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

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

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

FR*EE Report on Bulk REOs … check it out here:

http://www.bulkreotrader.com/?1192664

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

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
–

Smart Real Estate News & Commentary by Chris McLaughlin August 19, 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

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

Fix A Flip Re-Opens … all new content, all new case studies.  This is

one webinar that you don’t want to miss!

When: Thursday, August 19th at 8:30 PM ET, 5:30 PM PST

Where: https://www2.gotomeeting.com/register/618365627

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

Homeowners pessimistic

According to the Zillow Second Quarter Homeowner Confidence Survey, U.S. homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom.  Homeowners were more pessimistic about the short-term future of home values in their local market than they had been in the previous three quarters, with 33% believing home values in their local housing market had not yet reached a bottom, while 38% believed they had already reached a bottom.  Nationally, 28% of homeowners said home values in their local real estate market would decrease in the next six months, up from 20% in the first quarter.  Additionally, less than one-third, or 30%, believed home values in their local market would increase, down from 42% in the first quarter. 

Zillow said less than a quarter, or 24%, of homeowners said their home had increased in value in the past year, compared with 27% in the first quarter. In reality, 34% of homes increased in value in the second quarter, according to the Zillow Q2 Real Estate Market Reports.  27% of homeowners believed their own homes’ values would increase in the next 12 months, 35% believed they will stay the same, 12% expected a decrease and 26% did not know.  Of those who expected their homes’ values to increase, the median expectation was a rise of 6%, although that varied by geography.   Despite the increasing pessimism, a large number of homeowners were anxiously awaiting the opportunity to sell. Indeed, 5% of U.S. homeowners said they were very likely to put their home on the market in the next six months if they saw signs of a real estate market turnaround.  Zillow said this translated into 3.8 million homes with the potential to come into the market. By comparison, 5.2 million existing homes were sold in all of 2009.  “As these homeowners hear news of stabilization in home values, they put their homes on the market, driving up inventory and keeping a cap on home value appreciation,” Humphries said.

Jobless claims jump

The Labor Department says that initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended Aug. 14, the highest since mid-November.  Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.  The four-week average of new jobless claims, considered a better measure of underlying labor market trends as it irons out week-to-week volatility, rose 8,000 to 482,500, the highest since early December.  The number of people still receiving benefits after an initial week of aid fell 13,000 to 4.48 million in the week ended August 7 from an upwardly revised 4.49 million the prior week. Analysts polled by Reuters had forecast so-called continuing claims rising to 4.50 million from a previously reported 4.45 million.  The insured unemployment rate, which measures the%age of the insured labor force that is jobless, was unchanged at 3.5% during that period.  The number of people on emergency benefits increased 260,105 to 4.75 million in the week ended July 31.

Olick – Refi boom could break smaller banks

” To summarize, refinance applications are way up, up 17%, while purchase applications are on life support, down 3.4% from the previous week and down nearly 39% from a year ago. Refis now make up a full 81.4% of all mortgage applications, up from 78.1% the previous week, and at their highest level since January of 2009.  With home prices way down and mortgage interest rates hovering near record lows, you would think more buyers would get off the fence and sign a contract, but continued weak consumer sentiment is hold them back. You would also think that the bright side to all this is that all this refinancing is putting more money in the average, struggling American’s pocket. 

But then I read this note from FBR’s Bob Ramsey, who believes the rate on the 30-year fixed could go as low as 4%, with the following implications:  ‘If rates continue to fall, a refi boom could swamp banks and thrifts with cash flows with no obvious place to invest. With newly issued agency MBS yielding approximately 3.5%, banks and thrifts face considerable reinvestment risk.’  Thrifts, he says, are better positioned to handle the risk than regional banks, because, ‘better efficiency provides a significant buffer to weaker revenues.’  The less efficient regionals, he says, are most at risk and adds:  ‘Further, if rates remain low for an extended period, we would expect an increase in bank M&A activity as challenging prospects convince some to sell, and others choose to consolidate and grow earnings by cutting duplicative costs.’  I had thought that most borrowers who could had already refinanced by now, but he says that, for some unknown reason, is not the case.  “We believe approximately half of conforming borrowers have both the economic incentive and equity to refinance.”  It seems that in today’s housing finance market, for every upside, there is a downside.

