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Fix A Flip … Replay Comes Down Soon!
We’ve been flooded with phone calls and e-mails begging
us to reopen Fix A Flip … so today you get another
chance! If you’ve been frustrated by not being able to close
your flip transactions due to 30 to 90 day seasoning
requirements, this program is for you!
Watch the replay here:
http://www.shortsalesriches.com/fixaflipwebinar
(please allow a few minutes to upload)
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Housing: How Strong a Recovery?
The U.S. housing slump is levelling off, but whether it grows into a lasting recovery will depend on how heavily the housing market is leaning on the government’s crutches, and how long Washington is willing to keep those supports in place. Barclays Capital economist Michelle Meyer puts it this way: “The debate has shifted from ‘Is the housing market recovering?’ to “’How strong will the recovery be?’” Despite the recent reassuring signs, Barclays still expects the S&P Case-Shiller home price gauge to drop another 8 percent through the first quarter of 2010, bringing the total decline to 36 percent since the housing market peaked. Between the quasi-nationalization of housing finance companies Fannie Mae and Freddie Mac, the Federal Reserve’s $1.45 trillion commitment to buy mortgage-related assets, and an $8,000 tax credit offered to entice first-time home buyers, the amount of public money propping up housing is massive. Three reports due this week are likely to show these efforts are helping to reduce the glut of unsold homes and restore at least some confidence: The National Association of Home Builders releases its U.S. housing market index, and it’s expected to be better; figures on September housing starts and building permits are expected to inch up; and existing home sales for September is also expected to be up a bit.
Obama and job creation
Unemployment stands at 9.8 percent, with more than 4 million jobs lost this year. The deficit has reached $1.4 trillion and the national debt $11.9 trillion. President Obama is considering another stimulus package, while trying to deal with a record deficit. Adviser David Axelrod cited progress on reviving the economy, with expectations for growth in the third quarter this year. But he warned that the government should not make the mistake of ending its recovery initiatives too early at the risk of sending the economy back into recession. Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee, said the latest deficit figures are evidence of an expanding government. “This deficit is driven by us. I mean, you talk about systemic risk. The systemic risk today is the Congress of the United States,” he said. “We’re creating these massive debts which we’re passing on to our children. We’re going to undermine fundamentally the quality of life for our children by doing this.”
No to Interest-Only Mods
The Mortgage Investors Coalition, a trade group of asset managers holding more than $100bn in residential mortgage-backed securitizations (RMBS) on behalf of pension funds, college endowments, and other investors, is calling on the Treasury Department to reject a proposal to offer distressed borrowers interest-only payments for a certain length of time as part of the terms of a Making Home Affordable Modification Program (HAMP) workout. The coalition said the proposal fails to address the issue of negative equity, and that it is not in the best interest of the housing industry and consumers. “Modifying homeowners into mortgages that have future payment increases and adjustable interest rates will not improve a homeowner’s situation,” said Micah Green, a partner at Patton Boggs and coalition spokesman. “Doing so would ignore the fact that many of these homeowners are already in interest-only or other non-traditional mortgages and owe more on their mortgage than their home is currently worth.”
Motley Fool: Government not the answer to a recovery
It’s not clear when the economy will recover. America’s Gross Domestic Product now seems to be flattening out from a previous plummet, but that isn’t a great indicator of a recovery. After all, without a complete financial collapse, GDP can’t keep shrinking for ever. A big part of the decline in GDP has been from inventories, which have been falling since October last year, but manufacturers eventually have to increase output, or they’ll run out of widgets to sell, and that boosts GDP figures. What’s more, the government has been throwing money at the economy to try to reverse the vicious cycle of layoffs resulting in lower corporate sales, which is leading to more layoffs. This, too, props up GDP, so it’s not really surprising that GDP seems to have bottomed. But funding a recovery with huge government spending and massive debt is like using a defibrillator to treat a heart attack. It can work well in short doses, but it’s completely unsustainable over the long term. The government isn’t the key to recovery. Neither are corporations. Consumer spending is what really matters, accounting for 70 percent of the GDP. But right now, consumers are acting as cheap as a Congressman who has to spend his own money.
