Realtors

Smart Real Estate News & Commentary by Chris McLaughlin August 25, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

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

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You asked for it. You get it: Part 2 of

“Demystifying Fraud in the Short Sale Fog.”

https://www2.gotomeeting.com/register/862050594

Chris McLaughlin, Florida attorney and short sale expert,

and Ron Ballard, best known as The California Short Sale

Lawyer, return to continue clearing the fog surrounding

issues of legality and fraud in short sales TODAY at

2 PM ET, 11 AM PT in a LIVE webinar.

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

MBA – refinances increase

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 4.9% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 4.5% compared with the previous week.  The Refinance Index increased 5.7% from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 0.6% from one week earlier. The unadjusted Purchase Index decreased 1.1% compared with the previous week and was 38.8% lower than the same week one year ago.  “The volume of refi applications last week was up 26% over their level four weeks ago.  Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“We are at a new 15 month high for the Refinance index.  With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.”  The four week moving average for the seasonally adjusted Market Index is up 5.0%.  The four week moving average is down 0.3% for the seasonally adjusted Purchase Index, while this average is up 6.2% for the Refinance Index.  The refinance share of mortgage activity increased to 82.4% of total applications from 81.4% the previous week, which is the highest share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% from 5.7% of total applications from the previous week.

10 year yield sets new low

The yield on the benchmark 10-year note was 2.49% at 4:30 p.m. yesterday in New York. That’s down from 2.6% late Monday and is the lowest level since the 10-year yield closed at 2.4% on January 20, 2009, according to data from the Federal Reserve.  The yield on the 2-year note dropped to 0.48%, holding near an all time-low, while the 5-year yield slid to 1.33%. The yield on the 30-year bond was 3.56%, down from 3.66%.  The flight to safety boosted demand for the $37 billion worth of 2-year notes that the government sold Tuesday, with investors submitting bids totaling $115 billion for the notes. 

The bid-to-cover ratio, a measure of demand, was a relatively strong 3.12. But the ratio was higher at the last 2-year sale in July, and has averaged 3.17 so far this year.  It was the first of three auctions this week totaling $102 billion in U.S. debt. On Wednesday, the U.S. will offer $36-billion in 5-year notes and will offer $29 billion in 7-year notes on Thursday.  Treasuries are widely considered one of the most secure assets available. As a result, prices often rise when investors are nervous about the economic outlook. Stocks, however, fell sharply after the housing report came out.

Low home sales could sink the recovery

With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the recovery.  Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Two months after the end of the tax credit, sales are 34% below April’s tax incentive-induced peak.  “Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics. “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.” 

The sales pace of all homes — single-family homes, town homes, condominiums, and co-ops — is at the lowest since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.  Inventory has also continued to climb, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.  The housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.  “Falling housing prices strain the overall confidence in the economy and discourage Americans from spending,” Dales said. “They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.

Durable goods fall more than expected

The Commerce Department reports that new orders for long-lasting U.S. manufactured goods, excluding transportation equipment, posted their largest decline in 1.5 years in July, while overall booking rose far less than expected.  The report was the latest to indicate subdued U.S. economic growth and an increased risk of a slide back into recession, though most analysts still do not believe a double-dip recession is imminent.  The Commerce Department said durable goods orders excluding transportation dropped 3.8%—the biggest fall since January 2009—after rising 0.2% in June. Overall orders rose 0.3% following a revised 0.1% fall in June.  Analysts polled by Reuters had forecast orders increasing 2.8% last month from June’s previously reported 1.2% fall.

Orders excluding transportation had been forecast to increase 0.5% from a previously reported 0.9% fall.  Defense aircraft orders dropped 8.3 after rising 5.7% in June, while motor vehicle orders rose 5.3% after June’s 4.0% rise.  Orders outside transportation were depressed by weak bookings for machinery, electrical equipment and computers and related products and Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 8.0% last month after a 3.6% increase in June. Markets had expected a 0.4% rise last month.  Durable goods inventories rose 0.6% after increasing 1.3% in June. It was the seventh straight month of gains in inventories.  Shipments, which go into the calculation of gross domestic product, last month rose 2.2%, adding to June’s 0.2% gain.  Unfilled orders slipped 0.1% after rising for three straight months.

