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Oklahoma crafts its own mortgage settlement

by admin on February 10, 2012

Smart Real Estate News & Commentary by Chris McLaughlin February 10, 2012

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Oklahoma crafts its own mortgage settlement

Oklahoma Attorney General Scott Pruitt reached his own settlement with top mortgage servicers. Pruitt was the only Attorney General (AG) not to sign the $26 billion multistate deal that included the Justice Department and the Department of Housing and Urban Development. The negotiations launched in October 2010 after evidence surfaced of foreclosure documents signed en masse and filings on borrowers being considered for modifications. As details emerged of a preliminary settlement in 2011, Pruitt and three other Republicans Florida AG Pam Bondi, Texas AG Greg Abbott, and Virginia AG Kenneth Cuccinelli sent a letter to lead AG Tom Miller of Iowa saying any deal that involved principal reduction would only promote strategic default. “We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to establish an overarching regulatory scheme, which Congress had previously rejected, to fundamentally restructure the mortgage industry in the United States,” Pruitt said yesterday.

Pruitt’s $18.6 million settlement will resolve claims of any unfair and unlawful practices he found. His public protection unit will process relief applications from borrowers. “Oklahoma is fortunate to have a stronger housing market and economy than many other states that are struggling. This settlement will provide damages to those Oklahomans who did fall victim to unfair and unlawful misconduct of mortgage servicing companies, while not exceeding the appropriate role and authority of state attorneys general,” Pruitt said.

US trade deficit leaps

The monthly trade gap swelled to $48.8 billion as goods imports climbed to the highest level since July 2008, just before the financial crisis caused world trade to plunge, a report from the Commerce Department showed today. Analysts surveyed before the report had expected the December trade deficit at $48.0 billion, up from a revised estimate of $47.1 billion in November. US exports grew slightly in December, with records set for petroleum, services and advance technology goods. For the year, the US trade gap rose 11.6% to $558.0 billion, the highest since 2008. Exports last year rose 14.5% to a record $2.1 trillion, keeping the United States on pace to meet President Obama’s goal of doubling exports in five years. Imports grew 13.8% to a record $2.7 trillion, with records set in several categories. Auto imports rose to the highest since 2007 and petroleum the highest since 2008. The average price for imported oil in 2011 was a record high $99.78 per barrel.

The record trade deficit last year with China is certain to reinforce concerns in Congress about Beijing’s currency and trade practice ahead of a meeting next week between Obama and the Asian giant’s expected next leader, Vice President Xi Jinping. US exports to China jumped 13.1% to $103.9 billion. But that was overwhelmed by a 9.4% increase in imports from China, which pushed the tally to a record $399.3 billion. Last year, the Democratic-controlled Senate passed legislation to pressure China to raise the value of its currency, but that bill hit a dead end in the Republican-controlled House of Representatives. Many lawmakers believe that China deliberately undervalues its currency to give its companies an unfair price advantage, contributing to the huge bilateral deficit. The US trade deficits with the European Union and Canada also expanded in 2011.

Olick – robo-deal about lowering principal

“It took more than a year to strike a deal, but here it is, the biggest government-industry settlement in history, surpassing even big tobacco. Five of the nation’s largest servicers will cough up more than $25 billion, the bulk of which will go toward lowering mortgage principal for borrowers who are behind on their mortgage payments. Wait a minute. What does that have to do with faulty foreclosure documents? Nothing. But that’s how it started, and now that government got what it wanted, i.e. mortgage principal reduction for about a million borrowers, they are likely, quietly whispering a big thank you to all those so-called ‘robo-signers.’ Let’s take a step back for a second to remember the fall of 2010, when ‘robo-signing’ came to light. The idea that one low-paid guy sitting in a room was signing his, or perhaps somebody else’s, name to thousands of foreclosure documents was appalling. It is appalling, no question. But let us not forget that the vast, vast majority of those foreclosures being processed were in fact legitimate foreclosures; it was the documentation process that was fraudulent. Banks didn’t foreclose on borrowers for no reason, they foreclosed because borrowers weren’t paying their mortgages.

So fast-forward to 2011 when the housing market is still in deep despair. Home prices are still falling, eleven million borrowers owe more on their mortgages than their homes are worth, home construction sees its worst year ever, and government relief programs are doing very little to help. Cries arise that the only way to help housing is to reduce the principal on all those underwater mortgages, give borrowers their equity back! But how does government force the banks to do that? Robo. The last thing the banks need are fifty state lawsuits over bad foreclosure documents, plus they need to be able to get all these legitimate foreclosures through the courts, so they can stem some losses by reselling the homes. The ‘robo’ scandal has ground foreclosure processing to a veritable halt in much of the county and slowed it everywhere else. Borrowers are sitting in their homes paying nothing. So the banks agree to the deal, any deal, because they have no other choice. You can hear it in their statements today:

‘We believe this settlement will help provide additional support for homeowners who need assistance, brings more certainty to the housing market and aligns to our ongoing commitment to help rebuild our neighborhoods and get the housing market back on track.’ — Bank of America.

‘Today’s agreement represents a very important step toward restoring confidence in mortgage servicing and stability in the housing market.’ — Wells Fargo Home Mortgage.