$8000 Tax Credit extension likely?
Diana Olick, CNBC’s Real Estate Reporter, thinks the administration is going to extend the $8000 Home Buyer’s Credit. “I was on the fence for a while as to whether Congress would extend the $8000 first time home buyer tax credit and whether the Administration would stand behind that, but I’m getting some clues that have pushed me over the side,” Olick says. “I think it may happen.” She names a couple of insiders who deflected her questions about an extension, but cites Secretary Geithner as saying, “We’re not going to make the mistake many countries made in the past of putting the brakes on too early and creating risk that we have a, you know, weaker recovery with even higher levels of unemployment going forward.” And Geithner again: “…[we are] looking at a set of programs like unemployment insurance, other sets of things that have–that are set to expire. And there’s a good case for extending them. And I think a lot of support fundamentally for doing it.” Olick also cites a report by the Joint Committee on Taxation on extending and even broadening the credit that Capital’s Washington Research Group says, “strongly suggests that a mere extension of the program will be much less and refutes whispers in Washington that an extension alone could cost more than $15 billion.”
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What’s Better – Short Sales or an Annuity?
As investors seek safety against a falling dollar and declining stock market, annuities are an option increasingly explored by fearful investors but are annuities all they are cracked up to be? Let’s take a few minutes to compare and contrast annuities versus short sales to see which makes the most sense.
Annuity Defined
An annuity is essentially an insurance product that pays an income for a specified period of time. In a nutshell, you hand over a lump sum and/or regular contributions to an insurance company that is able to use and invest that money in exchange for a guaranteed payment in the future.
Reward vs. Risk
The “reward” portion of an annuity is the ability to secure a reliable, steady source of income outside of your ability to work. This is one reason it is a popular option among retirees or others seeking “safety” from the prospect of outliving their ability to work without having to depend solely upon Social Security.
While superficially this sounds like a great idea, the actual reality is often not quite as advantageous as it may initially sound. This is due to several reasons including the inherent risk associated with dealing with an insurance company (indeed, nearly any company) over an extended period of time. If the near default and subsequent bail-out of AIG didn’t teach investors anything it certainly highlighted the potential for insurance companies to take on more than their ability to pay and remain solvent. While the AIG fiasco did not directly concern individual insurance contracts, the basic premise remains the same…there is a risk associated with total reliance upon a company over an extended period of time.
Unfortunately, this is not the only risk. The risk versus reward ratio in terms of actual returns falls short especially given the ultra-low interest rates in the current market. For example, consider the following example where you invest $100,000 into an annuity paying an annual interest rate of 5% for 30 years (roughly the same period of time you would finance an average mortgage). Annuity Payments ($ / Year). The annuity would pay roughly $6,200 per year or just over $500 per month for placing $100,000 in cash at their disposal. At the end of 30 years you would have zero remaining – nada, nothing, zilch. Unfortunately, during that same period of time, the $6,200 would have lost value due to inflation; in fact, if inflation follows a historic average, that same $6,200 annually would be worth just about $2,000 in purchasing power.
Now, let’s see what happens if you were to purchase just one short sale property for $100,000 cash. You rent it out for 30 years and make the exact same $500 per month or $6,200 (remember, No mortgage!) plus you have tax write-off’s for depreciation. For 30 years you collect the same amount of money but at the end of 30 years instead of the payment stopping leaving you with absolute nothing…you still own a paid-in-full, income generating property. Since real estate tends to keep pace with inflation, that same $100,000 property will be worth roughly $300,000 using standard historical estimates. Now, ask yourself one simple question…which would you rather own in 30 years? An annuity controlled by someone other than yourself that leaves you empty handed or a paid-in-full property that continues to generate income as long as you own it? Call us crazy but seems like short sale real estate is a clear winner.
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
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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 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
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