Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

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

Inventory rises for spring

Housing inventory around the country is on the rise, as sellers look to capitalize on the spring home buying season.  Home sale inventory was up 2.97% in March and up 6.83% over the three months ended in March, according to the Altos Research 10-City Composite Index.  The index is a statistical compilation of property prices highly correlated with the S&P/Case-Shiller Index. The 10-city index is based on single-family homes in Boston, Chicago, New York, Los Angeles, San Diego, San Francisco, Miami, Las Vegas, Washing D.C., and Denver; however, Altos also reports figures from other cities around the country. 

Sale inventory in Boston increased the most during the month, up nearly 16% to 14,297 properties, followed by New York (up 8.24%), Philadelphia (up 7.68%) and San Francisco (up 6.71%).  Prices, on the other hand, are trending downward, Altos said. The national average sale price fell 0.29% in March 2011 compared to one year prior, down to $432,307. Over the three months ended in March, prices fell 2.3%.  Prices decreased the most in Atlanta, down 1.13% to $182,276, followed by Las Vegas (down 1.03%), San Diego (down 1.03%) and Detroit (down 0.79%). Realcomp reported Monday morning that sales in Detroit dropped 9.6% in March.

Trade deficit lower

The Commerce Department says that the trade balance, which measures the difference between the nation’s exports and imports, narrowed to a $45.8 billion deficit in February, down from a revised $47 billion in January.  The data falls in line with economists’ estimates for a $45.7 billion deficit.  Exports totaled $165.1 billion in February, down $2.4 billion from the month before. Imports totaled $210.9 billion, or $3.6 billion less than in January.  The United States has had a trade deficit since 1975, as Americans use more foreign goods than they export.  Meanwhile, the trade gap between China and the United States — the world’s largest trade imbalance between two countries — narrowed as well.  In February, China exported $18.8 billion more in goods and services to the U.S. than it imported from Uncle Sam. That gap stood at $23.3 billion the month before.

Florida appellate court says foreclosure note is enough

A trustee that holds a homeowner’s original note and mortgage has enough evidence to establish standing to foreclose even if the homeowner believes the trustee failed to provide documents showing an official assignment of the mortgage note, a Florida appellate court ruled.  That’s the decision the Fourth District Court of Appeal of the State of Florida wrote in the Isaac v. Deutsche Bank National Trust case.  The homeowners, who filed the complaint, appealed a lower court’s grant of summary judgment for Deutsche Bank National Trust on the grounds that the lower court failed to consider their argument that Deutsche Bank lacked standing to foreclose.  The plaintiffs argued on appeal that “Deutsche Bank failed to provide sufficient documentation reflecting how it obtained ownership of the mortgage and note from the original assignee, an entity called Option One.”

On the other hand, court records say “Deutsche Bank argues that it established its standing to foreclose based upon its possession of the original note and mortgage, combined with the affidavit of a representative of Option One’s successor in interest affirming Deutsche Bank’s ownership.”  The court agreed with Deutsche and held that the trustee has legal standing to foreclose.  The trustee proved its case by providing the court with the original mortgage, the note and a piece of paper annexed to the promissory note from Option One Mortgage, the original assignee.  Court records say the annexed paper, which was signed by the assistant secretary of Option One, “did not state a payee.” Because it did not include a payee, the note became payable to the bearer. The court added that in this situation, the instrument is negotiated by transfer of possession. “Deutsche Bank, by virtue of its possession of an instrument payable to bearer, is a valid holder of the note and, therefore, is entitled to enforce it,” the court held in a decision entered April 6.  The case is similar to a series of cases that have surfaced in Alabama, where three courts have reached differing opinions on the issue of whether a trustee holding securitized notes has the standing to foreclose.

