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We’re not allowed to release her name. Because she used to
work for the enemy. And she knows all their dirty little
tricks. Just call her the Short Sale Sensei…
This gal used to be well respected by banks. She processed
nearly 10,000 short sales for lenders too big to name here.
She was one of them. She attended their office parties.
She’s sat down to dinner beside them. Socialized and went
to sporting events with them.
If there’s a tactic or strategy the bank’s kept hidden from
investors, she knows it.
And she’s ready to spill the beans in an ENCORE TODAY,
Thursday, at 3 PM ET, NOON PST, on a fr-ee webinar, right here:
https://www1.gotomeeting.com/register/815788648
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Mortgage applications rise as interest rates fall
According to the Mortgage Bankers Association (MBA), its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, rose 14.6% for the week ended February 26, from the earlier week. The Refinance Index rose 17.2% from the previous week while the seasonally adjusted Purchase Index increased 9.0% from one week earlier. The increase was due to a drop in loan rates — the rate on 30-year fixed-rate mortgages dropped to 4.95%. “Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent,” said Michael Fratantoni, vice president of research and economics at MBA. “Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.” Analysts say the surge in mortgage applications is not an indication of long-term recovery, given the current levels of foreclosure and unemployment. “We are seeing positive signs of some form of life, but it is not significant and the recuperation period is going to be significant because these are dramatic declines” in housing, said Vickie Lester, president of mortgage servicing at RoundPoint Financial Group.
Home prices rise 5%
Clear Capital, a provider of real estate data, says home prices climbed 5% nationally in February from a year ago. The prices grew 2.3% in January on an annual basis. Among metropolitan areas, Providence, Rhode Island saw the highest rise of 6.1% from the earlier quarter. California had 5 of the 15 highest performing markets. The rise in prices is likely to be sustained as the tax credit deadline approaches in April. “If the increase in demand that preceded the end of the last tax credit is any indication, home prices may dip only slightly into negative territory before getting an added boost before the April tax credit deadline,” said Alex Villacorta, senior statistician at Clear Capital. The firm has expressed optimism despite the likely impact of REOs – properties that go back to the mortgage company after an unsuccessful foreclosure auction – on home prices in the coming months. “Although many markets have seen a slow down in price gains, I’m encouraged that prices have remained positive through the first two months of the year despite all the negative economic news and threat of more REOs hitting the markets,” Villacorta said.
Hovnanian returns to profitability
Hovnanian Enterprises, a real estate development company, posted a profit of $236.2 million for the quarter ended January 31, compared with a year-earlier loss of $178.4 million. The result includes a $5 million write-down on land and other items, compared with $132 million in write-downs a year earlier. This is the first quarterly profit since 2006. Hovnanian operates in 18 states, including California, Arizona and Florida, the worst-hit states. The company’s net contracts, excluding unconsolidated joint ventures, decreased 5% while the average price grew 14%.
The company’s contract backlog as of January 31 was 1,593 homes, down 4%, with a value of $505.4 million. The cancellation rate dropped to 21% from 31%; this was the company’s lowest cancellation rate since the second quarter of 2005. Ara Hovnanian, Chief Executive of Hovnanian, sounded cautiously optimistic about the company’s prospects for the near-term. “We are pleased to see the market for new land deals begin to thaw out a bit and we continue to diligently pursue new land opportunities where we can make normalized returns based on today’s home prices and sales absorption levels,” said Hovnanian. “I’m not trying to brush off concerns in the marketplace. There are risks, and the risks are real.”
Service sector’s best performance since December 2007
The Institute for Supply Management (ISM) said its index tracking the service sector rose to 53.0 in February from a reading of 50.5 in January. This is above the estimate of 51.0 made by economists. A reading above 50 indicates economic expansion while a reading below 50 denotes contraction. The February reading is the highest since December 2007. The services sector accounts for about 70% of America’s economic activity. “We’re starting to see a broadening of the economic recovery,” said Richard DeKaser, chief economist at Woodley Park Research. The data “are encouraging, to say the least.” Dean Maki, chief U.S. economist at Barclays Capital, said: “Spending by consumers and businesses is growing again, though not at the pace prior to the financial crisis. Generating service-sector employment is quite critical to the broader economy.” Unemployment is the biggest concern. Given the current unemployment level, it may take years and not months for the sector to recover in a sustained manner. “Business feels better, there is no question about it,” said Macy’s Chairman and Chief Executive Officer Terry J. Lundgren. “We still have high unemployment, and I still see tight credit on consumers.” Nine industries, including information technology, arts, transportation and retailing, saw growth in February while 8 industries saw a fall in output.
Planned layoffs drop in February
According to a report released by Challenger, Gray & Christmas, a consultancy, planned job cuts announced by U.S. employers dropped 41% to 42,090 in February, from the 71,482 layoffs recorded in the previous month; this presents a 77% drop from 186,350, a year earlier. The report states that job-cut total in February is the smallest since July 2006. Analysts believe it will take some time before hiring starts to grow. John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said: “Employers have shifted away from downsizing and are poised to start adding workers. It may be a couple of more months before hiring begins to surge.” Pharmaceutical companies, with 17,687 announced cuts, and government and non-profit agencies, with 4,628, led all industries in reductions in February. The economy is limping back from its worst downturn since the 1930s, but economists are concerned about the unemployment rate which is expected to average close to 10% this year.
Now on to our real estate investing educational section…
Whole Life Financing For Dummies
Have you been sitting on the sidelines waiting to accumulate cash to start investing in short sales? There are faster, easier and more efficient ways to raise needed funds but one that is gaining a great deal of support is the use of whole life insurance as a finance vehicle for short sale investing.
Whole life insurance is often considered a “bad buy” among traditional investment guru’s including notables such as Dave Ramsey and Suzy Ormon…indeed, for the average American struggling just to get by, any form of life insurance is often viewed as a luxury rather than necessity. However, those with the foresight plus a little time on their hands to crunch the numbers soon realize a whole life policy isn’t always a bad investment…in fact, held long-term it can be the most economically viable option. Beyond the basic death benefit, there are other very real rewards to be gained from a whole life policy including the use of low-cost financing.
Basically it works like this; once a participating whole life policy is purchased and capitalized or funded, the dividends eventually cover the cost of the policy itself. Additional paid in full riders can greatly increase the initial funding of the account to grow the cash balance to a desirable level. At this point, the policy can be borrowed against for any desired purpose…including the purchase of real estate. A contract is established that delineates the “interest rate” to be charged on the loan and the time period in which it is to be repaid. Meanwhile, the policy continues to receive dividends based upon the complete cash value of the policy essentially creating an exceptionally low cost source of funds. In fact, the policy owner benefits in several ways since the payments (with interest) are paid directly back into the whole life account. Interest can be used as a write-off for the real estate expenses while simultaneously, excess payment amounts paid back into the whole life policy are used to purchase additional paid-in-full premiums thereby increasing the death benefit and available source of future cash value in the account.
Not only does the account continue to grow, pay dividends and collect the full payments back into the account but insurance is considered a protected asset in many states and taxes are deferred until the withdrawals exceed the amount paid into the policy. Because dividends are considered a ‘return of premium’ rather than distribution of profits, they are not subject to typical taxes.
If you own a whole life insurance policy, take time to carefully consider the feasibility of using a policy or cash value loan to dramatically enhance your individual real estate portfolio. By establishing favorable repayment terms and recapturing the interest rates into your own account, it’s possible to act like your own banker while building a strong real estate investment portfolio.
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
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us and our market…
http://www.shortsalesriches.com/blog
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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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Join my Facebook Fan Page: http://www.mclaughlinchris.com
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