DsNews.com – 2/3s of mortgages untouched

According to a new report from state attorneys general and bank supervisors from across the country, more than 60% of homeowners with seriously delinquent loans are still not involved in any form of loss mitigation with their servicer.  The ratio is disconcerting considering the group also found that one of servicers’ primary loss mitigation options today, loan modifications, are resulting in significant payment reductions with fewer redefaults.  The State Foreclosure Prevention Working Group says loans modified in 2009 are 40 to 50% less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008.  “This improvement in loan modification performance suggests that dire predictions of high redefault rates may not come true,” the group said in a paper released Tuesday. “This positive trend suggests that increased use of modifications resulting in significant payment reduction has succeeded in creating more sustainable loan modifications.” 

The consortium of state regulators and chief attorneys also found that recent modifications that significantly reduce  the principal balance of the loan have a lower rate of redefault compared to loan modifications overall, suggesting that servicers should strategically increase their use of principal reduction modifications to maximize prospects for success.  Principal writedowns, though, have been slow in finding their way into the mod equation. The group’s study shows that only one in five modifications reduce the loan principal, and in fact, some 70% actually increase the loan amount by adding servicing charges and late payments to the loan balance.

Credit card debt lowest in 8 years

The average combined debt for bank-issued credit cards — like those with a MasterCard or Visa logo — fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year ago, according to TransUnion.  The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.  More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.  That’s the first time the delinquency rate has been below 1 percent since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in TransUnion’s financial services unit.

The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing.  Becker said the foreclosure crisis could be helping to improve the timeliness of credit card payments and lower balances. When people don’t make mortgage payments, he suggested, they have a short-term cash boost.  “That can provide extra money to pay down credit cards,” he said.  Besides paying down debt, consumers are getting fewer new cards. Nationwide, the number of new accounts opened dropped almost 6.5 percent from last year.

Now for our real estate education section…

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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
–

Smart Real Estate News & Commentary by Chris McLaughlin August 24, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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

Get the capital you need to do more deals than ever before! 

Fix A Flip CLOSES after this TONIGHT at 8:30 PM ET, 5:30 PM PST: 

https://www2.gotomeeting.com/register/292471755

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

Existing home sales plunge 27%

Today’s report from the National Association of Realtors (NAR) shows that purchases of existing homes plunged 27.2 percent to a 3.83 million annual rate. The pace compares with the median forecast of a 4.65 million rate, according to a Bloomberg News survey.  The number of previously owned homes on the market rose 2.5 percent to 3.98 million. At the current sales pace, it would take 12.5 months to sell those houses, the highest since at least 1999 and compared with 8.9 months in June. The months’ supply of single-family homes at 11.9 months was the highest since 1983, NAR said.  Sales last month fell in all four U.S. regions.  Foreclosures are boosting the so-called shadow inventory, and competing with owners trying to sell properties.

Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.  Residential real estate may keep struggling for the rest of this year, while into “2011 and beyond, it is difficult to determine,” Richard Dugas, chief executive officer at Pulte Group Inc., said in an Aug. 20 interview with Bloomberg Television. Pulte is the largest U.S. homebuilder by revenue.  “Demand is low across the country,” Dugas said. “You have record-low interest rates and excellent pricing, but consumer confidence eased. We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home.”

Credit card fees up

According to the market research company Synovate, the average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier.  The jump created a dramatic spread of 11.45 percentage points between the average credit card interest rate and the prime rate — the largest margin in 22 years, according to Synovate.  Synovate study director Lauren Guenveur said the increase in interest rates was driven primarily by the Credit Card Accountability Responsibility and Disclosure Act of 2009. She said the so-called CARD Act gave credit card companies a limited amount of time to raise rates, “before they could no longer do so freely.” This put pressure on issuers to aggressively raise rates, she said.  Guenveur added that the recession and nation’s high unemployment were also driving the increase, because it was causing the default rate to go up.

“This is largely due to consumers still charging on their credit cards, but being unable to pay,” she said. “Default rates should remain high as long as unemployment remains high.”  Synovate reported that credit spending has increased, on average, by 6% in the first half of 2010 to $1,559, but still falls short of third quarter 2008 numbers, which Synovate describes as “the quarter prior to the financial meltdown.”  Offers for new cards reached a fever pitch last quarter. U.S. households received 640.3 million credit card offers in the second quarter, a surge of 83% from 349.1 million offers during the same period last year.  “Issuers are desperate to lock-in customers with good credit, so they will mail many offers to these households in order to gain their attention,” Guenveur said.