GM tries to break away from the government

General Motors Co. filed registration papers Wednesday for an initial public stock offering, laying the groundwork for the car maker to begin cutting its ties to the U.S. government, its majority owner.  GM outlines a business plan that intends to leverage its massive global scale, strength in fast-growing emerging markets such as China and a balance sheet cleaned up by Chapter 11. At the same time, the company warns it faces many risks, such as continuing losses in Europe and a significant underfunding of its pension obligations.  GM’s plan to return to the public markets includes preferred stock, which the company will sell to raise funds, along with common shares, which will be sold exclusively by some of GM’s current shareholders, including the U.S. government. The company said no dividend is currently planned to be paid on the common shares. 

The IPO will allow the U.S. Treasury to begin selling the 61% stake it holds in GM after last year’s $50 billion U.S. government bailout of the company.  Another holder of GM shares, the United Auto Workers, also is expected to sell some of its stock during the IPO, according to people familiar with the situation.  The IPO, expected later this year, is anticipated to raise $10 billion to $15 billion but possibly more. An expected price range for the shares will be determined closer to the sale.  For the government to recoup its full investment GM must achieve a stock-market value of $70 billion—10 times GM’s market capitalization before the company headed into bankruptcy-court protection in June 2009, and at least $30 billion more than the market value of Ford Motor Co.

Now for our real estate education section…

Best Real Estate Resources You Never Knew Existed

By now everyone has heard of Zillow but when it comes to serious real estate related research, here’s how to find the best of  the best…the type of data the experts use to create those ground-breaking reports and hard hitting case studies. Whether you are working on your next commercial enterprise or simply want to stay abreast of the latest and greatest real estate related information, tap into sure-fire resources to access the best data available.

1. Put a Ph.D to work. Search thousands of doctoral dissertations to see who is working on relevant housing and commercial development related projects. Sponsored by the Office  of University Partnership and the US Dept of Housing and Urban Development, this is a goldmine of research:

http://www.oup.org/ddrg/ddrg_profilesearch.asp

2. Free Information resources. Need a few good resources but don’t have the time or money to hire a writer? Use these free foreclosure related resources to educate consumers and help them make informed decisions about the best course of action when it comes to keeping, selling or buying a home. Produced by the Making Home Affordable Program in conjunction with HUD, they are designed for maximum readability in both spanish and english.

http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure

3. Social Media & Uncle Sam – Your good old Uncle Sam has finally taken the plunge and is now available via Facebook and Twitter. Find out about the most recent research, grant and tax credit opportunities, new programs and much more with instant updates via your favorite social media site.

http://www.facebook.com/pages/Washington-DC/HUD-USER/183685747712?v=wall

http://twitter.com/HUDUSERNEWS

4. Taxing Tips – It’s a topic we would all rather avoid but make it as painless as possible by tuning in for great tips right from the source. IRS.gov has it’s very own real estate tax center…a topic of profound importance to every real estate investor.

http://www.irs.gov/businesses/small/industries/article/0,,id=185194,00.html

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 18, 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

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

Fix A Flip Re-Opens … all new content, all new case studies.  This is

one webinar that you don’t want to miss!