Getting the housing market back on track. Restoring stability in the housing market. That’s what they want. They’ve already stopped ‘robo-signing’ long ago. Now what they need is closure. Move the foreclosure process along again, so that the housing market can clear all the distress and move ahead. Let the bank black eye begin to heal. Sure, they will get hit with plenty more lawsuits over mortgage securitizations, but that has little to do with their customers on the street, the average consumers. That has to do with investors, and federal regulators and all kinds of complicated Wall Street products that are lost on average Americans. Robo-signing was more personal; it had to do with real people’s mortgage papers that they signed at their kitchen tables.”

Trail going cold at MF Global

When commodities brokerage MF Global imploded, the FBI and federal prosecutors were quick to launch an investigation to pursue what seemed obvious to outspoken regulators and lawmakers: laws were broken and crimes were committed. More than three months later, it is far from clear that anyone will face criminal charges over the disappearance of more than $600 million in customer money as MF Global spiraled towards bankruptcy in the brokerage’s final, frantic days in the last week of October. So far, the MF Global investigation is not tracking the early progress of other high-profile financial scandals such as RefCo, where former Chairman Phil Bennett was arrested within days of the disclosure that the futures firm had been hiding losses for years.

Lawyers and people familiar with the MF Global investigation of the firm that was run by former Goldman Sachs head Jon Corzine say that even though the hunt is still on to find out whether or not officials at MF Global intended to pilfer customer money in a desperate bid to keep the brokerage from failing, the trail at this point is growing cold. To date, scant evidence of criminal intent has emerged in company emails, no former or current employees have sought to cut a deal to provide testimony about potential wrongdoing and seasoned defense lawyers say they are not seeing the tell-tale signs of a hot criminal investigation. Ellen Davis, a spokeswoman for the office of the Manhattan US Attorney, declined to comment. Randall Samborn, a spokesman for the office of the US Attorney in Chicago, also declined to comment.

MBA statement on foreclosure deal

The Mortgage Bankers Association (MBA), issued the following statement upon news of an agreement between state and federal officials and five large residential mortgage servicers.

“A final agreement can play an important role stabilizing and providing certainty and confidence to the housing and mortgage markets. With all the rumors and speculation surrounding these negotiations behind us, it is now imperative that policymakers, lenders, servicers and other stakeholders work together on policies and initiatives that will allow us to get the housing market on the road to recovery. I would caution, though, that, while a positive step, this will not be a panacea for all that ails housing. There are a number of other issues that we need to resolve. This includes striking the appropriate balance between consumer protection and access to affordable credit for qualified borrowers in the QM and QRM rulemakings, and facilitating the return of private capital to the mortgage market by comprehensively addressing the future of the GSEs and the government’s role in the secondary market.” – David H. Stevens, President and CEO of MBA.

Debra W. Still, CMB, Chairman of MBA’s Council on the Future of Residential Mortgage Servicing in the 21st Century added: “The standards in this settlement can provide a framework for a national servicing standard that would provide borrowers with equal protections, regardless of where they live, and would give lenders a single set of rules governing how they interact with their customers. If done properly, and in recognition of different business models, a nationwide standard would provide renewed confidence in the system and encourage qualified borrowers to jump back into the housing market.”

Citigroup takes $50 million loss

Citigroup was forced to write off $50 million after two traders accused of attempting to influence global lending rates left the bank, according to people familiar with a worldwide investigation that is gathering pace. Nine separate enforcement agencies in the US, Europe and Japan have been probing whether US and European banks manipulated the London Interbank Offered Rate or Libor, the benchmark reference rate for $350 trillion worth of financial products, and other interbank lending rates. So far, only Japan’s Financial Services Agency has formally sanctioned banks in connection with the probe. In December, regulators found that two former Citigroup employees in Tokyo attempted to pressure colleagues and employees at other banks involved in the rate-setting process for the Tokyo Interbank Offered Rate, or Tibor. While the regulator did not publicly name the traders involved, people familiar with the case identified them as Thomas Hayes, a trader of yen-related products, and Christopher Cecere, his former boss.

According to those people, the alleged attempts to influence Tibor were uncovered after another Citi employee in London reported the activity. Citi took a $50 million loss when it unwound the traders’ positions and reported the matter to regulators, according to people familiar with the case. However, other Citi sources suggested the losses were significantly in excess of that amount. The investigation into possible manipulation of global interbank lending rates has accelerated in recent weeks, with more than a dozen traders at various banks fired, suspended or placed on administrative leave. A former Barclays trader, Philippe Moryoussef, is being investigated in connection with the setting of Euribor, the rate at which banks lend euros, according to people familiar with the case. Mr. Moryoussef left Barclays in 2007, long before US, European and Japanese regulators launched their probe into interbank lending rates and now works in an unrelated position for Nomura in Singapore. Barclays took the information to European Commission officials, who are now investigating and declined to comment.

NAR – prices boost affordability

Housing affordability conditions improved in most metropolitan areas from softer existing-home prices and record-low mortgage interest rates in the fourth quarter, with rising sales and lower inventory creating more balanced conditions, according to the latest quarterly report by the National Association of Realtors (NAR). Introduced with this release is a new annual metro-level housing affordability index, with historically favorable conditions dominating across the country.

