Mortgage Firms Told to Step Up Loan Modifications

Real Estate News & Commentary by Chris McLaughlin, July 10, 2009

http://www.shortsalesriches.com

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

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Mortgage firms asked to step up loan modification effort

In a letter to 25 mortgage-servicing firms, Timothy Geithner, the Treasury Secretary, and Urban Development Secretary Shaun Donovan, have urged the firms to modify more home loans. Analysts say the Obama administration’s loan modification program has not done enough to stem the rising tide of foreclosures so far. The program’s effectiveness has been hampered by mortgage firms not being able to keep pace with the applications received for loan modification. “We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share,” wrote Geithner and Donovan in their letter.

The administration exhorted the firms to provide “an escalation path for borrowers dissatisfied with the service they have received” and suggest ways of improving the design of the program. Industry experts have been disappointed with the pace of the program so far. “We are not getting anywhere near the level of resolutions we expected,” says Bruce Dorpalen, national director at Acorn Housing Corp. Housing counselors say there is a need to raise homeowners’ awareness of the program. “Homeowners on their own are not able to navigate the system,” says Maeve Elise Brown, executive director of Housing and Economic Rights Advocates.

Homeowners say downpayment and closing costs are far too high

According to the “2009 National Housing Pulse Survey,” conducted by the National Association of Realtors (NAR), homeowners consider high downpayments and closing costs as the greatest obstacles to home purchase. The survey participants said that they were highly concerned about their job security and their ability to get home loan. “Homeownership is an investment in your future; however, saving for a downpayment and closing costs is still too great of an obstacle for 82% of house hunters looking to take advantage of the current market,” said NAR President Charles McMillan.

Despite the concerns about the economy, 83% of the survey participants said they consider buying a home to be a good financial investment. Foreclosure remains an important concern for many homeowners with 51% of the survey participants saying foreclosures are a big problem in their area. About 70% said they are not confident of getting approval for a home loan and there are fewer mortgage options offered by banks. NAR has expressed concern about the continuing credit crunch. “While there has been some easing of credit in the mortgage market, the availability of credit continues to be an issue for many qualified home buyers,” said McMillan.

AIG seeks pay czar’s permission for bonus payment

American International Group (AIG), the beleaguered insurance firm, has sought permission to pay $2.4 million in bonus to 43 of its employees from Kenneth Feinberg, the Obama administration’s pay czar. Firms which have received bailout funds from the government need Feinberg’s permission to pay bonuses and retirement packages to their 100 highest-paid executives. Analysts say AIG will be seeking permission to pay about $235 million in retention bonus to employees in AIG’s Financial Products (FP) division next year. The FP division was responsible for the company’s near-collapse on account of its derivative losses. AIG paid $165 million in retention bonus to its FP employees earlier this year. That led to a scathing criticism by the public and Congress. A Treasury spokesperson suggested that Feinberg has the authority to deny permission to bonus payments which are deemed to be inappropriate and excessive. “Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives,” the spokesman added.

Borrowers say credit crunch is still on

Alan Greenspan, former Federal Reserve Chairman, says the credit crunch is nearing its end. Greenspan’s measure of credit crunch is what is called the LIBOR-OIS Spread, which fell to 0.33% points this week. The current spread is very close to what Greenspan calls “normal.” A decreasing LIBOR-OIS Spread means that banks believe the other banks they are lending to have a lower risk of defaulting on the loans. It also indicates that the credit markets are functioning smoothly—which is sign of potential economic expansion. So all’s well in credit markets? “It’s more complicated than that, obviously,” said Scott Anderson, senior economist at Wells Fargo. “Greenspan’s right in one respect: the liquidity crisis is over. But consumers’ and business’ access to credit remains extremely tight.” Analysts believe liquidity has been restored in the market but the credit crunch still exists. Banks are still unwilling to lend on account of the economic situation. “There’s a new normal as far as banks are concerned, in terms of tighter standards and the types of loan products offered,” said Anderson.

“Animal spirits” needed for economic revival

According to economists Robert Shiller and Nouriel Roubini, the negative sentiment prevailing now can have a deleterious effect on economic recovery. Shiller, a professor at Yale University, said: “The fundamental problem, as Franklin Delano Roosevelt said in 1933, is fear.” Shiller says the Great Depression was exacerbated due to a “sense of lost confidence or animal spirits that was a self-fulfilling prophecy. The worry is that we will have the same kind of issue arising again.” Shiller believes that the $787 billion stimulus package introduced by the Obama administration in not adequate to kick-start the economy and consumer sentiment has to improve sooner than later if the economy has to recover. Roubini predicts that more corporate bond defaults are likely. “The wave of corporate defaults is going to be massive,” Roubini said. “We’re not out of the woods.” Shiller and Roubini believe that lack of regulation in banking led to banks taking unmanageable risks, leading to credit crisis and government bailing out firms such as American International Group Inc.

