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Freddie Mac door knocking delinquents
Freddie Mac has contracted Titanium Solutions, a third-party servicer, to go to the homes of delinquent borrowers to get the missing information and documentation necessary to start three-month long trial repayments under the Home Affordable Modification Program (HAMP). “By meeting with our borrowers, one on one, Titanium Solutions can help them overcome the roadblocks keeping them from starting their Home Affordable Modification trial periods,” said Ingrid Beckles, Freddie Mac senior vice president, default asset management. As a fraud prevention measure, Titanium representatives will not be allowed to accept mortgage payments or any other money from borrowers, Freddie Mac said. Representatives will also carry a copy of the solicitation letter the borrower initially received from their servicer, which contains unique information about the borrower’s loan. In addition to the door-to-door campaign, Freddie Mac sends representatives to foreclosure mediation events put on by the Treasury Department and has hired Home Retention Services, a subsidiary of Stewart Lender Services, to process the backlog of modification applications from distressed borrowers with Freddie Mac mortgages.
Job losses keep slowing
According to Automatic Data Processing, a payroll-processing firm, private-sector employers cut 254,000 jobs in September, down from a revised 277,000 in August. It was the smallest monthly total since July 2008, but more than the 200,000 loss economists surveyed by Briefing.com had forecast. The good news is that the difference was “not statistically meaningful,” according to Joel Prakken, an ADP spokesman and chairman of Macroeconomic Advisers, LLC. Large businesses, those with 500 or more workers, let 61,000 workers go. Medium-sized businesses, with between 50 and 499 workers, shed 93,000 jobs. And small businesses, those with less than 50 workers, reduced payrolls by 100,000. “The pattern of improvement in headline number is undeniable at this point,” Prakken said. Private sector payrolls will continue to decline at a slowing rate for the next few months before modest job growth resumes “in the first few months of 2010,” he added.
MBA – Mortgage Applications down
The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 25, 2009 decreased 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3.1 percent compared with the previous week and 44.3 percent compared with the same week one year earlier. The Refinance Index decreased 0.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 6.2 percent from one week earlier. The unadjusted Purchase Index decreased 6.9 percent compared with the previous week and was 10.6 percent lower than the same period one year ago. The four week moving average for the seasonally adjusted Market Index is up 3.9 percent. The four week moving average is down 0.6 percent for the seasonally adjusted Purchase Index, while this average is up 6.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.3 percent of total applications from 63.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.2 percent from 6.7 percent of total applications from the previous week. 30-year borrowing rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group. A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.
GDP revised upward
The Commerce Department’s final estimate has been revised to show that gross domestic product fell at a 0.7% annual rate instead of the 1.0% decline reported last month. Analysts had forecast GDP, which measures total goods and services output within U.S. borders, slipping at a 1.2% rate in the second quarter after dropping 6.4% in the January-March period. According to CNBC, this will probably mark the last quarter of decline in output for the U.S. economy, which slipped into recession in December 2007. The economy is believed to have rebounded in the July-September quarter. With the second-quarter contraction, the country’s real GDP has shrunk for four straight quarters for the first time since government records started in 1947. Consumer spending, which normally accounts for over two-thirds of U.S. economic activity, fell at a 0.9 percent rate in the second quarter—smaller than the previously estimated 1.0 percent decline. Spending rose at a 0.6 percent rate in the previous quarter.
Multifamily sector hardest hit
According to commercial mortgage-backed securities (CMBS) and commercial mortgage information provider Trepp, the multifamily sector looks poised to post the worst performance of any major commercial property type this month, and delinquency levels in office and hotel properties are likely to come in “sharply” higher in September. Credit-rating agency Realpoint noted that multifamily properties came in second only to retail delinquencies. 4.8% of the total multifamily outstanding balance was delinquent in August. The total delinquent unpaid balance for CMBS rose to $28.16 billion in August from $25.68 billion in July, marking a 592% increase from the previous-year period and nearly erasing July’s $2.97 billion recovery from the June ‘09 12-month high. 3.47% of the $811.4 billion of unpaid principal balance for all CMBS pools was delinquent in August, up from 3.1% in July but slightly below June’s high of 3.5%.
Manufacturing down – slows stock rally
The Chicago Purchasing Managers Index, which is considered a precursor to the national Institute for Supply Management index to be released on Thursday, fell to 46.1 in September instead of rising to the 52 that economists expected. While GDP is up, the Chicago PMI data is fresher and therefore more troubling than the GDP reading. And it reminded investors that the economy still has major obstacles to be overcome before a solid recovery can occur – driving a 100 points plus decline in the DOW as of this writing. In the first hour of trading, the Dow fell 1.2 percent, Standard & Poor’s 500 index dropped 1.2 percent, and the Nasdaq composite index 1.2 percent.
Now on to our real estate educational section…
What’s Safer – Short Sales or Your Pension Plan?
They told you it would be safely set aside for when you needed it most; Guaranteed by the backing of Good Old Uncle Sam via the Pension Benefit Guaranty Corporation…another quasi-government entity that is ready to petition for their very own version of a big bail-out. You spent the best years of your life waiting for that money to mature only to learn it may not be there after all…or even if it is, you may be required to pay more in taxes, have access to fewer benefits or fight against the ravages of inflation. So, what is really safer…short sales or your pension plan? Let’s examine the facts to find out why relying upon a pension may not pay off in the long run.
- The PBGC – Pension Benefit Guaranty Corporation – has been underfunded each and every year since 2002. Remember, this is the main entity responsible for “making good” on pension plans when a corporation goes bankrupt. Unfortunately, the downturn in the economy has resulted in the largest single short-fall in the history of the PBGC…in addition to the multi-year deficiency. In fact, experts predict it is a matter of months before the PBGC will be forced to petition congress for financial support. Can you count on them to be there when you need it?
High income earners are at even greater risk…if the PBGC is forced to take over your pension plan it already has a cap in place limiting payments to only $54,000 per year to anyone 65 or older – no matter what your original pension might have been!
- Companies are cutting back, filing bankruptcy and attempting to reduce long-term obligations in any way possible just to remain afloat. Take a look at General Motors. How long can you count on your company to remain viable in a rapidly changing global economy in the midst of a total melt-down? Are you willing to bet your golden years on their ability to remain profitable for ten years? Twenty years? Longer?
- Too many eggs in one basket. Earning a living is getting harder every day so why place all your eggs in one basket? It’s bad enough to lose an income but even worse to face unemployment lines and a loss of a pension plan should your company meet with an early demise. Remember, even if they stay in business but simply restructure debt, it could potentially impact your financial future.
On the other hand, short sales are directly under your control. They do not rely upon big bail-outs, government intervention or even the whims of investors other than those you deal with directly. Short sale real estate allows you the opportunity to diversify outside of your company by retaining access to an income stream outside of that associated with your place of employment…but without taking on more time away from home. Finally, short sales are able to fit your needs now…not ten, twenty or even thirty years or more into the future. If your situation changes – sell. Need additional write-off’s…hold for awhile. The choices and versatility afforded by short sales are nearly endless compared to dealing with a pension plan where the rules of the game can change before you are able to act on new information.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com
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