The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas (MSAs) in the fourth quarter from a year earlier; two were unchanged and 118 areas had price declines. The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2% from $170,600 in the fourth quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes – foreclosures and short sales which sold at discounts averaging 15 to 20% – accounted for 30% of fourth quarter sales; they were 34% a year earlier. Total existing-home sales, including single-family and condo, increased 5.9% to a seasonally adjusted annual rate of 4.42 million in the fourth quarter from 4.17 million in the third quarter, and were 9.2% above the 4.04 million pace during the fourth quarter of 2010. All regions rose from the third quarter and from a year ago. At the end of the fourth quarter there were 2.38 million existing homes available for sale, which is 21.2% lower than the close of the fourth quarter of 2010 when there were 3.02 million homes on the market.

NAR’s national Housing Affordability Index rose to a record high 184.5 in 2011, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power; recordkeeping began in 1970. An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20% down payment and 25% of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are relatively lower. Metro areas with the greatest housing affordability conditions in 2011 include the Detroit-Warren-Livonia area of Michigan, with an index of 383.4; Toledo, Ohio, at 242.9; and Decatur, Ill., at 236.8. Only 24 out of 152 metros measured had an affordability index below 100 in 2011.

Between 2010 and 2011, in markets where comparisons are available, all but 2 out of 148 areas showed improvement in housing affordability, and 69 MSAs had double-digit increases in affordability conditions. The share of all-cash home purchases in the fourth quarter was 29%, unchanged from the third quarter; they were 30% in the fourth quarter of 2010. Investors, who are drawn by bargain prices and account for the bulk of cash purchases, accounted for 19% of transactions in the third quarter; they were 20% in the third quarter and 19% a year ago. First-time buyers purchased 33% of homes in the fourth quarter; they were 32% in both the third quarter and the fourth quarter of 2010. In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $160,800 in the fourth quarter, which is 1.7% below the fourth quarter of 2010. Ten metros showed increases in their median condo price from a year ago, one was unchanged and 43 areas had declines.

Regionally, existing-home sales in the Northeast rose 6.3% in the fourth quarter and are 3.7% above the fourth quarter of 2010. The median existing single-family home price in the Northeast fell 4.6% to $229,200 in the fourth quarter from a year ago. In the Midwest, existing-home sales increased 7.0% in the fourth quarter and are 14.1% higher than a year ago. The median existing single-family home price in the Midwest declined 3.3% to $134,100 in the fourth quarter from the fourth quarter in 2010. Existing-home sales in the South rose 3.8% in the fourth quarter and are 9.1% above the same quarter in 2010. The median existing single-family home price in the South was $146,500 in the fourth quarter, down 3.8% from a year earlier. Existing-home sales in the West increased 8.1% in the fourth quarter and are 8.4% higher than a year ago. The median existing single-family home price in the West declined 4.2% to $205,200 in the fourth quarter from the fourth quarter of 2010.

Greece still not bailed out

Stock markets fell Friday after Greece’s crucial international bailout was put on hold by its partners in the 17-nation eurozone, a day after it seemed that the country’s tortuous journey to pacifying its creditors had reached a conclusion. Greek Prime Minister Lucas Papademos and heads of the three parties backing his government agreed to deep private sector wage cuts, civil service layoffs, and significant reductions in health, social security and military spending. Investors breathed a sigh of relief that the agreement would allow Greece to get a euro130 billion ($173 billion) bailout package and avoid a bankruptcy next month that could send shockwaves around the financial markets. But finance ministers from the other 16 eurozone states threw a spanner in the works late Thursday and insisted that Greece had to save an extra euro325 million ($430 million), pass the cuts through a restive parliament and guarantee in writing that they will be implemented even after planned elections in April.

Amherst – foreclosure deal penalizes investors

The $26 billion settlement between government officials and the five largest mortgage servicers will exacerbate servicer conflict of interest by allowing the banks to use investor dollars to foot the bill, according to Amherst Securities Group. The analysis comes as representatives from mortgage banks, trade groups and organizations expressed relief as the settlement with state attorneys general and federal prosecutors finally arrived. By receiving credit for principal write downs on the loans owned by investors, servicers can settle their liability claims with private investor money, Laurie Goodman and her team of analysts at Amherst noted. The settlement includes $17 billion in required credits for principal reduction and other foreclosure initiatives, including short sales, anti-blight measures and borrower transition efforts. These credits are put toward loans both in bank portfolios and in private label securitizations.

“We believe that this settlement will further exacerbate the conflicts of interest in the foreclosure process, highlighting the fact that first liens are often poorly treated,” the analysts said. “We are deeply concerned that such a settlement will significantly raise the cost and delay the return of private capital to the US single-family mortgage market.” They compare the settlement to charging a patient, or investor, an extra fine when his doctor, or bank, is found guilty of malpractice. The already wounded patient is hurt again, and the doctor does not have much incentive to change his behavior. “The settlement has missed the opportunity to correct some of the huge conflicts of interest that are embedded in the foreclosure process,” the analysts said.