Now on to our real estate investor education section…

Estimating Future Results

Short sales are partially a number game; you must get out there and make offers in order to generate a deal and each deal will tend to generate certain levels of profit. It’s important to keep track of all your efforts not only for tax purposes but also as a method of forecasting potential profits in the future. Not only will you attain valuable information on what works or doesn’t but also will be prepared for seasonal differences or other factors. Use this series of questions to get started:

1. Record all initial contact. For example, perhaps you decide to make contact with 100 potential sellers each month.
2. Response rate. Of that original 100, how many responded?
3. Of those that responded – how long did it take? 1 week? 1 month? 3 months?
4. Of those that responded, how many offers did you actually submit?
5. Of those offers – how many were accepted, rejected, countered or cancelled?
6. What was the average profit from each successful closure?
7. What was the average time required to resale/rent or otherwise turn a profit?
8. What was the average out of pocket expense associated with each successful sale?
9. What was the average out of pocket expense associated with each response?

10.  What was the average out of pocket expense associated with each contact?

11.  What was the average time invested in each successful transaction?

12.  What was the average profit on your time invested in each successful transaction?

13.  If you were to increase the number of initial contacts – what would the outcome be in estimated future profits?

14.  Would you be able to float the required funds or would you need to seek outside help?

15.  Would you have the time available to meet the increased demands for working with sellers and others or would you need to hire outside help?

16.  What would it cost to borrow additional funds or hire others?

17.  What would the tax considerations be for generating x amount of additional profit?

18.  Is it worth the additional time and effort? (Every person has a personal “sweet spot” where effort, taxes and profits make the most sense – find yours!).

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

PS:

“You Thought Short Sales Were Hard to Close?

Sorry -  You Thought Wrong…”

This automation miracle finds listings, negotiates

low-ball price with the bank, and sells them to investors

without you doing anything more than signing the papers.

You don’t even pay for marketing!

Find out more for fr-ee right here:

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Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com
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

450 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

Caution is the watchword for potential home buyers

Real Estate News & Commentary by Chris McLaughlin, July 9, 2009

http://www.shortsalesriches.com

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

“You Thought Short Sales Were Hard to Close?

Sorry -  You Thought Wrong…”

This automation miracle finds listings, negotiates

low-ball price with the bank, and sells them to investors

without you doing anything more than signing the papers.

You don’t even pay for marketing!

Find out more for fr-ee right here Thursday night:

https://www2.gotomeeting.com/register/307836154

Caution is the watchword for potential home buyers

According to a survey conducted by Realtor.com, home buyers in the U.S. are hesitant to jump into the housing market, given the current economic downturn. Nearly 53% of the survey participants said they have postponed their home plan on account of their negative outlook. Uncertainty on the job front was the main factor for not buying a house for nearly a third of the survey participants. Nearly 16% said they worry about selling their current home, while 8% said they fear home prices will keep falling. Home buyers recognize that the housing market currently offers great deals; however, financial worries far outweigh attractiveness of the deals available. Nearly 20% said they were interested in foreclosed homes with an attractive price, while nearly 15% said they want to receive incentives such as the $8,000 tax credit for first-time buyers. Errol Samuelson, president of Realtor.com, said buyers feel that purchasing a foreclosed home is more “complex” than other transactions. Among the survey participants, only 28% said President Barack Obama’s plan to tackle the foreclosure crisis is working, compared with 41% who said it isn’t and 27% who didn’t know.

12 plead guilty in $100 million mortgage fraud

New York City prosecutors have charged 25 people, including lawyers, bankers, mortgage brokers and appraisers, and a mortgage company, with committing mortgage fraud. Robert Morgenthau, Manhattan District Attorney, said AFG Financial Group Inc. (AFG) and its accomplices inflated property values, created phony loan packages, forged W-2 forms, and bank documents to get loans from banks for unsuspecting buyers. Buyers did not know that the transactions were a sham. AFG, through its attorneys, would ask that the mortgage money be deposited in escrow accounts. Instead of paying the seller, AFG would take the money for itself. “These attorneys often did not meet or communicate with their so-called clients until the day of the closings … and were paid off by AFG for their efforts,” Morgenthau said. Buyers were left with bad credit while the lender foreclosed the seller’s property and took ownership. Banks which were cheated include New Century Mortgage Corp., which lost $32.2 million; Countrywide Home Loans, which lost $7.9 million; and Washington Mutual, which lost $8.6 million. “This is one of the reasons for the mortgage crisis,” said Morgenthau. Among those charged, 12 have pleaded guilty. All those convicted face up to 25 years in prison.

