Real Estate News & Commentary by Chris McLaughlin, October 12, 2009

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

Deals Done For You Replay Link Comes Down Tonight!

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

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

Watch the Replay NOW … it comes down tonight at midnight:
http://www.shortsalesriches.com/replaylink

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

Now on to our real estate educational section…

Rewarding Short Sales – New Incentives From Uncle Sam

Coming soon to a lender near you are even more short sale incentives from Uncle Sam. In this case, the Treasury Department is getting in on the act by substantially increasing incentives to lenders and services that use short sales. An extension of the Home Affordable Modification Program implemented in May, it is anticipated that expanding incentives will increase the use of modifications among eligible homeowners from the rather dismal 12 percent currently in place, to somewhere closer to the actual number of homeowners eligible for assistance.

The renewed sense of urgency is due in part to the looming threat from “shadow inventory”. According to analysts, 7 million units are sitting on the sidelines waiting to hit the market; a glut capable of causing yet another crash in an already fragile real estate market.

According to the Treasury Department, $10 Billion dollars of government funds will be dedicated specifically for loan modification programs and applied directly to lenders in order to catch-up payments and offset the cost of completing a short sales process. Funds would only be allocated if the lender opts for short sales over other means and methods of removing the asset from their books…so much for former critics of short sales that believed this was simply “greedy capitalism” making a profit from the downtrodden. It appears Uncle Sam has come to the same conclusion we here at the ShortSales blog have known for a very long time; short sales are a win-win scenario for everyone involved.

While the details of the Treasury plan have not yet been finalized, it appears the plan will provide an additional $1,000 for lenders who agree to a short sale. Borrowers will receive $1,500 toward closing fees and second lien holders would receive $1,000 once they sign away their claim to the short sale. Depending upon the total cost of the property, this is a significant incentive package that could assuage the fears of servicers and lenders…especially when combined with the actual “catch-up” payments taken from the $10 Billion fund. However, the question remains…is it enough to begin moving the growing backlog of properties in order to work through the shadow inventory before a new wave hits?

While concerns over a new wave mount, the current inventory of short sales is actually down somewhat; short sale were about 12% of all sales in August versus 18% for bank-owned homes; a ratio that has actually narrowed since the March peak where bank-owned homes accounted for 31% of the market versus 18% for short sales. Experts agree, the bulk of the prime mortgage meltdown has passed while concerns for the next wave focus on those that are newly unemployed.

Critics of the current program still cite concerns including potential conflict of interest between the need to move short sales versus the desire of portfolio lenders to collect profits; there seems to be some intuitive sense to the argument; the company’s in charge of managing the properties are often paid for the time or duration they are in charge of the home(s) versus a flat-fee arrangement so there is little incentive for them to reduce the total time the house remains on the books. Unfortunately, little attention has been giving to this niche area of the process to date…savvy short sale investors should take note and learn how to effectively implement a tried-and-true process for working with short sales across the board. If you have not taken time to turn-in for one of the short sale webinars, put it on your priority list to learn how to put your investments on automatic while maximizing available incentives for all involved.

See you at the top!

Chris McLaughlin
**************
Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches
*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog
*************************************************
About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting nearly
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris
–