Real estate rip-off?

Many condo and townhouse dwellers are already familiar with resale fees — a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association’s homeowners.  But now, in some new developments, homebuilder contracts are including a 1% fee to be paid to them every time the house is sold — for 99 years. And the money doesn’t go for improvements or upkeep: It’s just money in the builders’ pockets.  That has the real estate industry and consumer protection groups up in arms. 

“It’s of no benefit to consumers,” said Kathleen Day, of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”  The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. “Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees,” he said.  A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold’s securitization plan to go forward.

It’s time to put grownups in charge

U.S. House Republican leader John Boehner is calling for the resignation of President Barack Obama’s entire economic team, including Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.  “It’s time to put grown-ups in charge. It’s time for people willing to accept responsibility,” Boehner declared in remarks prepared for delivery in a speech in Cleveland.   “President Obama should ask for—and accept—the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council.” 

Bad U.S. economic data last week heightened concerns about a return to recession. Claims for new unemployment claims rose to a nine-month high and manufacturing activity in the U.S. mid-Atlantic region unexpectedly contracted.  Boehner has been a leading critic of Obama’s agenda, including his overhaul of the U.S. healthcare system, tightening of regulation on the financial industry and what Republicans’ denounce as his failed economic stimulus plan.  If Republicans take control of the House, he is in position to be elected as speaker, a post that would make him the chamber’s presiding officer and in charge of setting its agenda.

Stay away from MBS

Bank of America Merrill Lynch (BofAML) recommends investors remain underweight in agency mortgage-backed securities (MBS) although a widening of the option adjusted spread indicates otherwise.  Chris Flanagan, MBS/ABS strategist at Bank of American Securities, said the “continued bull flattening of the yield curve is the elephant in the room for agency MBS.”  Normally a widening of the option adjusted spread “makes the sector appear attractive,” but Flanagan said this “does not account for the substantial risk that we are on the cusp of a classic Fed-induced refinancing wave, where the magnitude of the wave once again surprises the MBS market to the upside and mortgages underperform.”  And an early indicator of this risk is this week’s break above 4000 in the Mortgage Bankers Association’s (MBA) refinancing index, according to BofAML. 

“Moves higher would be slower and more gradual than in the past, but we think investors should not underestimate the potential to move higher,” Flanagan wrote in the firm’s MBS: Securitization Weekly Overview.  Flanagan said with the Fed indicating the current ZIRP rate will remain in place for awhile, any flattening in the yield curve would require “a further, and still major, back-end rally.” And “by major, we mean something on the order of at least 100-150 bps,” he said.  “While we can think of a few, very good reasons that this scenario might play out,” Flanagan wrote. “We need to be clear that we are not making a rate call here. We are simply highlighting this as an asymmetric risk scenario for mortgages.”

Now for our real estate education section.. 

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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
–

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

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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

Get the capital you need to do more deals than ever before! 

Fix A Flip CLOSES after this Tuesday at 8:30 PM ET, 5:30 PM PST: 

https://www2.gotomeeting.com/register/292471755

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

HAMP a failure, defaults on the rise

According to a federal report released Friday, only 36,695 homeowners received long-term mortgage modifications in July under the Obama administration’s Home Affordable Modification Program, known as HAMP. This brings the total to 434,717 borrowers who have successfully made it out of the trial phase.  A month ago, 51,205 delinquent borrowers were given long-term assistance, but the number of people falling out of the program is on the rise. Some 12,912 homeowners had their permanent modifications canceled in July, 272 of whom paid off their loans.  “While there has been some stabilization in the housing market, it remains clear that we have more work ahead,” said Raphael Bostic, assistant housing secretary.

“We know that we must continue to provide support to underwater borrowers, unemployed homeowners, and to the nation’s hardest hit neighborhoods.”  Foreclosure prevention programs have taken on renewed importance with the housing market on shaky ground again. A spike in foreclosures, combined with weak housing sales, could send home prices plummeting again.  In July, foreclosures were up 3.6% from the month before but down 9.7% from the year earlier period, according to RealtyTrac.  The latest report comes two weeks after the government had to revise its June redefault figures sharply higher, after analysts called the initial numbers misleading.  The revision showed that nearly 20% of homeowners were at least two months delinquent nine months after receiving a permanent modification. The initial figure showed that 7.7% had fallen behind.  The government did not provide redefault statistics for July in the current report. Officials said the data would be released quarterly.  Analysts at Barclay’s Capital said last month said 60% of homeowners may ultimately redefault.