Analyst says AIG’s equity value could be zero

Joshua Shanker, an analyst at Citigroup, says American International Group (AIG) will have no value left after repaying bailout funds. “Our valuation includes a 70% chance that the equity at AIG is zero,” said Shanker. AIG has received over $182 billion as bailout funds from the government so far. Edward Liddy, the outgoing chief executive officer of AIG, said last month at the firm’s annual meeting that the company has an “excellent chance” of repaying the government. Liddy had earlier informed the Congress that the company can pay back bailout funds within 5 years. AIG said last week that its recent losses in derivates could have a “material adverse effect” on its results. “The company has not been forthcoming about the sequence of events that would result in a loss,” Shanker said. “Even a proportionally small loss could be significant.” The outgoing CEO has been under pressure to sell some of AIG’s assets to repay government funds. “The CEO’s motivation and ability to lead may be compromised by his preparations to transition the company’s top seat to another,” Shanker said.

Monthly retail sales data denotes weakness in consumer spending

Retailers, across segments, posted weak monthly sales in June on account of continuing unemployment and rising gasoline prices. Merchants such as Limited Brands Inc., teen merchant Wet Seal Inc. and The Children’s Place Retail Stores Inc. reported poor sales figures. Low-priced retailers too were not spared. Costco reported a sales decline of 6% compared to a year ago. “Consumers are under severe pressure on the job front, so discretionary spending is just not happening, “said Ken Perkins, president of Retail Metrics, a consultancy. “This is not setting up well for the back-to-school season.” Customers continued to trade down to essential goods. Costco said food was among the categories which exhibited strong sales. Recession has taken its toll on consumer spending. “Obviously, the consumer has been under severe pressure here throughout this recession,” said Perkins. “There just were no catalysts for consumers to spend in June.” Weather also played spoilsport. Consumers buy items such as light clothing and beachwear in June which marks the onset of summer weather. However, this year, June had a cool weather with record rainfall in cities like New York, Boston and Chicago. As a consequence, consumer interest for summertime merchandise dropped significantly.

UBS caught in diplomatic row

The U.S. government believes that the Swiss bank UBS has about $15 billion in secret accounts meant to evade taxes in the U.S. UBS says it cannot reveal the identity of its account holders on account of Swiss banking laws. Switzerland has made it clear that it would prevent UBS from revealing the identity of account holders. “Switzerland will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS,” the Swiss government said in a response to U.S. authorities. Analysts believe that this issue souring diplomatic relations between the U.S. and Switzerland. Alan Gold, a district judge in the U.S., has asked the U.S. Justice Department if the government will shut UBS in the United States if the bank does not provide information on its account holders. The Justice Department will have to be careful in answering the judge’s question. “They’re going to have to be very delicate and thoughtful in terms of how they respond to this,” said Peter Hardy, a partner at the Post & Schell, a law firm.

Now on to our real estate investor education section…

Top Reasons Short Sale Investors Get Side-Tracked

Sooner or later you are likely to encounter a potential short sale investor filled with anticipation, eager to get started and checkbook in hand…who dwindles away with little to nothing to show. Find out the top reasons short sale investors get side-tracked and what actions are required to get back into the race.