It’s not all bad news, however. “On the positive side, we are pleased to see that the changes in servicing practices address the fact that servicers often own companies that provide ancillary foreclosure services, or mark-up third-party services with no disclosure to borrowers or investors,” they said. The increased foreclosure timeline due to robo-signing issues is likely to extend further because of the settlement, Amherst analysts said, and the costs of will fall disproportionately on private investors.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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

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Bank deal holdouts have the most foreclosures

by admin on February 10, 2012

Smart Real Estate News & Commentary by Chris McLaughlin February 8, 2012

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Bank deal holdouts have the most foreclosures

California, New York, Nevada, and Massachusetts are among the states that haven’t signed off on a settlement with banks over foreclosure abuses, according to state officials and two people familiar with the talks. The holdouts include some with the highest rates of foreclosures. More than 6% of Nevada housing units had at least one foreclosure filing in 2011, the nation’s highest rate, according to RealtyTrac. California was third-highest with more than 3%, said the firm, which tracks foreclosures. California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman, who have been among the most outspoken in pushing for changes to the accord, were among those who hadn’t joined as of a Feb. 6 deadline.

More than 40 states originally signed on, said Iowa Attorney General Tom Miller, who is helping to lead talks with the banks. “Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor. “If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.” All 50 states announced almost 16 months ago they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from states and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with five banks that is said to be worth as much as $25 billion. At the time of this posting, Arizona, Michigan and Florida have also joined the other 40 states in the deal, for a total of 43.

Still hope for Keystone pipeline?

A plan to fast-track the stalled Keystone XL pipeline was passed by a key committee in the US House of Representatives on Tuesday, as Republicans made yet another attempt to spur approval of the project that has become a major issue in the 2012 elections. The bill would wrest decision-making on the pipeline from the Obama administration and hand it to the Federal Energy Regulatory Commission, which would be compelled to quickly issue approval permits on the Canada-to-Texas project. But the plan would need to clear several more Congressional hurdles, including getting through Democratic opposition in the Senate, before it could land on President Barack Obama’s desk for approval. In a decision last month that pleased environmental groups, Obama blocked TransCanada’s $7 billion project, citing the need for further review of its route as the line would have traversed sensitive lands and an aquifer in Nebraska. Republicans have made the pipeline a symbol of what they believe are unnecessary regulations that are stifling job creation and energy production in the United States. Opponents cite possible environmental hazards including spills from the pipeline connecting western Canada to Houston.

Today, the House Energy and Commerce Committee voted 33-20 to send its Keystone bill to the full House, where it will likely become part of a highway and infrastructure funding bill that House Speaker John Boehner wants to see passed this month. But getting a similar measure through the Democratic-controlled Senate could be a tougher fight. A Republican member of the Senate Finance Committee has floated a Keystone provision to attach the Senate’s highway funding bill, a measure that may come up for discussion later today. Republicans also have not ruled out trying to attach a Keystone provision to must-pass payroll tax cut legislation. “We’re going to use all options, so we’ll see,” said Fred Upton of Michigan, the Republican chair of the energy committee, who is also part of joint Senate-House conference panel working on the payroll tax cut compromise.

MBA – mortgage applications up

Mortgage applications increased 7.5% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 3, 2012. The Market Composite Index, a measure of mortgage loan application volume, increased 7.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8.7% compared with the previous week. The Refinance Index increased 9.4% from the previous week. The seasonally adjusted Purchase Index increased 0.1% from one week earlier. The unadjusted Purchase Index increased 6% compared with the previous week and was 4.1% lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 4.88%. The four week moving average is up 0.65% for the seasonally adjusted Purchase Index, while this average is up 5.72% for the Refinance Index. The refinance share of mortgage activity increased to 80.5% of total applications from 80.0% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.0% from 5.6% of total applications from the previous week. During the month of January, the investor share of applications for home purchase was at 6.4%, a decrease from 6.9% in December. This change was led by a decline in the West and East North Central regions. In addition, the share of purchase mortgages for second homes increased to 5.9% in January from 5.4% in December.

Five banks bid on AIG assets

Another batch of the riskiest mortgage-backed securities once owned by the American International Group are being auctioned off this week, according to two people familiar with the matter, a sale that would bring the insurance giant’s 2008 meltdown once step closer to a resolution. The Federal Reserve Bank of New York took control of the assets after A.I.G. was bailed out in 2008. They are being auctioned to a group of bidders that includes Credit Suisse, Barclays Capital, Morgan Stanley, Goldman Sachs and Royal Bank of Scotland. Bids are due on Wednesday, and a winner will likely be identified by Friday. The auction will be the second major sale of the year of assets held by the New York Fed in a vehicle known as Maiden Lane II, which absorbed A.I.G.’s soured residential mortgage-backed securities after the 2008 bailout. Last month, Credit Suisse won an auction for bonds from the vehicle with a face value of around $7 billion, which it promptly sold to clients including hedge funds and other banks. The success of that auction led to another bid by one of the five firms for more Maiden Lane II assets, and signaled that the market for residential mortgage-backed securities, the bête noires of the financial crisis, has improved since last year. The New York Fed conducted a sale of some of the Maiden Lane II bonds last June, but had to halt the sale when it created turmoil in the bond market. The bonds being sold in this auction have a face value of roughly $6 billion, about half the amount remaining in Maiden Lane II, according to the people. The auction was earlier reported by The Wall Street Journal.