When: Thursday, August 19th at 8:30 PM ET, 5:30 PM PST

Where: https://www2.gotomeeting.com/register/618365627

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

22 cities in danger of double dip

A new report from Moody’s Economy.com singled out 22 cities that are at risk of slipping back into a recession in as early as three months. To come to this conclusion, the economists considered dwindling progress in employment, housing starts, home prices and industrial production.  The at-risk cities are spread across the country, ranging from Missoula Montana to Mobile Alabama, though more than half of the cities are in the South, and five are concentrated in the Midwest.  “With chances of a national double-dip recession now estimated at about one in four, several metro areas will probably experience their own downturns in the first half of 2011,” said economist Andrew Gledhill, author of the report.  Private sector hiring has been tapering off in recent months compared to the start of the year, triggering Moody’s to boost its forecast for a national double-dip from a 20% chance to 25% chance.   In the 22 identified metro areas, Gledhill said private sector hiring is particularly sluggish, increasing the chances of a slowdown.  Without a substantial pick-up in hiring, Gledhill said the number of cities in danger of a double-dip recession could grow, possibly reaching the triple-digits.  “There was a time when all 384 metro areas were in a recession. We probably won’t get to that point again, but given the growing risk of another national recession, we’re on the lookout for more metro areas that will be weakening substantially on several levels over the next six months to a year,” Gledhill said.  He added that a handful of metro areas, particularly those that are industrial economies, are also suffering from a recent falloff in manufacturing.

MBA – Refinance Activity Increases

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 13.0% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 12.4% compared with the previous week.  The Refinance Index increased 17.1% from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 3.4% from one week earlier. The unadjusted Purchase Index decreased 4.6% compared with the previous week and was 38.6% lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 2.6%.  The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 3.2% for the Refinance Index.  The refinance share of mortgage activity increased to 81.4% of total applications from 78.1% the previous week, which is the highest refinance share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7% from 5.9% of total applications from the previous week.

Obama’s tax hike

With Obama’s tax plan in place, people making more than $195,550 in taxable income ($200,000 in adjusted gross income) and joint filers with taxable income over $237,300 ($250,000 in adjusted gross income) would be pushed up from the current 33% and 35% tax brackets into 36% and 39.6% brackets next year.  “It comes down to the greater your earnings, the greater the tax hit,” said Robert Kerr, senior director of government relations at the National Association of Enrolled Agents. “But it’s all relative. For someone used to spending that money — whether on a big family or expensive habits — it’s impossible to say how much they would be impacted.”  Say you’re a single filer with a taxable income of $250,000. This year, you owed $67,617 in income tax under the 33% bracket. Under the new system, you would pay $67,912 in taxes next year, a slight increase of $295.  But those people making more than $300,000 are going to owe additional amounts in the thousands. For instance, if you make $382,650 you’ll owe an extra $4,095 in income tax.  Single filers with $500,000 in taxable income would owe Uncle Sam an additional $9,492 from this year’s tax bill. Meanwhile, joint filers with taxable income of $700,000 would owe $232,396 in 2011, an extra $17,088 from $215,308 in 2010.  Those Americans lucky enough to be earning millions each year, whether filing as individuals or jointly, could end up seeing increases in the six-figures.  A single filer with a million dollars in taxable income would owe $32,493 more than in 2010, While joint filers with the same income would owe $30,888 more than they paid in 2010.  For single filers making $5 million in taxable income, get ready to hand over $1,944,137 for the 2011 tax year, an increase of $216,493 from $1,727,644 in 2010.  And a joint filer with an income of $5 million is likely to see his tax bill go up more than $200,000 next year.

HSBC to sell mortgage unit?

HSBC Bank USA is considering the possible sale of its US-based mortgage unit, HSBC Mortgage Corp., and notified employees Monday of the possible options being considered although no firm timetable for a potential decision was provided. The bank, the U.S. subsidiary of London-based HSBC Holdings Plc, bases much of its US operations in New York state.  Options for the mortgage subsidiary include “a sale, merger or other business combination,” according to a statement from the bank, which also said the mortgage company may look to sell substantially all of its assets. It’s also possible that no changes at all will be made, the bank said.  Bank spokesperson Neil Brazil stressed to the press that HSBC is not looking to exit US mortgage originations, but is instead assessing how it conducts its mortgage business in the United States.  HSBC’s mortgage operations currently employ roughly 1,500 in the US, according to the company, and the company was the 21st largest mortgage originator in the US during 2009.  But Europe’s largest bank has been moving to reduce its exposure to unsecured lending and exiting unprofitable businesses for the past two years, transferring its North American consumer finance operations into a run-off portfolio following heavy losses from subprime lending.  Beyond considering options for its US-based mortgage business, the bank is in the process of divesting from other assets and recently announced that a deal to sell the remainder of its vehicle finance loan portfolio, which totaled $4.3 billion at the end of June, would close in Q310.

