial future.

On the other hand, short sales are directly under your control. They do not rely upon big bail-outs, government intervention or even the whims of investors other than those you deal with directly. Short sale real estate allows you the opportunity to diversify outside of your company by retaining access to an income stream outside of that associated with your place of employment…but without taking on more time away from home. Finally, short sales are able to fit your needs now…not ten, twenty or even thirty years or more into the future. If your situation changes – sell. Need additional write-off’s…hold for awhile. The choices and versatility afforded by short sales are nearly endless compared to dealing with a pension plan where the rules of the game can change before you are able to act on new information.
See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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Mortgage applications up

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending September 4, 2009, and the mortgage loan application volume increased 17.0 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 15.8 percent compared with the previous week and 64.5 percent compared with the same week one year earlier.  The Refinance Index increased 22.5 percent from the previous week, the biggest jump since mid-March.  The seasonally adjusted Purchase Index increased 9.5 percent from one week earlier.  This was the largest gain since early April, putting the index at the highest level since the first week of January.  The four week moving average for the seasonally adjusted Market Index is up 7.0 percent.  The four week moving average is up 3.3 percent for the seasonally adjusted Purchase Index, while this average is up 9.7 percent for the Refinance Index.  Cameron Findlay, chief economist at LendingTree.com in Charlotte, North Carolina, said that while higher demand is a positive for the hard-hit U.S. housing market, the sector still faces plenty of obstacles.  “It is hard to make an argument with lower wages, less hours and higher unemployment that people will be upsizing into their dream home.”

Ohio to sue mortgage providers

Ohio Attorney General Richard Cordray says he plans to sue more mortgage companies in an effort to break the foreclosure crisis.  Servicing companies have found themselves at the forefront of the battle to curb the home foreclosures that helped push the economy into recession, but they have drawn increased scrutiny in recent months amid signs that foreclosures are rising despite their efforts.  Cordray said the discovery process in court would allow his office to more closely examine servicers procedures.  Whether it be incompetence or greed — through charging excessive fees for handling loan modification requests — servicers have not yet hired enough people to provide sufficient customer service to stricken homeowners, he added.  A slow response by servicers over President Barack Obama’s Home Affordable Modification Program (HAMP) has also led to a rebuke by the U.S. Treasury.  “Foreclosures lead to abandoned homes that bring additional costs that have to be paid by our communities, not the mortgage companies and not the servicers.  They (mortgage companies) know they won’t have to bear those costs and they don’t give a hoot.”

Obama on track with foreclosure prevention?

Federal Housing Administration Commissioner Dave Stevens thinks so, but then he would, wouldn’t he?  In testimony prepared for delivery at a congressional hearing today, Federal Housing Administration Commissioner Dave Stevens claims that about 360,000 borrowers had seen their monthly payments lowered under the plan.  A month ago the U.S. Treasury Department had put that figure at about 230,000.  In all, mortgage servicers had extended more than 571,000 loan modification offers to date, up from about 400,000 reported through July, Stevens said.  The new figures put the program to combat rising U.S. home foreclosures on track to meet the administration’s goal of modifying more than half a million delinquent mortgages by November 1, according to Stevens.  Administration officials have been frustrated by how few mortgages have been modified under the plan first announced in February, but Stevens said the administration was conducting a “high level review” of the housing rescue effort and was also exploring “programmatic options” to ensure signs of stabilization in the housing market are maintained.  Who knows what that means, but why do I suspect it’ll cost megabucks?

Consumer credit down 10%

Federal Reserve data indicates that total U.S. consumer credit fell by a record $21.6 billion in July, the latest hint that household spending would be too weak to drive the economy’s recovery from recession.  July consumer credit outstanding fell at a 10.4% annual rate to $2.47 trillion, steeper than analysts’ expectations for a $4.0 billion drop.  Total credit in June was down $15.5 billion instead of the $10.3 billion drop previously estimated by the U.S. central bank.  According to Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey, “it is one more important sign that consumers are not going to be contributing very much to the economy for the balance of this year and probably for a good part of next year.  Consumers will be in the background.”  With an unemployment rate of 9.7%, the highest in 26 years, and incomes falling, households have drastically cut back on spending.  “There is no way that this recovery can be sustained unless we see a pickup in household spending.  The big question out there is will we see Americans spend again to keep this recovery alive,” said Baumohl.