New rules for credit cards

New rules designed to protect credit card users from “unreasonable late payment and other penalty fees” came into force yesterday.  According to the Federal Reserve, which approved the regulations, the rules block credit card companies from charging more than $25 for late payments except in extreme circumstances, prevent them from charging customers for not using their cards, and requires them to reconsider rate increases imposed since January 1, 2009.  “The industry has moved swiftly to implement all of these changes and the final piece of the puzzle is now in place,” said Kenneth Clayton of the American Bankers Association.  Some banking groups have concerns. Financial Services Roundtable’s senior lobbyist Scott Talbott warned that the Fed’s cap on penalty fees will limit the industry’s ability to offset the risk that credit cardholders don’t pay their bills.  “The restrictions in the rules the Fed issued will decrease the ability of the credit card industry to price for risk and the net effect will be a decrease in [credit] availability,” Talbott said.

Olick – Government spin

“I don’t envy the folks over at Treasury and HUD who, month after month, are forced to report lackluster statistics on the Administration’s mortgage bailout and find something positive to say about them. Unfortunately they painted themselves into a corner by inventing a “Housing Scorecard” this summer, which only forces them to report more troubling numbers.  Dr. Raphael Bostic, an assistant secretary at HUD, cited three reasons that we should feel good about housing.  1. “More stability in terms of prices than we’ve seen before the Administration initiatives were started” and “improving expectations offering some hope that we are moving to a more positive environment.”  2. Historically low interest rates that “will be an important incentive and tool for people to access housing and home ownership in a very affordable way.”  3. A lot of things the Administration has done outside of the mortgage bailout “have touched a significantly larger number of people than the number of people who have gone into foreclosure.”  Numbers 2 and 3 are fair enough, but I, and another reporter on the call who got to ask the question first, took issue with Number 1. Yes, home prices are not in freefall, as they were before the current administration took office, but I’m not sure where they’re seeing “improving expectations.”

All I’m seeing are reports of double dips in home sales and prices, and increasing concern that the struggling job market will push more borrowers into foreclosure.  When asked about that, Dr. Bostic replied only to the first part, about prices being better now than two or three years ago. He declined to answer the question: Where exactly are you seeing data that things are improving now?  Administration officials seem to want to point to all the other programs and incentives out there that have and are stabilizing the housing market. It’s not just HAMP (Home Affordable Modification Program), they argue, but the FHA, the Hope Now industry program, the home buyer tax credits, and the government-induced low interest rates that are saving housing, they claim.  Still, the reason everyone focuses on HAMP and criticizes its results is that HAMP is the direct bailout that we the taxpayers are paying for…”

AIG repays $4 billion

American International Group’s (AIG) aircraft leasing unit, ILFC, repaid nearly $4 billion of U.S. loans after raising new debt from investors.  The repayment reduced the principal balance under a Federal Reserve Bank of New York loan to just over $15 billion, its lowest level since the March 2009 restructuring of government aid.  A previous low of $17 billion was reached in December after AIG gave the Fed preferred interest in two special purpose vehicles created to hold its foreign life insurance business, the source said, declining to be named as the development is not yet public.  International Lease Finance Corp raised $4.4 billion with new debt sales earlier in August.  Chief Executive Robert Benmosche told Reuters in an interview the funds would be used to pay down the Fed’s loans that AIG had taken to prop up the unit 

41% price drop in commercial real estate

National property prices on commercial real estate dropped 9.1% in June from last year, according to Moody’s commercial property price index. The rate declined 0.9% over the first half of 2010, and while prices remain 4.2% above the current recession low of October, they are down 41.4% from the peak in October 2007.  Moody’s bases the index on the dollar volume of repeat sales transactions in commercial real estate. Analysts reported $2.1bn of these transactions in June, up from $1.5bn in May and $800m in April.