1. False Start. The excitement of doing something new overrides their discipline and true desire for success. Plain and simple, they don’t have realistic expectations or the knowledge to get the job done right. Start slow and invest in success by acquiring proper training, surrounding yourself with the right professionals and expect to confront a few bumps now and then.
2. Justification. These would be investors tend to be cautious and perform well once they convince others it is the right track. Unfortunately, it can be tough to justify your position to everyone around you. If you need to prove your position before moving forward, either take the time to crunch the numbers in more detail or do a reality check on your readiness to invest. Having someone agree with you might feel good but does little for your bank account at the end of the day. Learn how to rely upon yourself rather than the opinions of others.
3. Guilt. Paying for Past Mistakes can be a long and difficult journey especially if you are involved with someone that simply wants to “punish” you. Recognize that investment involves elements or risk and reward then move forward. Make what amends you can then walk away from the issue once and for all. Remember, investing is about the future –not the past.
4. Recruiting. Investing isn’t like joining a golf club; there are very real reasons why it can be good to go it alone. This doesn’t mean you can obtain expert advice and surround yourself with professionals – that is always a good idea – but it does mean you are able to move forward without having half your friends and associates involved. Set the pace and believe us, they will show up once the profits begin rolling in!
5. Going it Alone. Likewise, trying to do everything your self is another major reason many short sale investors get side-tracked. It’s simple too much to handle alone. In fact, even if you are able to do so for a short period of time, it’s not always the best use of time. Establish a process that makes the most of your valuable time with the greatest possible reward then hire out or subcontract the rest.
6. Avoidance. Those that attempt to avoid all risk will rarely experience anything but the most limited gain – if not actually increase their total risk. It’s one thing to inform, educate and prepare yourself but quite impossible to avoid risk altogether. The reality is this is fear of the unknown which you are weighing more heavily than fear of that which is familiar…sadly, that isn’t always the least risky. Something familiar might initially seem harmless but in reality can be deadly. The same goes for finances – inflation can erode away even the safest investment making it the most risky route by far

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com
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

450 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

Real Estate News & Commentary by Chris McLaughlin, March 30, 2009
http://www.shortsalesriches.com/welcome.html

——–

Brand New Investor Makes It Happen!  If you

missed the amazing testimonial from a newbie

real estate investor who made $51,000+ on her

first deal, go here now to watch this video:

 

http://www.youtube.com/shortsalesriches

 

Then grab a spot for yourself before they all

disappear in our no-cost, no-obligation
webinar right here Tuesday at 8:30 PM

ET, 5:30 PM PST:

 

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———

Foreclosures spike again in February

 

It was starting to look like the problem was easing before January, when foreclosure starts declined to 69,000 in November from 77,000 in October and then dropped again to 56,000 in December.  But in January the number of started foreclosures jumped to 217,000, and now February’s numbers have leaped up again to 243,000.  87,000 homes were repossessed (foreclosures completed) by banks during February, a 28% jump from the 68,000 foreclosures completed in January.  Since the mortgage meltdown hit in July 2007, 1,395,044 homes have been lost.  In February, nearly 250,000 homeowners received either mortgage modifications or repayment plans from their lenders, according to Hope Now, the coalition of lenders, investors, and community advocacy groups put together by the Obama administration’s foreclosure prevention initiative. 

 

AIG back in the news

 

American International Group (AIG) has cut or delayed payments to some of its real-estate ventures, potentially leaving the developers and their bankers in the lurch.  AIG had previously been sued by Mitchell L Morgan Management Inc for missed and delayed payments, and the latest victim is Alabama shopping-center developer Alex Baker.  The action puts 15 banks at risk of exposure to soured loans.  AIG Global Real Estate, an arm of the insurance company, has interests totaling more than $23 billion across 53 million square feet of real estate.  The Federal Reserve is monitoring AIG’s spending closely after committing $180 billion in bailout funds, but whether that’s helping or harming is still anyone’s guess.

 

Detroit failed

 

The Obama administration gave General Motors and Chrysler LLC failing grades Monday for their turnaround efforts.  It promised a sweeping overhaul of the troubled companies, but also threatened a “structured bankruptcy.”  Prior to the announcement, CEO Rick Wagoner announced his resignation, saying it came at the request of the Obama administration.  GM will get 60 more days and Chrysler 30 more days in which to make a final push toward proving they can run viable businesses.  If Chrysler succeeds — probably by merging with Fiat — it will receive a $6 billion loan.  In GM’s case, the officials would not specify how much the carmaker might receive, but we can all guess it’ll be a lot. 

 

Stocks slide on banking troubles

 

Bad news from the auto sector was bad enough, but Treasury Secretary Tim Geithner’s announcement that more banks would need help caused stocks to tumble, with the Dow opening 202 points lower, the S&P 500 index lost 21 points,  and the Nasdaq composite lost 39 points.  As Art Hogan, chief market strategist at Jefferies & Co put it, “We were starting to see some light at the end of the tunnel, but it’s beginning to look oddly like a train.”  That pretty much captures investor sentiment this am.  Would it be an understatement to say the week isn’t off to a good start?  Especially if you own auto or banking stocks.