Budget cuts

Nearly $40 billion will be trimmed — cutting back on a wide range of programs and services including high-speed rail, emergency first responders and the National Endowment for the Arts.  Hundreds of individual programs are facing reductions, with the biggest cuts running in excess of $1 billion dollars.  Almost $3 billion for high-speed rail funds are cut, along with roughly $3 billion for highway construction, $6.2 billion in Department of Defense construction projects, and $1 billion from programs that help prevent the spread of sexually transmitted diseases.  Grants to states that help pay for drinking water infrastructure projects are cut by $1 billion.  Every broad category of government receives a reduction in funding levels, with the exception of two: The Department of Defense and the Department of Veterans Affairs.  The Pentagon would end up with a boost of about $5 billion above last year’s level. At the same time, the bill would slash $4.2 billion in military earmarks — a type of spending Republicans have vowed to eliminate from the budget. 

The Department of Veterans Affairs’ budget would increase by $600 million over fiscal year 2010, an increase that is accomplished by reducing funds for military construction by about $10 billion while boosting spending on veterans’ health care and benefits.  The bill would cut $377 million from the U.S. contribution to the United Nations. USAID will get $39 million less for operating expenses. Almost $1 billion is cut from a community development fund run by the Department of Housing and Urban Development.  ”My committee went line-by-line through agency budgets this weekend to negotiate and craft deep but responsible reductions in virtually all areas of government,” House Appropriations Committee Chairman Hal Rogers said in a statement.  Funding is also cut for four so-called administration “czars” including those who work on urban affairs, climate change, health care and autos.  Congress will vote on the measure later this week. And that should close the book on the tortured 2011 budget process. In the meantime, the one-week funding extension lawmakers passed Friday will fill the gap.

DSNews.com – drop in subprime delinquencies

Recent improvements in the job market are translating into falling subprime delinquency rates, according to Fitch Solutions. At the same time, prices on U.S. subprime credit-default swaps (CDS) have been steadily rising, up for five consecutive months.  Multiple reports on the secondary market signal growing investor appetite for subprime mortgage bonds and structured finance instruments like CDS, which provide a type of insurance protection for investors in which the risk of default is transferred from the holder of the security bond to the seller of the swap.  While subprime bonds have become the black eye of the mortgage industry, these high-risk loan pools offer high yields, and therein lies the attraction for investors.  According to a Wall Street Journal report, prices within the subprime bond market have doubled from 30 cents on the dollar at the low point of the crisis to roughly 60 cents today.  Fitch says it’s also seeing a rate of increase in prices of subprime default swaps that’s equivalent to a “rally.”  The agency’s overall subprime CDS price index rose 5.8% in March to hit its highest level since October 2008. Fitch says the 2004 vintage led the charge with a 9.4% monthly increase, followed by the 2007 vintage which registered a 6.7% gain in March.  Rising subprime prices and the increased investor interest stems from a noticeable improvement in credit performance for these high-risk mortgages.  Fitch reports that the percentage of subprime borrowers who were 30-days delinquent decreased by 5.3% in March, while the percentage of borrowers 60-days delinquent fell by 4.4%. 

Additionally, the firm found that fewer subprime borrowers are rolling from the early stages of delinquency to the later, and there has been an increase in cured loans from previously delinquent borrowers.  Fitch notes that the 2004 vintage saw a sharp increase in cured loans with the%age of 60-day delinquent borrowers who rolled to current increasing by 50% and the percentage of 30-day delinquent borrowers who rolled to current up by 30%.  According to Fitch, the area that is most likely to weigh on subprime prices going forward is the increasing amount of time needed to sell foreclosed or real estate owned homes.  “Homes in foreclosure remain near record highs, while foreclosed homes sold each month continue to decline,” said Alexander Reyngold, senior director at Fitch Solutions. “Loan loss severities have increased proportionally to the time required for the loan to be liquidated over the last year.”  Reyngold explained that the resulting increase in loss severities can lead to lower CDS prices as losses to the reference bond also accrue to the CDS.  As an example, for the 2007 vintage, the percentage of foreclosed homes was 19.8%, almost unchanged from the previous year, according to Fitch’s report.  However, the percentage of loans rolling from foreclosure or REO to liquidation was half the rate of a year ago at 2.5%.  As a result, Fitch says over the same period, loss severities on foreclosed or REO homes rose from 70% to 77%.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
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 150 high-value, high-profit
      properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  
    * 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
–

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

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

What if I could show you how to not only have the

deals coming in automated, but also show you how to

automate your buyers list as well and have all the

money you need for you deals all in one spot?

