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Announcing the Re-Opening of FixAFlip! But only a few spots
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Join Chris McLaughin, Nathan Jurewicz, and CPA Bob Beard this
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Join us Sunday, December 13, at 8:30 PM ET, 5:30 PM PST:
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4% get mortgage help
Treasury officials, in the first comprehensive tally of permanent modifications made, say that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30, but 30,650 people in trial modifications have been denied. That means that only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program. A nearly equal number of trial modifications have been denied permanent assistance, the report showed. The reasons include not making monthly payments on time, not submitting all the necessary paperwork and not qualifying for reasons such as insufficient income.
Homeowners claim that banks keep losing paperwork, but banks claim they often don’t get it in the first place. Around 375,000 people should be eligible to receive long-term relief by year’s end, but only one-third of homeowners who have made at least three trial payments have submitted all the needed forms, Treasury officials say, and some 20% have not submitted any paperwork at all. Banks and government agencies have hired outside companies to knock on borrowers’ doors to assist them with completing the paperwork. None of this addresses the real problems, of course: a lot of people are underwater and don’t see the point of making payments, and quite a few know they won’t qualify once their real income comes to light.
Retail sales up
Retail sales jumped 1.3% in November, according to the Commerce Department, more than the expected increase. The seasonally adjusted November increase represents $352.1 billion worth of monthly sales. This is slightly less than the October increase, when retail sales jumped 1.4% month-to-month. Automobile sales had little to do with November’s gains this time — without including autos, retail sales rose 1.2% last month. Economists had expected retail sales to rise 0.6% from October, according to a consensus of forecasts compiled by Briefing.com. November sales included Black Friday, the post-Thanksgiving shopping spree that is generally one of the hottest days of the year for retail. But this year’s Black Friday disappointed retailers, with sales 0.5%, and falling short of Thomson Reuters’ forecast of a 2.1% rise. The University of Michigan will release its preliminary consumer sentiment index for November later today. The November index is expected to rise to 68.8, according to a Briefing.com consensus, from the prior month’s index of 67.4.
Fed outlines new mortgage market
Elizabeth Duke, a governor of the board of the Federal Reserve System presented a framework for a “better-functioning” mortgage market while speaking at the Federal Reserve Bank of Chicago. Data collected under the Home Mortgage Disclosure Act for 2008 showed a fractured market for housing finance, Duke said, with frozen private lending and new loans dependent on government support. Only 75% of the mortgage companies active in 2006 remained in 2008 as warehouse lines of credit – which the companies depended upon to fund their loans – shrank “significantly,” Duke said. “Some would argue that most of the really risky behavior is now out of the market,” Duke said. “But, unfortunately, the backlash has restricted a lot of perfectly responsible lending as well. Banks are reluctant to put any but the lowest possible risk loans in their portfolios.”
Duke said that a new system must provide adequate consumer protection after widespread abuses so consumers can feel confident in negotiating a mortgage. “Second, there must be transparency at all levels. Retail products should be as transparent as possible, so that consumers find it easy to understand the terms and risks of their mortgages; Third, the new system should encourage simplicity. Retail mortgage contracts ought to be as simple as possible. Too often, the complexity of mortgages has served to confuse borrowers and make it more difficult to make informed decisions; Finally, the new system should feature clear roles and properly aligned incentives for all players. Too often in the recent turmoil, we saw examples of misaligned interests and competing objectives,” Duke said.
More money down the drain
The Obama administration is considering starting up a whole new program from the $700 billion Troubled Assets Relief Program (TARP) dedicated to dumping more money into banks without restrictions so long as the funds were used to support loans to small businesses. As an alternative, officials would also be prepared to ask Congress to modify the Troubled Asset Relief Program itself by easing pay limits and other restrictions that would be imposed on small business lenders, the newspaper said. Jim Rogers, chairman of Jim Rogers Holdings, says the plan will leave the country with no way to help its way out of the next crisis. The Treasury Department “has been putting out all of this stimulus and now they’re talking about extending the TARP,” Rogers said. “Why are we listening to any of those guys down there? They’re making our situation worse,” he said. “They said in writing yesterday the solution to our problem is to spend more money … that’s what got us into this problem: too much debt. That’s like saying to Tiger Woods, ‘you get another girlfriend and it will solve your problems’ or ‘five more girlfriends and you will solve your problems,’” he said. “We’re all going to pay the price for this in, one, two, three years,” Rogers added. “The next time that we have problems in the economy, which will not be too long, we don’t have any bullets left. We’ve shot everything we had to solve our problems.” Since labor leaders and Democrats in Congress have backed the notion, it’s almost certainly a horrible idea.
Some cities see an increase in listings
While gross house listings in major US markets continued their decreases, listings in some of the markets hit hardest by the housing downturn saw an increase, according to ZipRealty’s survey of housing inventory. The number of listings in 27 major US markets declined 2.42% from October to November. The 579,413 multiple listing service (MLS) listings in the markets is down 27.64% from November 2008. It’s the 17th straight month that gross listings for all markets declined month-over-month. Boston experienced the greatest month-over-month decrease at 8.5%, followed by Minneapolis-St. Paul (6%), Washington, D.C. (5%), Denver (4.4%) and Chicago (4%). San Diego led all markets with a 53.7% year-over-year inventory decline, followed by Los Angeles (53.7%), San Francisco Bay area (51.8%), Las Vegas (51%) and Phoenix (40.7%). But some distressed markets experienced month-over-month listing increases in November, including Tucson (2.6%), Las Vegas (1.3%) and Orlando (0.6%). It was the first inventory increase in Las Vegas in 12 months, when listings increased 1.86% month-over-month between October and November 2008.
Now on to our real estate investing educational arena …
Friday File: Fact & Fiction About Fees
This week we focused on financial aspects surround short sales; from credit terms to FAQ’s about loan modification the emphasis has been on understanding loans. To finish the week in style we thought it was only fitting we should cover a few of the facts and fiction about fees including which are legit and which you have a fair chance of fighting.
Factual Fees
While you might take issue with any fees, the reality is that some are truly representative of services rendered including underwriting fees and processing fees. Underwriting fees are the actual charges for those that review the loan while processing fees are the costs for dealing with the details of the loan.
Closing costs are another set of expenses which are not actually fees but simply expenses require for various entities such as the local government. Doc stamps and certain taxes fall into this category.
Appraisals, inspections and surveys are also customary charges you are likely to encounter for services by third party providers.
Fictional Fees
Email fees, appraisal review fees and ancillary fees are just a few of the increasingly common fictional fees being charged across the nation. While it may not be possible to avoid every junk fee, savvy buyers should certainly challenge these excess costs whenever possible. Here are a few other to keep an eye out for when applying for a mortgage loan:
- Photo review fee
- Satisfaction fee
- Funding fee
- Document prep fee
- Plot Plan fee
- Excess Escrow fees based upon loan amount(s)
- Notary Fee – even when signing in person
- FedEx/Overnight Delivery – verify actual cost and use – don’t be charged when documents were emailed or faxed. Ditto for courier or messenger fees.
- Archive Fee
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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