Moody’s managing director Nick Levidy said the increase in sales could mean prices have fallen far enough to meet new demand.  “The increase in dollar volume in each of the past two months, taken together with this month’s 43% increase in the number of repeat sale transactions, may be an early indication that buyers and sellers are starting to agree on market-clearing prices,” Levidy said. “If this is in fact occurring, we would expect transaction volumes to rise steadily and price volatility to ebb in the months to come.”  Analytics firm Realpoint found delinquency rates on these loans that have been securitized, CMBS, reached 7.79% in July, more than two times the 3.15% reported a year ago. It’s also more than 27 times the recorded low point, a 0.28% delinquency rate in June 2007.  The delinquent unpaid balance for CMBS loans reached $60.8bn in July. While it did increase $387.9m from the previous month, it’s nearly 90% below the previous six-monthly average of $3.14bn in increases. Commercial loans that were either 90-plus days delinquent, in foreclosure, or REO grew in the  aggregate for the 31st consecutive month, reaching $49bn in July. That figure is nearly triple the year ago and up 9% from the previous month.  Realpoint said the delinquency rate could reach between 9% and 10% by the end of the year with the potential to reach 11% under more heavily stressed scenarios.

Now for our real estate education section…

What a Difference a Decade Makes: Marketing Today  & Yesterday

Ever experience one of those moments when you suddenly realize an entire year has passed by without your notice? Perhaps a favorite song comes on the radio or an important date seems to catch you by surprise; sooner or later it happens to everyone.

The same phenomena occurs in the business world…especially marketing. What worked a few years ago isn’t just old news, it’s a downright waste of time and money. Unfortunately, it’s easy to be taken by surprise even when working with a marketing company or professionals that really should “know better”. Here to demonstrate the point is a quick comparison between what worked just a few years ago versus what works now.

Year 2000: Email blasts. Remember how easy (and expensive) it was to buy a target email list and send out a mass email or newsletter to prospective new clients? That has all changed. According to Marketing Sherpa, the average open rate for an email blast is less than 40%. Users routinely use filtering software to weed out unknown email and the National Canned Spam Act limits the use of email only to those clients you already have a relationship with.

2010 Update: Twitter/Facebook. Build a relationship and allow it to go viral. Not only is it less expensive than an email blast but it’s also a lot less work. No need to constantly clean and update the list nor hassle with other database management issues.

Year 2000: Telemarketing.  Ten years ago it was still common practice to hire an independent firm or marketing pro to call on people directly. Caller ID combined with cell phones and a sizable increase in the number of people registered for the “Do Not Call Registry” have made this all but obsolete.

2010 Update: UTube and other viral video’s. Not only do they provide more comprehensive information to the prospective client but they are available 24/7 and cost a fraction of the amount required by telemarketing.           

Direct mail: There was a reason credit card companies constantly sent unsolicited approvals through the mail…it worked! Direct mail was one of the mainstay marketing techniques used by mega corporations and small business owners alike; simply purchase a list and send out postcards or letters then wait for the response. Of course, it was also expensive. Design and printing, stamps and postage, the cost of the list all adds up.

2010 Update: Direct mail is still in use but tends to be much more targeted due to the high cost. Instead, email newsletters, blogs and social media websites are filling in the gaps and gaining more impressive results by creating a constant level of contact and interaction with clients.

Newspaper classified ads: Remember those? Most newspapers throughout the country have either shut down or are barely surviving…meanwhile, advertisements cost more yet reach fewer people than ever.

2010 Update: Online classified advertisements have almost entirely transformed real estate and secondary sales. Not only are they more timely and cost effective but viewers are able to gain valuable information that requires less of your valuable time.

Bottom Line: Today’s media savvy consumers are adept at blocking out unwanted interruptions and outbound marketing efforts. Learn how to reduce the time and cost…while increasing response rates…through the use of social media marketing. Tune in for one of our free webinars to learn more.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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
–

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

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Standard & Poor’s expects delinquencies to remain high

S&P expects declining mortgage applications, high unemployment, the number of distressed sales, and a backlog of foreclosed properties not yet for sale to keep home prices down.  Agency loans backed by bond resolutions rated by S&P and at least 60 days delinquent or in foreclosure rose to 6.05% in the first quarter from 4.48% a year ago, but fell from 6.57% for the fourth quarter of 2009, according to analysts.  Without a decrease in unemployment – S&P chief economist David Wyss projects the figure hovering around 10% for the rest of this year – and tangible economic improvement, the ratings service expects agency delinquencies rates to remain high.  Wyss also sees difficulties with loan restructuring and delays in the foreclosure process keeping foreclosure inventory high for the next 18 months. And “additional foreclosures could put more pressure on home prices, possibly affecting loans” in agency portfolios, which could increase delinquency rates, according to the credit rating agency.  Still, analysts “don’t expect fluctuations in delinquency rates alone to cause ratings action at this time.”