Let me show you how in our no–charge class this TODAY

at 3 PM ET, NOON PST:

Click below to reserve your spot now! —->

https://www2.gotomeeting.com/register/479566067
*********************************************************
Home prices rise in July

According to the S&P Case-Shiller home-price indexes, prices began rising in April, boosted by the expiration of the first-time home-buyer tax credit that had new homeowners flocking to buy homes. Before that, they had fallen sequentially for six straight months.  Still, the housing sector faces challenges, with unemployment remaining high and the tax credit’s benefits wearing off. S&P warned last month that home-price returns could slow down, noting that housing and mortgage data pointed to fewer gains in the future.  Compared with a year earlier, unadjusted July prices rose 4.1% for the index of 10 metro areas, while the 20-city index climbed 3.2%.

The Case-Shiller index of 10 major metropolitan areas rose 0.8% from June, while the 20-city index climbed 0.6%.  David M. Blitzer, chairman of S&P’s index committee, said that going forward, prices could “still see some residual support” from the home-buyer tax credit, which covers purchases made before the credit’s expiration that close no later than Thursday. But “judging from the recent behavior of the housing market, stable prices seem more likely.”  Month-to-month gainers were headlined by Detroit — a city that has been walloped by the recession — which saw a 1.6% gain, as well as New York, which saw a 1.3% rise. Las Vegas again led decliners, posting a 0.8% drop.

No more tax mail?

Electronic filing of tax returns has become so popular that the Internal Revenue Service will no longer automatically mail a traditional paper form.  “We’re finding that more and more people are choosing to e-file, and the number of paper returns is going down,” said IRS spokesman Anthony Burke. He told CNN Tuesday that the agency last year mailed the old-style set of paper forms, tables and instructions to just eight percent of the nation’s taxpayers.  Burke said 96 million taxpayers this year have filed electronically, with another 20 million filing through professional tax preparers. The IRS hopes to save $10 million a year by not automatically mailing the materials.  Those who prefer hardcopy documents can still find them at libraries, post offices and walk-in IRS offices around the country.

After Jan. 1, they can request a mailing through the IRS toll-free number, 800-829-3676 .  The materials will also be available to download and print out from the IRS website: www.irs.gov.  Burke said the IRS “won’t produce the package any more,” as the agency transitions to providing software and other support for electronic filing.  Instead, in the next few weeks, those who filed traditional paperwork last year will get a simple postcard from the IRS, with instructions on how to obtain the documents needed to file a tax return.

29% of borrowers can’t afford mortgage

According to research by Zillow Mortgage Marketplace, any potential borrower with a credit score less than 620 is unlikely to receive a 30-year fixed-mortgage, even if they offer a relatively high down payment. Yet, according to myFICO.com, 29.3% of Americans have a credit score below that number.  This means that nearly one-third of Americans would likely be turned down for the nation’s most popular mortgage product.  Zillow tracked over 25,000 loan quotes and purchase requests in the first half of September. Potential borrowers credit scores 720 or higher received the lowest interest rates on Zillow.com, an average annual percentage rate of 4.3% for a 30-year FRM. Midrange credit scores, between 620 and 719, received APRs from 4.44% to 4.73%. 

Those with credit scores below 620 received too few loan quotes to calculate the average APR, Zillow said.  Zillow’s chief economist Stan Humphries attributes the trend to a tightening of credit standards, which he sees as a good thing.  “Four years ago, in the era of easy-to-get subprime loans, many borrowers with low scores did buy homes, which in turn helped contribute to a housing bubble,” said Humphries. “Today’s tighter credit is a predictable response by banks after the foreclosure crisis, but also keeps a cap on housing demand, which is important for the greater housing market recovery.”  Zillow entered into a partnership with Mint.com today, an online personal finance service from Intuit Inc. Now registered Mint users will receive a valuation quote, also known as a Zestimate, for their house as part of their online portfolio.