Hicks – market earnings to decline

“In 2010, inventory restocking contributed most to U.S GDP growth. In 2011, it was the rebound of private investment due to Obama’s capital equipment tax credit contributing most to U.S GDP growth. The US consumer, though, hasn’t really been jumpstarted over the past two years. That is why earnings multiples on the S&P 500 continued to decrease, despite stellar earnings growth from emerging markets. Last week’s Q4’11 GDP numbers confirmed, for me, that 2012 will be another year with little US consumer growth, and that earnings multiples for most companies (even those companies named after fruit) will likely continue to compress as we head further into this year. Currently, the S&P 500 trades at 11x 2013 consensus EPS of $117.50. S&P 500 earnings are expected to grow 11.7% in 2013 vs. Solutia’s earnings growth of 17% in 2013. So when a leading chemical company is only willing to pay 11x 2013 earnings growth (minus substantial synergies) for a company currently estimated to deliver 17% earnings growth in 2013, why is the market paying 11x 2013 earnings growth for the S&P 500 currently estimated to deliver 11.7% earnings growth in 2013? This represents a massive disconnect between investor sentiment and corporate America.”

Olick – 40 states sign on [edit to add 3 more, as above]

“After more than a year of negotiations, attorneys general from more than 40 states signed on to a proposed settlement agreement with five of the nation’s largest mortgage servicers over ‘robo-signing’ foreclosure processing abuses, according to the lead negotiator, Iowa Attorney General Tom Miller. ‘This enables us to move forward into the very final stages of remaining work. Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement,’ Miller said in a statement released late Monday. The deal with Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and Ally Financial will reportedly total $25 billion. Some $17 billion of that would go toward writing down mortgage principal for an estimated 850,000 troubled borrowers, $3 billion could go toward restitution payments of $1,500 each to borrowers who lost their homes to foreclosure, and the rest could go to state funds for foreclosure relief, according to reports and estimates by Inside Mortgage Finance. The total could be less, however, if California does not sign on. As of late Monday, officials there said Attorney General Kamala Harris had not agreed to the proposal. ‘For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits, and will ensure accountability. We are closer now than we’ve been before but we’re not there yet,’ Harris said in a statement earlier that officials in her office said still stood after Iowa’s announcement. California accounts for nearly a quarter of the nation’s foreclosures in the latest housing crash.

New York also did not sign on to the deal, according to sources in Attorney General Eric Schneiderman’s office. Schneiderman had said he would not sign, but reports earlier in the week suggested he was reconsidering, given his new roll as co-chair of a Justice Department task force to investigate mortgage-related abuses. Attorneys general from Delaware and Nevada also have reportedly not agreed to the deal. Despite the Feb. 6 deadline, states can still sign on and the expectation is that more will. So-called robo-signing, where thousands of foreclosure documents are signed by one employee without proper verification, came to light in the fall of 2010. Miller formed the coalition of attorneys general to investigate major bank servicers in October 2010. Allegations of forgery and abuse in the documentation process ground foreclosures nearly to a halt for much of 2011, as servicers reviewed and changed the way they process foreclosure documents. They are just now ramping up again in states where foreclosures are not required to go before a judge, or non-judicial states. In judicial states, foreclosures can now take up to three years. Miller’s office would give no details as to the agreement, or the states that committed to it.

Gold holds steady

Gold prices held steady around $1,745 an ounce today, as investors waited with caution for Greece to grind towards a deal on a rescue package that it urgently needs after missing a string of deadlines. Athens tested investor’s patience yet again yesterday by postponing a decision on whether to accept austerity and reform measures in exchange for a 130 billion euro ($172 billion) bailout from the IMF and EU. Gold could face a short-term pullback if Greece strikes a deal, as it may hurt the appeal of safe-haven assets, but in the long run the lingering euro zone debt crisis is expected to support sentiment in gold. “If Greece were to agree on everything right away, I don’t think it would solve everything because they will still have to implement the measures,” said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong. “There are plenty of land mines left.”

Major investor blames the bailout

As sales languish and prices continue to fall, Sam Zell, the head of Equity Group Investments and numerous other ventures, pinned the blame on policies that refused to allow market forces to take hold. “Rather than let the elements of the business world take care of the problems, we basically stopped the process of creating market clearing,” Zell said in a CNBC interview. “Had we allowed the market to clear without trying to stop reality…we would have a healthy housing market today.” Since the financial crisis began in 2008, President Barack Obama has continually tried to regulate and stimulate the problem away. Most prominently, the administration implemented the Home Affordable Modification Program, theoretically aimed at helping as many as four million distressed homeowners refinance their mortgages at affordable terms. However, the program has reached only about one-fourth its original goal. Then, in his state of the union address, Obama pledged to expand the efforts to include even those buyers whose mortgages are not owned by government-sponsored enterprises Fannie Mae or Freddie Mac. “It’s putting off facing up to reality,” Zell said in describing the efforts to halt foreclosures. “The longer we avoid clearing the longer we’re going to be living with this problem.”

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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

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Foreclosure deal deadline postponed

by admin on February 3, 2012

Smart Real Estate News & Commentary by Chris McLaughlin February 2, 2012

Forward this e-mail to your friends!

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Foreclosure deal deadline postponed

The deadline for states to decide whether to join a proposed nationwide foreclosure settlement with banks was delayed to Feb. 6 from Feb. 3, the Iowa Attorney General’s Office said. States were given more time to evaluate the proposal, which may total $25 billion, after at least one asked for a delay, Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, said yesterday in a phone interview. Miller is helping to lead negotiations. State and federal officials have been negotiating an agreement with mortgage servicers that would provide mortgage relief to homeowners and set requirements for how banks conduct foreclosures.