 

Now on to our real estate investing education section…

 

Understanding the Time Value of Money – Why Short Sales Still Make Sense

 

Deflation or Inflation? Chances are whichever side of the debate you happen to be standing on at the moment you are in good company. The government experts are readily printing money out of thin air…and actually admitted as much in recent weeks…while financial analysts, other governments around the globe and those with fixed incomes fear the rise of inflationary pressures. How could so many smart people have such a strong disagreement? It comes down to the time value of money. A topic of such importance it will have profound implications on the way you structure investments throughout your lifetime.

 

There are two primary methods used to determine the time value of money – Present Value and Future Value. Present value is what a dollar today is worth rather than the value compared to receiving it as some point in the future. For example, let’s assume you have an option to sell or hold a modest property purchased via short sale. To keep the calculations and comparisons simple, we will further assume the property is paid in full.  You are reasonable positive you could pocket $100,000 by selling the property outright but wanted to know if this was your best option.

 

Typically, future dollars are worth less than present dollars due to inflationary pressures. The entire purpose of the Federal Reserve is to assure a steady supply of funds including controlled inflation (defined in the 1-3 percent range). So for example, if the rate of inflation was rising at 3 percent annually the value of $100,000 would be only $74,400 in only ten years.  Wait 20 years and that same $100,000 is only valued at $55,000. Bump up the rate of inflation to 5 percent and $100,000 drops to only $61,000 in ten years and only $37,000 in 20…now you know why lottery ticket discount so much if you take the lump sum payment up front! Ditto for insurance companies.

 

Short sale investors should immediately realize money printing combined with the ability to use leverage in the form of loans can dramatically increase the ability to generate cash today – not ten or twenty years into the future. In fact, the more excess cash (above what is needed to pay your bills and service debts) you generate today, the better especially during times of inflation. If inflationary pressures hit the levels seen in the 70’s take a look at what happens …$100,000 turns into $42,000 within ten years and only$14,000 by year 20. What originally would pay for a modest home will eventually only be enough to buy a used car without taking steps to preserve your wealth.

 

Rarely, a reversal takes place where future dollars may become more valuable than current dollars as is sometimes seen during a deflationary cycle. That is what the government fears most since it would make it more costly to pay back all the loans and debt obligations – a cost so high it could jeopardize the foundation of the nation. However, the current deflationary concern is a temporary one at best. The Federal Reserve has repeatedly stated they expect the deflationary aspect of this current crisis to cool by the end of 2009 to 2010…listen carefully – unlike what many “think” they hear…the government and Fed Reserve is not claiming the pain will be over…only that the current deflationary spiral will come to an end. The lack of investment grade returns is unlikely to resume its former hay-day for quite some time while employment continues to lag. Both add up to very real pain as Americans are unable to make a profitable investment or keep pace with their standard of living from lagging wages.

 

Bottom Line: This is a once in a lifetime buying opportunity unlikely to last forever. Act before it is too late.

 

See you at the top!

 

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar Tuesday at 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/745206430

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 
http://www.sixfigurebpo.com *************************************************
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 flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

—

Real Estate News & Commentary by Chris McLaughlin, March 24, 2009
http://www.shortsalesriches.com/welcome.html

——–

Brand New Investor Makes It Happen!  If you

missed the amazing testimonial from a newbie

real estate investor who made $51,000+ on her

first deal, go here now to watch this video:

 

http://www.youtube.com/shortsalesriches

 

Then grab a spot for yourself before they all

disappear in our no-cost, no-obligation
webinar right here live tonight (Tuesday) at 8:30 PM

ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/982247811

———

Up and…down.

 

The Dow Jones industrial average jumped 498 points yesterday, or 6.8 percent, and the S&P S&P 500 rallied 7.1%, on news that Treasury Secretary Timothy Geithner would buy a trillion dollars worth of toxic assets, and an unexpected 5.1% rise in existing home sales.  The jump was the biggest since October 28 of last year.  Not surprisingly, the markets opened lower today on profit taking.  “There’s a feeling that we’re getting to the end of the worse of the news,” said Ken Wattret, economist with BNP Paribas in London, but noted that there’s still plenty to be pessimistic about, including skepticism over whether the toxic assets at the center of the government’s plan will ever rise in value.

 

AIG – the saga continues

 

15 of the top 20 bonus recipients at AIG have agreed to return their bonuses, for a total of $50 million of the $165 million originally paid out.  Whether it has more to do with altruism, or angry mobs with torches, is open to speculation.  Just about everyone in the United States is outraged over the payouts, including congress, the president, and New York Attorney General Andrew Cuomo.  Today Chairman Ben Bernanke got into the act by claiming in testimony to congress that he too wanted to sue AIG, but declined because if he had lost it would have added punitive damages to the bonuses.