State taxes

A Tax Foundation report says that Tennessee has the highest combined state and average local sales tax rate of any U.S. state, at 9.44%, while two Alabama cities are tied for the highest combined state, county and city sales taxes. Birmingham and Montgomery both levy an average of 10% on purchases.  Chicago used to hold the title of highest metro area sales tax, but lost it after Cook County lowered its rate by 0.5% in July, leaving it with the sixth highest rate at 9.75%.  Among the nation’s other metro areas with at least 200,000 inhabitants, there are five California cities with sales tax rates above 9%: Long Beach, Los Angeles, Oakland, Fremont and San Francisco. Glendale, Ariz., and Seattle also ranked high on the list.  the state with the second highest combined sales tax rate after Tennessee is California, at 9.08%, while Arizona came in third, at 9.01%. Other states with particularly high rates are Louisiana, Washington, New York, Oklahoma, Illinois, Arkansas and Alabama.  There are 34 states that allow local governments to charge a local option sales tax on top of the state sales tax, while 16 states have no local sales tax. There are five states that have no statewide tax at all: Alaska, Delaware, Montana, New Hampshire and Oregon.  Sales taxes are levied by state, county and city governments. As a result, rates vary widely across the nation, making it difficult to measure and compare sales tax trends, said Kail Padgitt, a Tax Foundation economist.

Olick – not just the tax credit

“There’s no question that the home buyer tax credit, which expired at the end of April, pulled home buying demand forward and thus created an inevitable drop-off afterward.  It would be wrong, however, to blame the current lull in home buying/selling entirely on the tax credit hangover.  You need only look at a report today from California-based MDA Data Quick, headlined, ‘Bay Area July Home Sales Down Sharply.’  Sales in San Francisco in July fell to the lowest level in 15 years, down 19 percent from June and down nearly 23 percent from July of 2009.  It was also one of the largest monthly drops recorded.  ‘There’s been a pause in the market. Some potential buyers – including those who held off until the tax credits expired – will take their time to assess market conditions, searching for signs of renewed price cuts,’ says DataQuick President John Walsh in the release. 

“Depending on the economy and other factors, that might be what some of them find, especially in areas with a growing number of homes for sale – particularly distressed properties.”  There’s even more to it than that, specifically a startling lack of confidence. Yesterday the chief economist for the National Association of Realtors, less than a week before the release of its monthly existing home sales report, warned that this lack of confidence, grounded or not, could pose a bigger risk to recovery than expected.  ‘As long as people hold back, whether realistically or irrationally, or rationally,’ Lawrence Yun says, ‘then naturally there will be too much supply in relation to the demand, and that could lead to some over-correction in home prices in some markets.’  And we didn’t even bring up foreclosures in the conversation.  Add this to a new report from Zillow.com that one third of all homeowners in the U.S. still think the housing market has yet to hit bottom and nearly the same amount think the worst is yet to come.  And another report from Trulia.com (and mind you these are real estate sale Websites) that finds fewer renters than ever now intend to buy and fewer Americans than ever think owning a home is part of the American dream, and dare I say, ‘Case closed.’”

Faith in government low

Steen Jakobsen, Chief Investment Officer at Litmus Capital Partners, says a big risk for markets is the fact that faith in the US government’s ability to fight the economic markets, as well as in central banks’ monetary policy tools, is eroding.  “The fact of the matter is that people have a huge disbelief in government,” he said.  “The real crisis 2.0 is not about the new normal or whatever term is being used, the new crisis is a crisis of faith in the US system. We’re far away from that point now but that is a clear risk,” Jakobsen said. 

Because people are losing faith in the governments’ ability to bring the economy back on track, the impact of various policies is smaller, while keeping interest rates at record lows has altered investors’ perception about what this actually means for the market, Jakobsen warned.  Investors no longer perceive low rates as good for stock markets because they create liquidity, but as a sign that a slowdown in economic growth is coming, he said.  Jakobsen predicts zero or even negative growth for the US economy for the third and fourth quarters.