Banks failing

279 banks have collapsed since Sept. 25, 2008, when Washington Mutual Inc. became the biggest bank failure on record. That dwarfed the 1984 demise of Continental Illinois, which had only one-seventh of WaMu’s assets. The failures of the past two years shattered the pace of the prior six-year period, when only three dozen banks died.  Between failures and consolidation, the number of U.S. banks could fall to 5,000 over the next decade from the current 7,932, according to the top executive of investment-banking firm Keefe, Bruyette & Woods Inc.  The upside of failures is that they can represent a healthy cleansing of a sector that grew too fast, with bank assets more than doubling to $13.8 trillion in the decade that ended in 2008. Many banks that failed were opportunistic latecomers. Of the failed banks since February 2007, 75 were formed after 1999, according to SNL Financial. 

Still, economists say, the contraction represents an enduring threat to capital, lending and the economy.  “When we step back and look at this financial disaster 10 years from now, the destruction of capital in our economy as a result of what we’ve endured will be the single greatest lasting impact on recovery and how the economy performs in the future,” says Howard Headlee, president of the Utah Bankers Association.  Since 2008, the industry’s assets have shrunk by 4.5%.  “If you reduce the amount of assets at a bank, it means they make fewer loans, and that has a negative impact on the economy,” says Richard Bove, a bank analyst at Rochdale Securities in Lutz, Fla.  From small towns like Rockford, Ill., to Miami, the banks’ disappearance means not only cutbacks in lending but fewer banking choices, lower interest rates on savings accounts, and lost jobs. The recession and collapse of the housing bubble have cut bank-industry employment by 188,000 jobs, or 8.5%, since 2007, according to FDIC data. Failures alone have cost 11,210 jobs, or 32% of the employees at failed banks, according to FIG Partners, an Atlanta investment firm that specializes in the banking industry.

CNBC’s Olick – 30 year fixed makes recovery harder

“Let me just preface that the study I’m about to discuss was funded by the Mortgage Bankers Association, the folks who represent mortgage bankers of course, so keep that in mind; this is not to say they don’t bring up a valid argument.  ‘Mortgage features that are restricted in the Dodd-Frank Bill such as longer terms, interest-only periods and flexible payment designs are quite common in other countries and are not associated with higher rates of default.’  There’s your headline.  That headline is of course meant to argue that perhaps some of the new restrictions recently passed by Congress to protect borrowers are going to hamstring lending going forward and slow the housing recovery.  Interesting that this study comes out the same day that another industry player, online real estate sale site Zillow.com, puts out a survey showing that 1/3 of Americans today can’t qualify for a mortgage and half of Americans would not be eligible to get those low low rates on the 30-year fixed that we’re always talking about. 

Zillow.com looked at 25,000 loan quotes and purchase requests during the first half of September and found that folks with a FICO score of 620 or lower looking for a 30-year fixed got no offers.  That’s even when they offered 15-25 percent down on the home.  1/3 of Americans fall into this category, and that number is growing, as millions of troubled borrowers short sell their homes or go into foreclosure.  Their credit scores drop and their ability to re-enter the housing market is gone.  Am I advocating going back to the hey-days of wild and reckless lending?  Of course not.  But how are we supposed to get the housing market back up and running again if so many potential buyers can’t get a loan they can afford, and the only loans out there offer borrowers very little flexibility for investing not to mention little return for the non-government investors we need to fund the mortgage market?”

Now for our real estate education section…

Servicer Status Woes

A recent court case that took place in Duval Florida has potentially far reaching implications for the short sale and foreclosure market. A case filed by JP Morgage/WaMu claimed that WaMu submitted an assignment of mortgage in a foreclosure case despite the fact that WaMu never owned the mortgage; it was actually held by Fannie Mae.

Common Complaint

If this story sounds family it is probably because a similar situation has taken place thousands and tens of thousands of times across America; however, this time it’s different. Rather than ignore the “clerical errors”, the Court found WaMu “by clear and convincing evidence….committed fraud on this Court” and that these acts constituted a “knowing deception…”.  Ouch!

Fraud by Any Other Name         

In this situation, WaMu was only a servicer and did not actually own the loans; Fannie Mae did. Because WaMu claimed to be the “owner and holder of the note and mortgage” in order to file for foreclosure on the property, it was then necessary to prove that the course of ownership in the property was properly traced.  In recent years it has become almost routine for servicers to take it upon themselves to file foreclosure proceedings when in fact, they have no legal ground to do so.