Will Fed keep inflation down?

Chicago Fed President Charles Evans says it’s too early to start reversing the United States’ accommodative monetary policy, but that the Federal Reserve will act aggressively if inflation starts to build.  Even though the U.S. monetary base has nearly doubled in the past year as the Fed has rapidly expanded its balance sheet, sluggish growth in bank credit has held broader money growth to about 8 percent.  Evans, a voting member of the central bank’s Federal Open Market Committee in 2009, focused on the “raging” debate between those who still fear price deflation in the U.S. economy, and others who fear inflation is poised to rise uncontrollably.  “Highly regarded analysts talk about the possibility of another debilitating deflation while others — just as highly regarded — suggest that even though we have avoided the Great Depression 2.0, the U.S. economy may be facing the Great Inflation 2.0,” he said.  Evans said the answer was none of the above.  “I am confident the Federal Reserve will achieve the price stability component of our mandate.”  I wish I was as confident of the government’s ability to manage money.

A few more billion down the auto bailout drain

A Congressional Oversight Panel report questioned some of the decisions President Obama’s Auto Task Force made with regard to General Motors and Chrysler on the use of Troubled Asset Relief Program (TARP) funds to restructure the auto industry, and while it didn’t say the Task Force broke any laws, it suggested there were many unresolved issues regarding the handling of GM and Chrysler.  Now that the U.S. government owns 10 percent of the new Chrysler and 61 percent of the new GM, the Panel made several recommendations for how the Treasury Department should oversee its investment.  Among them, the Panel called for the Treasury Department to provide, “…a full, transparent picture of its actions.”  On the issue of potential conflicts of interest, the COP urged the Treasury Department to “…consider placing its Chrysler and GM shares in an independent trust that would be insulated from political pressure and government interference.”  Finally, the oversight panel said it believes the Treasury Department should provide the legal justifications for its use of TARP funds to restructure the auto industry.  Oh, and in case you had any doubts, the panel concluded about $23 billion of initial loans to the two companies will be subject to “much lower recoveries.”  In particular, $5.4 billion of the loans to Chrysler are “highly unlikely to be recovered.”

Surprise!

Now on to our real estate education section…

Short Sales Template

One of the great things about short sales is that half the profit equation is created from day one…buying right sets the stage for exceptional profits leaving investors with only one major concern…selling. Whether you flip the property the same day or rent out while waiting for favorable capital gains taxation rates, there are certain triggers that can heighten the desirability of the property and help fetch better prices and bigger gains. Use the following to create your own template simply or as a starting place for presenting properties for potential clients.

Need. Everyone has a need so what needs does this specific property fill?

Convenient
Safe
Attractive
Amenities
Income/Investment
Other

Cost. The price point or cost of any property – rental or resale – will fall somewhere in a scale that makes it affordable (not necessarily desirable) to a specific percentage of the population. Those that are most affordable typically have the greatest flexibility whereas those with the least affordability often attract the most highly qualified pool of potential clients.

Income equal what percentage of the median for the MSA/area…

Less than 20%
20%-40%
40%-60%
60%-80%
80% or Greater

Access. Whether or not the Cap & Trade replete with carbon credits and new housing codes passes or not, the issue of access is likely to create an instant gold mine for those properties located near highly desirable areas. Remember, access is a lot like beauty and in the eye of the beholder; don’t assume a high traffic property is undesirable due to location. On person’s traffic is another’s quick commute.

What locations does the property provide access to…?

Shopping
Hospital/Medical
Major Employer
School Park/Playground
Water
Forest (Hiking/Hunting/Privacy)
Agriculture
Other

Experience. Today’s generation has grown accustomed to experiencing everything so take the time to paint a complete picture of the property in the minds of potential clients. What is the likely experience this property will provide?