DSNews.com – Modifications pick up, but not from HAMP

The industry has completed about 975,000 permanent loan modifications so far in 2010, according to estimates released this week by the Hope Now Alliance.  Of those, just over 331,000 have been processed under the umbrella of the federal government’s Home Affordable Modification Program (HAMP), while nearly 644,000 have been restructured using servicers’ own proprietary mod programs.  The latest data from the Treasury provides details on what happens to borrowers that are not accepted into HAMP. 

Based on information from the eight largest HAMP participants, 45% of those that don’t make it into a preliminary HAMP trial receive an alternative modification from the servicer; 2.4% lose their home through a pre-foreclosure short sale; just over 10% are pushed through to foreclosure; and nearly 3% file for bankruptcy.  According to Hope Now’s report, servicers have initiated more than 1.2 million foreclosures so far this year, and completed foreclosure sales on 583,000 homes.  The Alliance’s data, though, shows that servicers slowed the pace of foreclosures in June. Foreclosure starts dropped 7% compared to the previous month, and foreclosure sales were down 9%. 

Economy to get worse?

We’ve all anticipated a gradual gain in US employment, but what seems to be happening is a surprising deterioration, and that has economists worried about the increasing threat to the economic recovery.  Yesterday’s jobs report was just the latest confirmation that things are getting worse instead of better.  The monthly Labor Department report for July showed 71,000 private jobs were created even as total non-farm payrolls fell 131,000, and that trend is confounding economists, who say the net job creation in the private sector ought to start having some effect on the weekly number.  “There’s got to be an awful lot of job-churning going on if we can have positive private sector employment growth for seven months out of the year and this (weekly claims) thing is drifting up,” says Kurt Karl, chief US economist at Swiss Re in New York. “Businesses have got to be laying off a lot of people and hiring a lot of people, and the net is slightly positive.” 

Besides the sharp drop in government payrolls and the dynamics of the benefits program, small business remains a major concern, since recent surveys have shown waning confidence among small business leaders.  The multiplicity of factors lining up against the labor market is sure to stoke up talk about a double-dip in the economy, or at the very least little chance of meaningful gains for quite some time.  “It’s not good, it just isn’t, particularly when you piece it together with all of the other data we’re getting,” says Paul Ashworth, senior economist at Capital Economics in Toronto. “This isn’t just rising claims and nothing else is going on. We’re seeing activity rates going down, we’re seeing confidence weaken—a lot of not very encouraging signs.”

Now for our real estate education section…

Friday File – 15 Minute Resolution

Ever dream of buying a beautiful investment property in a far-away place like Brazil or perhaps something a little closer to home like the lovely island of Jamaica is more to your liking…Well, whatever your taste, chances are your good old Uncle Sam has already bought some land in the same area and with the economy being what it is, he’s ready to wheel and deal.

This week’s 15 minute resolution is a quick way to find – and potentially fund – the investment property of a lifetime. Luxurious locations and even some attractive funding make these worth the time to take a second look.

Bureau of Overseas Building Operations – Now this is a resource you hardly ever run across! This little known gem lists property owned (and listed for sale) by the federal government in exotic locations around the world. Pick up a beautiful 7,000 square foot home in La Paz Bolivia, a downtown condo in Santiago Chile or even an unbelievably beautiful executive residence on four acres in Kingston Jamaica. Other areas of interest include Haiti, Pretoria South Africa, and even Prague…just this week alone! Sign-up to receive instant notification of newly listed properties at http://www.state.gov/obo/c20736.htm.

How about tax-free living on an enchanted Island? If the idea of zero federal incomes taxes without the need for a Visa sounds interesting, be sure to check out all the great properties for sale in by the federal government in Puerto Rico. As a commonwealth, Puerto Rico is part of the United States but doesn’t pay federal income taxes. Great year-round weather, easy access to the mainland and more tropic fruit than you can consume in a lifetime make this an increasingly popular destination. Best of all, buyers are still able to use HUD/FHA and even VA vendee loan programs to purchase an island property with little money down!

Search all the properties at once by visiting http://www.homesales.gov/homesales/mainAction.do?pageAction=GetCounties&state=PR&stateName=Puerto%20Rico

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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
–