The implications for foreclosures, REO’s and other real estate transactions is immense; not only may banks be required to fully expose their levels of excess inventory but determining the actual owner of record is becoming more important than ever.

Little Help for Homeowners

Homeowners are likely to find little recourse other than a few months reprieve since it is expected that Fannie or Freddie will begin their own foreclosure proceedings “sooner or later” but it is expected to slow down an already flooded system as lenders and servicers scramble to get records in order.

Quick Steps

How can real estate investors protect themselves? Use this quick tips:

1. Use the Fannie Look-up tool to determine if the property is owned by a GSE.

2. If a GSE property is being foreclosed by any other entity, bank or lender then the case could be suspect.

3. Visit http://www.fanniemae.com/loanlookup/ to perform a search on prospective properties of interest.

See you at the top! 

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************
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
–

——
You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced.  How?  Just register now for our fr’ee webinar unveiling the strategies to use in this economy…all tonight at 9 PM ET: 

https://www2.gotomeeting.com/register/638209573

——
This should come as no surprise to most of our readers: home prices posted an 18% drop for October of last year, the biggest drop ever since the Standard & Poors/Case-Shiller 20 city housing index was created.  The 10-city index fared a bit worse, dropping 19.1%.  And there areas really got wacked: Phoenix dropped 33%, Las Vegas slid 32%, and San Francisco declined 41%. 

The Conference Board announced that its Consumer Confidence Index dropped 38 in December from a revised 44.7 in November.  The low number surprised economists: a survey of 62 number crunches estimated that the reading would come in around 45.   

But in good news for consumers, General Motors announced that it would once again offer zero percent financing for the next several weeks.  This comes on the heels of the announcement that GMAC was approved as a bank, therefore eligible to tap into $5 billion of the $700 billion of TARP funds. 

Now, on to our real estate investing education section…

Discounting Hedonic Pricing Models

Short sale investors interested in obtaining the lowest possible price should learn to turn the tables on rapid rate increases by discounting hedonic pricing models to their benefit. Hedonic pricing essentially works like this; instead of calculating the increase in a price of a home as inflationary, the “upgrades” and other enhanced “quality” measures are calculated independent of the base price of the home. While this is a valid method of taking quality improvements into account especially during periods of economic growth, it does little to account for increased “liabilities” during periods of economic or financial contraction.

Let’s demonstrate by using a basic example; Buyer A and Buyer B both purchased 3 bedroom, 2 bath homes on 1/3 acre lots with city utilities. Each home is 1500 sq. feet living area and is 3 years of age. Home A is a “bare bones” affordable housing model with laminate counter-tops, inexpensive carpet and off the shelf fixtures throughout. Standard bathtub, windows, doors and other items were used. The cost of the home was $100 per square foot or roughly $150,000 plus the price of the lot. Buyer B also purchased a home of the same size but with granite countertops, imported Italian tile, upgraded windows and custom features throughout. Upgraded appliances, a large in-ground pool, whirlpool spa tubs and other upgrades resulted in a cost of $300 per square foot or a selling price of $450,000 plus the price of the lot.

So far so good. Unfortunately, as the economy begins to stagnate items originally deemed highly desirable quickly become undesirable as the cost of maintenance and repairs outpaces the ability of homeowners to sustain these items. This is where short sale investors are likely to reap major benefits. Deep discounts of common upgrades or former enhancements are possible by keeping these rules of thumb in mind:

1.     If it requires high maintenance it is a liability and should be deeply discounted. In-ground pools are a prime example. Not only do they increase electric bills when heating but cleaning supplies and maintenance contracts can easily cost $100-$250 per month. Items that require regular out of pocket costs should be deeply discounted as potential liabilities for a property. Aggressive pricing estimates would deduct the cost of repairs, maintenance and even potential removal of the item.