Newlywed Starter Home
Family & Friends
Entertaining
Retirement
Country Living
Artistic            Individualism
Investor
Sophisticated
Cosmopolitan

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

************
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More foreclosures coming as job outlook weakest since 1962

According to a report by employment services company Manpower Inc., employers will keep staff levels stable for the rest of the year, but U.S. hiring expectations are among the lowest around the world.  The report surveyed 28,000 employers in 200 metropolitan areas, and found that almost 70% of U.S. companies surveyed expect no change in their fourth-quarter hiring plans.  12% said they expect to increase workers in the fourth quarter, 14% predicted a decrease, and the remaining 5% were undecided.  After seasonal adjustment, those responses resulted in a 3% decrease in the overall employment outlook.  That’s the weakest level since the report started in 1962 and certainly signals that more foreclosures are on the horizon.  Companies in the mining, information, financial activities and “other services” sectors expect hiring to stay relatively stable compared with the third quarter; manufacturing, wholesale/retail trade and government employers expected a slight decrease in hiring; transportation/utilities and professional/business services predicted a moderate decline; and construction and leisure/hospitality industries reported “considerably weaker” hiring plans.  Education/health services was the only sector to report a “modest increase” in fourth quarter hiring.

Small business sentiment improves in August

The National Federation of Independent Business (NFIB) said its U.S. small business sentiment index improved by 2.1 points to 88.6 in August, thanks to improved expectations for future business and real sales volume.  August’s level was 7.6 points higher than the recent trough in March, which was the second-lowest reading since the series began in 1973. The all-time low was notched in 1979. The survey, based on 882 respondents, showed that jobs were still hard to find, with small business owners reporting a decline in average employment per firm of 0.80 worker during the prior three months.  This was a big improvement from the record decline of 1.26 workers notched in May 2009, but still very weak compared with the average over the survey’s 35 year history.  “The ‘job generating machine’ is still in reverse,” NFIB Chief Economist William Dunkelberg said.

FHA in trouble?

The Federal Housing Administration (FHA) increased its exposure as it tried to help shore up the ailing housing market during the past year, particularly to mortgages in high-cost states that have also seen some of the sharpest price declines.  The FHA insures loans secured with down payments as low as 3.5%. According to the Wall Street Journal, concerns are mounting that the agency — and the U.S. taxpayer — may have to pay the price.  But values in many markets in which it has been increasing its activity have fallen far more than that in the past year. The result: A growing number of homeowners with FHA-backed loans owe more than their homes are worth and are more likely to default.  Officials are worried that the resulting losses will help push the FHA’s reserves below the level required by Congress. The value of those reserves will be revealed in the agency’s annual review due Sept. 30, and if they have fallen below the minimum, it could prompt a new round of questions about the role government should play in stabilizing the housing market.

Holiday spending prospects better

According to the survey by Information Resources Inc (IRI), a market research firm, U.S. holiday shoppers are more willing to spend in 2009, but still intend to hunt for discounts.  About 77 percent of respondents said they were willing to splurge on a gift for the 2009 holidays even if times are tough.  For retailers, the 2008 holiday season was the toughest in nearly four decades, as consumers faced a financial market crisis and housing downturn.  But as shoppers move toward this year’s holidays, employment fears remain top of mind, with 78 percent of respondents expressing worry over job stability, just 1 percent less than a year earlier, the survey found.  For retailers, the 2008 holiday season was the toughest in nearly four decades, as consumers faced a financial market crisis and housing downturn.

Gold tops $1000

Spot gold and U.S. futures topped $1,000 an ounce for the first time in six months on Tuesday as the dollar’s weakness and concerns about the sustainability of the global economic recovery underpinned sentiment.  “Gold’s rising price is due to uncertainty all the way from personal investors right through to institutions,” said Sandra Close, an analyst for gold research group Surbiton Associates.  Others said buying momentum could wane to push prices back towards $950 before consolidating, given weak physical demand and a tendency by big Asian consumers to sell when prices rise.  “I don’t know if it will stay there for a particularly long [period].  My view is that by the end of the year the gold price will be lower, probably down to around $950 an ounce,” said David Moore, a commodities strategist at Commonwealth Bank of Australia.  Futures have topped $1,000 nine times — three times this year and six last year, including a record $1,033.90.  Spot gold has risen above $1,000 just five times — on Tuesday, in February, and three times in March 2008, when it hit a record $1,030.80.  “There are questions out there over the health of economies, where interest rates are going.  All of that encourages gold hoarding.  There’s potential to see the price go even higher.”