State officials are reviewing the agreement with Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc., and are being asked to sign on. Greenwood declined to name the state that asked for more time or comment on state support for the deal. Nevada Attorney General Catherine Cortez Masto said in a Jan. 27 letter to Miller, the Justice Department and US Housing and Urban Development Secretary Shaun Donovan that she needed answers to 38 questions to evaluate the deal. The deadline was changed as Oregon Attorney General John Kroger said today in a statement that he would sign on to the settlement, joining Connecticut Attorney General George Jepsen, who also supports it. Delaware Attorney General Beau Biden has said he won’t sign on to the settlement.

Job cuts jump in January

The number of job cuts announced by employers jumped 28% in January, led by retailers and financial firms, according to the latest report by global outplacement firm Challenger, Gray & Christmas. Still, job losses announced last month were the lowest on record for a January, the month that typically sees the greatest number of layoffs, the firm said. Employers last month said they planned to cut 53,486 positions, compared with 41,785 job cuts announced in December. The January job cuts were 39% higher than during the same period a year earlier, when employers said they planned 38,519 cuts. Retailers and financial firms saw the greatest cuts, losing 12,426 and 7,611 jobs, respectively.

Challenger said the retail job losses were not related to seasonal hiring, and instead were the result of restructurings, store closings, and other cost-cutting measures. The financial sector saw the most job losses since September, when 31,167 cuts were announced. Challenger noted that most of those layoffs came from. Government job cuts continued to dwindle for a second straight month, with just 3,021 layoffs announced in January. “Of course, it is far too early to say whether we will continue to see low job-cut figures in government. It is highly unlikely, considering that many cities and states continue to struggle with budget deficits,” Challenger said in a statement. “And, then there is the federal level of government, which remains under intense pressure to cut costs. As a result, we expect government layoffs to be heavy again this year.”

LPS – house prices slow decline

Lender Processing Services, Inc. (LPS),  today announced that its LPS Applied Analytics division updated its home price index (LPS HPI) with residential sales concluded during November 2011. The LPS HPI summarizes home price trends nationwide by tracking sales each month in more than 13,500 ZIP codes. Within each ZIP code, the LPS HPI tracks five price levels from low to high. “Since the post-bubble drop in home prices eased in January of 2009, we’ve generally seen that prices for homes in the lowest 20% of local markets in the metropolitan areas covered by the LPS HPI now differ by more than the highest 20% from their levels 10 years ago,” said Kyle Lundstedt, managing director of LPS Applied Analytics. “In those metropolitan areas where lowest-priced homes have increased in value, the differences between the high and low ends of the market have usually shrunk; where they have decreased in value, the differences have grown.”

The LPS HPI national average home price for transactions during November 2011 was $199,000 – a decline of 0.6% during the month relative to October 2011, reaching a price level not seen since October 2002 (Figure 1, Table 1). This is the fifth consecutive month of price decreases. The partial data available for December suggests further price declines of approximately 0.8%. LPS reported partial data from November transactions in its December release, which proved a reasonable indicator for November’s performance: it showed a preliminary 0.5% estimated decline, compared to the 0.6% for the full month’s data. LPS HPI average national home prices continue the downward trend begun after the market peak in June 2006, when the total value of US housing inventory covered by the LPS HPI stood at $10.8 trillion. Since that peak, the value has declined 30.6% to $7.5 trillion. During the period of most rapid price declines, from June 2007 through December 2008, the LPS HPI national average home price dropped $56,000 from $282,000, which corresponds to an average annual decline of 13.8%. Since December 2008, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. During this period of more slowly declining prices, the national average home price has fallen approximately $26,000 from $226,000.

The November national average price is down 3.4% from the average price at the beginning of the year. Home prices in November were consistent with the seasonal pattern that has been occurring since 2009. Each year, prices have risen in the spring, but have reverted in autumn to a downward trend that has not only erased the gains, but has led to an average 4.4% annual drop in prices to date. The national average home price has declined 4.8% over the most recent year to November 2011. Price changes were largely consistent across the country during November, increasing in 13% of the ZIP codes in the LPS HPI. Higher-priced homes had somewhat smaller declines: 0.55% for the top 20% of homes (prices above $311,000), compared to 0.60% for the bottom 20% (below $100,000). The highest-priced homes, the top 1% (prices above $839,000), declined 0.47%.

Claims and productivity both easing

New US claims for unemployment benefits fell last week, a government report showed today, pointing to more healing in the nations battered jobs market. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 367,000, the Labor Department said. The prior week’s figure was revised up to 379,000 from the previously reported 377,000. Economists polled by Reuters had forecast claims falling to 375,000. Claims have been lower than 400,000 for eight of the last 10 weeks, holding below a level associated with labor market healing. The four-week moving average for initial claims, a trend measure that smooths out volatility, fell 2,000 to 375,750. A Labor Department official said there was nothing unusual in the state-level data and that no state had been estimated. Job growth has gained momentum in recent months and the unemployment rate dropped to a near three-year low of 8.5% in December. The number of people still receiving benefits under regular state programs after an initial week of aid fell 130,000 to 3.437 million in the week ended January 21, the lowest since September 2008. Economists had forecast so-called continuing claims at 3.55 million. The number of Americans on emergency unemployment benefits rose 100,392 to 3.022 million in the week ended January 14, the latest week for which data is available. A total of 7.67 million people were claiming unemployment benefits during that period under all programs, little changed from the prior week.