2.     If it requires minimal maintenance but adds no additional value it should be discounted by comparing a standard pricing model. For instance, those beautiful granite countertops don’t save money or increase functionality to the home therefore they are of no more “real” value when selling than laminate or less expensive alternatives. Make a point of going through the home and putting together a comprehensive replacement price list based upon standard “off the shelf” alternatives for all items that do not activity save money or represent major buying incentives in the new economy.

We had so many positive comments about our top 5 positive things about the market … so we’re going to post it again for you:

As 2008 draws to a close and short sale investors look to 2009 the question on everyone’s mind is whether or not the economy will continue its downward spiral or experience a recovery. Despite the considerable abundance of doom and gloom reporting in the media, there are a few bright spots that aren’t receiving the full attention deserved. Short sale investors searching for a silver lining in an otherwise cloudy economic environment would do well to focus on these current trends:

1. $40 per gallon oil and $1.65 per average gasoline. How low will it go and how long it will last is subject to debate but one thing is certain; those who rely upon gasoline and oil are experiencing a bit of much needed relief in the form of lower prices.

2. Low Mortgage Rates & Dropping LIBOR Rates. The cost of money is cheap – not just inexpensive but downright cheap. Make no mistake about it, real interest rates are the lowest in decades and make it less expensive than ever to borrow money to build a short sale empire. It is possible to buy more house for less money while simultaneously spending less on taxes and insurance. It’s a win-win-win situation for those with the courage to buy when others are selling.

3. Huge Fiscal Stimulus. Coming soon to a federal budget near you is a huge fiscal stimulus package destined to become one of the largest in history. Bridges, roads, hospitals, schools, utilities and other mega-projects are slated to spur the economic growth needed to jump-start the economy. Whether you believe the stimulus package will work or worsen the long term economy, one thing is certain; those workers will need affordable and convenient housing for long term projects. Short sale investors would do well to make a mental note of future road plans, schools and other large building projects in the target areas of interest. Whether you buy low and sell high or wait for the path of progress to reach you, it is a position of strength rather than weakness.

4. Long Term Lag-Times. The global decline in commodities and other tangible assets will eventually lead to long term shortages with tremendous upside profit potential for short sale investors. Remember, there is a lag time between the supply and demand which will result in high demand and low supply once the economy stabilizes. Everything from basic building materials to mineral rights, timber and even natural gas holdings will be impacted. Savvy short sale buyers would do well to realize the long term potential inherent in their holdings.

5. More Renters. Foreclosures aren’t over…in fact, due to legislative restrictions on the number of “bad loans” and tangible assets a bank may have on the books at any given point in time, the current bail-out simply provided the liquidity required for banks to prepare for the 2^nd stage of the growing mortgage meltdown. Most experts agree that what began as a sub-prime mess is expanding into ARM’s, low/no Doc loans and even prime mortgages in response to rising unemployment, falling stocks and bonds plus a plethora of other economic problems hit the average homeowner.

——–

See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling?  Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tonight – at 9 PM ET:

https://www2.gotomeeting.com/register/638209573

P.S.S.:

Have you seen the hilarious “Short Sale Kid Gets a Holiday Haircut.”  Don’t miss this challenge issued by Nathan Jurewicz:
http://www.youtube.com/shortsalesriches

Mid-Day Market News & Commentary by Chris McLaughlin, October 28, 2008
http://www.shortsalesriches.com/welcome.html

You can’t miss this.  Seriously, I mean it!  If you haven’t attended one of our fr’ee webinars, make sure you get on the one tonight.  It is 100% fre’e and you shouldn’t miss it!  So block off some time and join us … TONIGHT, October 28th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/656685734

Spaced are limited … log on now to claims yours!

Investors got a bit of relief today as overnight stock markets fared much better.  Japan’s Nikkei surged 6.41% while Hong Kong’s Hang Seng index jumped 14.4%.   And the European stock markets, Britain’s FTSE 100, Germany’s DAX, and Frances’ CAC-40 all were higher in morning trading.   At noon today the Dow Jones Industrial Average was up 114.85 to 8290.62. 

The S&P Case-Shiller Home Price 10 city index dropped 1.1% for the month of September, marking the 25^th consecutive month that home prices have declined, and indicating a decline of 17.7% for the year.  The 20 City index dropped 1.75% for the month and 15.90% for the year. The biggest drop was in Phoenix, which had a 30.7% decline in prices, but other cities were close behind:  Las Vegas dropped 30.6% and Miami plunged 28.1%. 