 

Real estate rebounding?  Sort of.

 

In housing markets around the country, there are signs that the bottom may have been reached, and sales are beginning to come back up.  First-time buyers are coming back into the market thanks in part to federal incentives, which include a $8000 tax credit for first-time, residential buyers.  Real estate search firm Trulia found that the greatest rise in internet searches occurred in Florida, where investors and retirees are snapping up bargains.  Sales for Lee County, Florida, which includes Fort Myers and Cape Coral, were up nearly 80 percent from 2007 to 2008, says Mark Washburn, a realtor at Island Coast Realty in Ft. Myers.  “That’s pretty impressive.  The caveat is the prices are half.”  That’s a caveat indeed.

 

Detroit troubles.

 

Car dealerships are going broke across the US.  Nationally, the United States lost about 900 car dealerships last year, according the National Automobile Dealers Association.  About 66% percent of the dealers that closed last year were single-brand dealers.  The losses are greatest among dealers selling Detroit brands, said Jim Appleton, president of New Jersey Coalition of Automotive Retailers.  Big dealerships with deep pockets are snapping up some of the smaller dealerships at fire sale prices, but many small dealerships are just closing up shop, unable to service the financing on the automobiles sitting idle on their lot.

 

Now on to our real estate investing education section…

 

It Can’t Happen Here – or Can it?

 

In the famous satirical novel written in the midst of the last great economic Depression by Sinclair Lewis, the election of a new president spurs the fanatical rise of “true believers” to propel the newly elected leader to the height of government.  After gaining control of Congress and the Supreme Court the nation is radically altered as the dictator attempts to save the nation from financial cheats, crime and other societal woes through a series of ever more severe restrictions on the lives of citizens.

 

While the story might center around a fascist regime, the similarities are otherwise well worth noting; a charismatic presidential candidate that runs on a platform of “reform” and claims to be a champion to the causes of the average citizen while still maintaining close ties with big business. A media darling who is elected during a time of financial crisis, greed and the growing distress of the masses, he soon has the support of the populace in exchange for their freedom. Notice any similarities yet? Whether you love him or hate him, one thing is certain…going on late night television to proclaim up to 90 percent taxation plus retroactive implementation of taxation is one way to get the attention of every hard working American in the nation. Even the host admitted the prospect was of more than passing concern.

 

So, what does this have to do with Short Sales? Take a look at the state of the nation; from Wall Street to Main Street people are searching for someone to bail them out and fix things. The repeated refrain is “This is America”…things are supposed to turn out just fine and recovery is just around the next corner. But what if it isn’t? What if the economy continues to falter in a Japanese style lull that lasts for years as economist Nouriel Roubini predicts? Worse, what is the USA goes the way of the former USSR as predicted by Dmitri Orlov? What if income taxes are suddenly increased with little to no warning? What if your prior earnings are retroactively taxed at rates as high as 90 percent?

 

Consider this, while domestic automobile manufacturing companies beg for bail-out funds even while slashing payroll and cutting back on benefits, car sales continue to decline and obtaining financing to purchase a depreciating asset like a new vehicle becomes even harder…meanwhile, it’s now possible to purchase a home – complete with lot and land – in Detroit for less than the cost of even a modest compact car. In fact, most people could pay in cash simply by charging it on a credit card. Now, we aren’t suggesting this is the right road to wealth but it does point out some of the underlying assumptions and mixed-up priorities currently being perpetuated by the mainstream media. As little as two years ago real estate was considered the road to wealth by everyone – so why the sudden change of heart?

 

During tough economic times it is more important than ever for investors to think for themselves rather than follow the masses. Real estate is a tangible asset that allows you to secure additional sources of cash flow when and how you want. Have a high income year? Take time to fix up the place to secure some additional write-offs. Need a little extra cash this year? Sell a property while you are in a lower tax bracket. Searching for a regular supplement to a fixed income? Rent or lease a property.  Want to sell but retain a long term steady income? Hold a note. Whatever your situation, real estate has the flexibility to provide the financial returns you need to ride out the economic storm. While most American’s agree that it can’t happen here – some already think it did. Either way, learn how to profit while others panic by coming to our webinar this evening at 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/982247811

 

 

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar tonight at 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/982247811

 

Copyright Loss Mitigation Institute 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 flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

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