Meanwhile, productivity increased at a 0.7% annual rate, the Labor Department said today. Economists polled by Reuters had forecast productivity, which measures hourly output per worker, rising at a 0.8% rate. Productivity rose at a 1.9% pace in the third quarter. Over the entire year, productivity rose 0.7%, the slowest since 2008. Hourly compensation rose at a 1.9% rate in the last three months of the year after contracting in the previous two quarters. That is well below the US inflation rate, with consumer prices rising 3.0% in the 12 months through December. Subdued wage growth supports the US Federal Reserve’s view of a low inflation environment. This likely gives the US central bank more room to try to boost growth and tackle stubbornly high unemployment. Though productivity has slowed after growing rapidly as the economy emerged from the 2007-09 recession, businesses have maintained the bulk of the gains made during the recovery. Businesses, estimated to be sitting on a cash pile of about $2 trillion, continue to hold the line on costs. Unit labor costs rose at a 1.2% rate in the fourth quarter. Economists had expected fourth-quarter unit labor costs would increase at a 0.8% rate.

WSJ – GOP discusses Obama’s mortgage plan

President Barack Obama, in announcing a program to help struggling homeowners refinance their mortgages, is betting this plan will fare better than his administration’s earlier efforts to fix the housing market. But House Speaker John Boehner (R., Ohio) questioned why this program would work when others have failed. “One more time? One more time? How many times have we done this?” he asked reporters. “I don’t know why anyone would think that this next idea is going to work.” He added that the previous programs have led to a delay in “the clearing of the market,” or letting housing prices hit bottom by allowing foreclosures to happen more rapidly. Republicans see additional government intervention as doing little to improve the housing situation. Mitt Romney, the front-runner for the GOP presidential nomination, said in October that the government should not try to stop foreclosures but let the housing market “hit the bottom.” He has argued that Mr. Obama’s housing policies have failed.

The government already has programs that allow some homeowners who are current on their payments to refinance at lower interest rates, even if they owe more than their homes are worth or wouldn’t otherwise qualify. Those programs are limited to borrowers with mortgages backed by Fannie Mae and Freddie Mac. The latest proposal would extend that option to all homeowners, allowing borrowers who are current on payments to refinance into new loans backed by the Federal Housing Administration. That requires congressional approval, partly because it would cost money. Economists said the latest proposal—at least on paper—is more ambitious than previous plans because it would allow more borrowers to qualify. Until now, policy makers and elected officials have been hesitant to take bolder steps because the political will simply isn’t there, analysts said. Many of those solutions would mean spending more money or forcing banks and investors to take bigger losses. Instead, policy makers tried to steer a middle course. Many have worried that rewarding irresponsible behavior would create a “moral hazard” that might encourage more defaults.

The hitch is that the programs were designed to make sure they didn’t help borrowers who took on more debt than they could afford. And that “made these programs very complicated,” said David Stevens, chief executive of the Mortgage Bankers Association who spent two years as a top Obama administration housing official. Using the FHA to refinance at-risk borrowers isn’t a new idea. The Bush administration and Congress passed a program in 2008 called for Hope for Homeowners that also employed the agency to refinance at-risk homeowners. It included many restrictions and resulted in just a few hundred refinanced loans. The Obama administration rolled out a similar initiative without Congress two years ago. It resulted in around 700 refinances. “The banks decided not to participate,” said Peter Swire, a former housing adviser to Mr. Obama. “So now the administration is looking for another way to achieve the same goals.”

US still risks recession

In the United States, the manufacturing sector grew at its fastest pace in seven months in January as new orders improved, but Jim Walker, Founder and Managing Director of independent research firm, Asianomics, said that the US economy is going to face a slowdown this year owing to fiscal tightening.

“There’s going to be a significant slowdown in fiscal expenditure in the US, they’re going to have to control the fiscal side much more as the year goes on,” he said. On Wednesday, the US House of Representatives voted overwhelmingly to freeze wages for federal civilian workers until 2013, a move that will save taxpayers $26 billion. According to Walker, pullbacks in government spending will cut between 1 and 1.5% from US GDP in 2012. Walker also believes corporate investment is likely to slow after the federal depreciation allowance expired at the end of 2011. In a report for clients released in December, Walker said there was a 55% chance of a US recession.

He also argued that US consumers were due for another “period of reckoning”, despite improving consumer confidence and spending numbers. He listed a litany of reasons: “Home prices are still falling (on a mild deflation path), equity prices are still off their highs of the year, household credit outstanding is still contracting, real hourly compensation growth is still negative, employment growth is still sub par – and up until November – consumer confidence was fast approaching the recession lows of 2008.” Walker is much more bearish on Europe, which he says is destined for a recession, with GDP contracting 2 to 5% in 2012. He expects further monetary easing from global central banks, which he says will boost precious metals, most notably silver. But he says investors should short the Euro and avoid industrial metals such as copper, which will suffer from a global downturn.