Investors are on Fed watch today … the most highly anticipated Fed rate cut should be announced sometime Wednesday, but there could be a surprise announcement today.   Most analysts expect at least a 50 basis point cut, while others believe the Fed could go as far as a full 1 percentage point reduction.  The prime rate, which is the rate that banks will lend to its best customers, is currently 4.5%, but a full percentage point reduction would drop it to 3.5%.   Many credit cards are tied to prime as are auto loans, thereby freeing up cash for customers.

Now on to our real estate investor section…

—-

It Can’t Happen Here…Or Could it?

The recent news about Argentina’s pension take-over brings to mind the famous book penned by Sinclair Lewis “It Can’t Happen Here”…or can it? Argentina’s nationalization of private pension system should send a shudder down the spine of every middle and upper class American who wonders about the health and safety of their own retirement fund. Combined with rising rates of unemployment and drastic cuts to employee benefit plans including the elimination of matching funds like that announced by GM just days later Americans should begin thinking about new ways to fund a retirement.

As if the spectacle of watching the balance of your portfolio dwindle week after week wasn’t enough, the prospect of government confiscation of pension funds brings to mind images of political extremism considered impossible on domestic soil. Could America one day follow the steps of Argentina and nationalize the entire pension system in order to offset losses against a burgeoning balance sheet? Well, there is now at least one precedent but even if the United States doesn’t take such a bold position as Argentina, your retirement funds may not be as safe as you hoped even if the market returns to its formerly robust status. Here’s why…

1.     Taxing the Un-Taxed. Feel pretty safe about those untaxed benefits? Not so fast! With the stroke of a pen you might find formerly low (or no) taxes suddenly fully taxed at any time in the future. The age-old idea about cashing out retirement funds when you are in a lower tax bracket may simply not work in the future. With the national debt and deficit growing at unprecedented rates, it isn’t far fetched to think Congress may one day be tempted to grab that pot of gold in the form of taxation.

2.     Inflation. As if inflation alone wasn’t harsh enough to savers, when it is combined with a progressive income tax it results in a double sting – not only do your dollar purchase less but you are now in a higher tax bracket.

3.     Broken Banks. By now you would need to have lived in a cave to not realize the entire financial system is in serious trouble. Although the FDIC limits have been increased through 2009, what guarantee is there after that period of time?

4.     Sick Social Security System. If you are close to retirement age then you may see some of this in your future but otherwise, don’t count on it to be there in the future. Social Security benefits are already at risk of higher taxes, fewer benefits and subsistence levels of support.

5.     Increased Volunteerism & Make-Work Programs. If you never want to retire then congratulations…there is a good chance you won’t with the current status of events. Unfortunately, for those that would like to live a little of the good life it will cost you. Government defined benefits and programs of the future are already slated to go hand-in-hand with volunteerism and make-work initiatives.

Want to take control of your financial future via the ultimate diversification tool? Jump into short sales and derive an income – and lifestyle- to fit your needs. Not sure it’s the right move for you? Consider the benefits of investing in short sale and foreclosure properties:

1.     Flexible – can hold property as an individual, LLC, corporation, trust or whatever type of entity that provides the most favorable tax treatment in the future.

2.     Tangible – physical assets tend to hold value during periods of rapid inflation and shelter/housing remains a basic need even during times of deflation. Unlike paper wealth (stocks, bonds etc) the actual house and property retains an intrinsic value that cannot go to zero no matter what happens in tomorrow’s markets.

3.     Income – establish your desired retirement income potential via sales, rentals, leasing, factoring or a host of other transaction types.

More on Wednesday …

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.: 

Interested in learning how to make over six digits a month flipping real estate short sales on autopilot? 

Join us on Tuesday, October 28th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/656685734

Spaced are limited … log on now to claims yours!

P.P.S.: If you already have the system, are you ready to really take it to the next level?  Go to http://www.shortsalescoach.com to learn how.  For just $7 a day you can begin implementing an amazing system!