Record low rates again

According to the Zillow Mortgage Marketplace weekly update, The national, 30-year fixed-mortgage rate (FRM) slightly decreased from a week earlier, reverting back to the record low average of 4.28% set two weeks ago.  , 30-year rates vary regionally, of course, but the majority of states witnessed a deflation. Most large states saw a decline in rates: California’s current rate of 4.33% is down from 4.34% last week; New Jersey’s at 4.26% is down from 4.28%; Pennsylvania’s at 4.32% is down from 4.33%; Illinois’ at 4.3% is down from 4.34%, and Florida’s at 4.21% is  down from 4.24%.  Rates substantially decreased in New York to 4.25% from 4.41% and Texas to 4.19% from 4.29%. Rates increased in Massachusetts to 4.22% from 4.28%.  Zillow reported the national average rate for 15-year fixed home loans remained flat at 3.86%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 3.23%.  Zillow’s rates are based on real-time mortgage quotes from lenders registered with, but not exclusively bound to the company. The national average comes from thousands of daily quotes given to anonymous borrowers through their website. State averages are also available.

Now for our real estate education section…

Low-Down on Government Loans

Sometimes it seems the more things change the more they stay the same especially when it comes to the mortgage industry. However, this time it really is a bit different especially given the major upheaval in the mortgage market. With the majority of mortgage loans now guaranteed by the U.S. government, it is a good idea to review what is available and to whom. Here is the low down on government loans as of August of 2010.

Basic FHA Loan (Home Mortgage Insurance – HUD/FHA) – This program has grown into a heavy hitter within the industry despite the fact that it doesn’t lend money directly to buyers (in most cases) but rather insures or underwrites the loans.

Condominium Unit Purchase (Mortgage Insurance – HUD/FHA) – Similar to the Basic FHA loan above, this is designed with condo owners in mind.

Manufactured Home Loan Insurance (HUD/FHA) – Like the basic FHA and condo loans above, this program is designed for borrowers interested in the purchase of a mobile or manufactured home.

Hope for Homeowners – The media made a lot out of this little program which turned out to be a much smaller than originally anticipated. Designed to help people avoid foreclosure, the program provides new, 30 year fixed interest rate mortgages for those that cannot afford their current payments. Stringent requirements have limited the number of eligible participants.

Rural Housing: Farm Labor Housing Loans and Grants – Once a major program within the federal government, the reduction in family farms has made this an all but forgotten program but one worth looking into for anyone interested in purchasing a family farm. Loans (and a limited number of grants) are available for land, housing, machinery and other assets required to buy, build and operate a farm.

VA – Home Loans – Interest Rate Reduction Refinancing Loan – Once considered the domain of veterans, this guarantee service also provides funding for the family of service members as well as veterans and others. Additionally the VA provides vendee loans for anyone interested in purchasing a VA foreclosure.

Section 203k Rehabilitation Mortgage Insurance – Interested in a major fixer-upper? Section 203k may be the right mortgage for you; once the main mortgage is obtained, this program provides the funding needed to make necessary repairs and upgrades to the property. Section 203h is a closely related program that provides funding for repairs and rebuilding due to natural disasters or other emergencies.

Home and Property Disaster Loans – The Small Business Administration may not be the first agency that comes to mind when you need a mortgage after a disaster but don’t be so quick to mark this one off the list; the SBA is able to assist small business owners, homeowners and even some renters after an area has been declared a disaster.

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
–