US now in second place in competitiveness

The United States has lost its place as the world’s most competitive economy, mainly because of the financial crisis and accumulated fiscal deficits, according to a survey released Tuesday by the Geneva-based World Economic Forum.  The U.S. came in second, behind Switzerland, in a poll of over 13,000 business leaders.  Singapore is third and Sweden comes forth.  “Given that the financial crisis originated in large part in the United States, it is hardly surprising that there has been a weakening of the assessment of its financial market sophistication,” the survey said.  “The country’s greatest weakness continues to be related to its macroeconomic stability.”  Switzerland has overtaken the U.S. because its economic performance has been “relatively stable,” the survey said, allowing that Swiss financial markets have “weakened somewhat.” It made no mention of Swiss banking secrecy, which has started to crumble under U.S. pressure to hand over client names of American taxpayers suspected of setting up secret offshore accounts with Swiss bank UBS AG.

Now on to our real estate education section…

The Most Important Financial Survival Strategies You Need to Implement Today

Need an easy to understand, affordable and hassle free way to keep your books in the black? Keep reading to discover the most important financial survival strategies you need to begin putting into practice today.

1. Step back and plan for the short term and the long term. Like the  old adage – failure to plan is akin to planning to fail. During tough economic times it isn’t merely enough to have a ten year goal in place, you must have objectionable and actionable short and long term goals. Failure to see the big picture leaves you wandering aimlessly while failure to account for short term details increases the risk of ruin due to insufficient cash-flow, liquidity or other problems.
2. Don’t ignore bad news. Yes, there are more than enough nay-sayers that will tell you the sky is falling rather than teaching you how to profit from one of the greatest transfers of wealth to take place in a generation. On the other hand, don’t automatically write-off all bad news…it often contains the information you need to know in order to make informed decisions about your future…or to take advantage of the financial wreckage coming down the pipelines.
3. Control your cash flow. One reason the current financial crisis has hit so hard is an over-reliance upon credit to meet short term obligations. Both consumers and small business owners are at the “mercy” of banks, credit cards and other lenders who can (and will) change credit terms and adjust lines of credit on a moment’s notice.
4. Minimize liability. Aside from cash flow issues, one of the other major risk factors impacting most investors is liability risk. One slip and fall accident by an uninsured worker on a short sale property could negate a lot of earnings. Likewise, while cash is king it also requires a much greater personal level of responsibility for the average investor. Stay smart and learn how to minimize liability both in terms of financial risk and more routine forms of liability by properly insuring and structuring holdings.
5. Focus on profits. Novice short sale investors with more time than money may need to begin small but should move up to more profitable investment as soon as feasible. Always focus on profits and eliminate the bottom 10 percent of all performers in your portfolio. Follow this one simple strategy to increase profits each and every year.
6. Identify your customers. Short sales are a strange business..do you really know who your clients or customers are? Is it the seller? Lender? New buyer? Know your customers and don’t waste money on ineffective marketing. Make everything count.
7. Don’t work too much. We’ve said it before and will say it again; earned income is expensive. Many people work themselves into an early grave only to watch more and more of their earnings go to paying ever rising taxes, health insurance premiums and medical bills. Outsource what you are able and switch the source of income to take advantage of favorable taxes.
8. Work with – not against – your competitors. In reality, there isn’t any such thing as a real competitor, only someone more suitable versus someone less suitable. When you find a deal that doesn’t really work for you…pass it along to someone better able to make it work and ask for them to do the same for you. Create a win-win for all involved in order to secure better profits with less work.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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