Atlanta lags in housing recovery

Housing prices continue to fall nationwide, despite a few modest signs of improvement. But not all markets are equal. A sprawling Southern metropolis, Atlanta has become one of the biggest laggards in the economic recovery. In November, prices of single-family homes were down close to 12% compared with a year earlier, the largest decline among major metropolitan areas, according to data released on Tuesday in the Standard & Poor’s/Case-Shiller Home Price Index. Home prices regionally are now below their levels of 2000, making Atlanta one of only four metro areas to have experienced such a slide. The price of entry-level housing in the area — the lowest tier of the market, valued at just under $96,600 — fell by close to a third last year.

Even though the national economy shows signs of strengthening, the beleaguered housing market remains a significant drag on the recovery. Across a group of 20 metropolitan areas measured by S&P/Case-Shiller, prices of single-family homes were 3.7% lower in November compared with a year earlier, with average prices at their 2003 levels. Economists say prices are unlikely to hit a nadir until at least late spring. Tom Porcelli, chief United States economist at RBC Capital Markets in New York, projects that average prices could slip by as much as 5% nationally this year because of the large amount of distressed properties for sale and a shortage of buyers. Although Mr. Porcelli describes a “generally better outlook on housing” than he has over the last few years, he added, “we still have a long way to go.”

The reasons for Atlanta’s housing woes are both representative of the nation’s troubles and special to this former boomtown, where housing appreciated handsomely, though not to the lofty heights of Las Vegas, Miami and New York. Where the region once attracted thousands of prospective home buyers drawn by plentiful jobs and more affordable living, that influx has dwindled. Local unemployment, at 9.2%, is slightly higher than the national rate, in part because one in every four jobs lost was connected to real estate, a much higher rate than in the rest of the country. Those jobs have yet to return, while even people with work are having trouble qualifying for loans. The region, plagued by mortgage fraud and developers who dotted the exurban landscape with large luxury homes that never sold, is inundated with foreclosed properties. In fact, Atlanta has the most government-owned foreclosed properties for sale of any large city, according to the Federal Reserve.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

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

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Washington state considers short sale protection

by admin on February 1, 2012

Smart Real Estate News & Commentary by Chris McLaughlin January 31, 2012

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Washington state considers short sale protection

Banks could soon be barred from pursuing deficiency judgments against Washington state borrowers after a short sale. A Senate committee in the Washington State Legislature will hold a hearing over H.B. 2718, which states that if a bank “writes off debt from the short sale, they can’t then subsequently collect this debt from the seller. The bill was modeled after similar action passed in Oregon last summer. The bill if passed does not require the lender to accept a short sale offer. It would go into effect with 90 days of being passed. According to a Washington Realtors alert put out late last week, a borrower would report the write off to the Internal Revenue Service and take a tax deduction for the loss. This same amount is also counted as taxable income for the seller. “Providing certainty and consumer protections for short sale sellers is critical in the current real estate market,” the trade group said. “Successful short sales often prevent foreclosures that would harm consumers, tax revenue and economic recovery.” After the Oregon bill took effect in June, REO numbers became choppy and then began to fall at the end of the year. In September, repossessed homes totaled 1,420, according to RealtyTrac. That number increased to 2,057 the following month then slid to 936 in November and 874 in December. Some of that could be due to seasonal trends. Most lenders put repossessions on hold during the holiday season, but the December total was down 29% from the same month one year earlier.

S&P warns of rate cuts over health costs
Ratings agency Standard & Poor’s warned it may downgrade “a number of highly rated” Group of 20 countries from 2015 if their governments fail to enact reforms to curb rising healthcare spending and other costs related to aging populations. Developed nations in Europe, as well as Japan and the United States, are likely to suffer the largest deterioration in their public finances in the next four decades as more elderly strain social safety nets, S&P said in a report. “Steadily rising healthcare spending will pull heavily on public purse strings in the coming decades,” S&P analyst Marko Mrsnik wrote in the report. “If governments do not change their social protection systems, they will likely become unsustainable.” If no reforms are adopted, healthcare-related credit downgrades would likely start within three years, eventually leading to an increase in the number of junk-rated countries as of 2020, the study showed.

Olick – US Treasury forcing principal forgiveness

“Late Friday the US Treasury Department announced a major expansion of its Home Affordable Modification Program (HAMP). The three-year-old program has been largely deemed unsuccessful, as it has provided just about 750,000 borrowers with permanent loan modifications. The initial expectation from government officials was that it would help three to four million borrowers. ‘Clearly the initial program erred on the side of making sure taxpayers were protected, but it didn’t do enough to help the overall economy,’ said Michael Barr, former Asst. Treasury Secretary for Financial Institutions and one of HAMP’s original architects. Now taxpayers will pony up the cash, as Treasury is tripling the financial incentives to lenders and opening the program up to Fannie Mae, Freddie Mac and investors in rental properties. The money would come out of TARP funds, i.e. from the taxpayers. We still don’t know if Fannie and Freddie will participate, since their conservator, the FHFA’s Ed DeMarco, has been actively fighting principal write down for years. A week ago he sent a letter to members of congress explaining the math behind his argument.

But the Treasury may be forcing DeMarco’s hand. He claimed that writing down mortgage principal would cost $4 billion more than the modifications that Fannie and Freddie are doing now. Those involve interest rate reduction and principal forbearance. The newly expanded HAMP, however, with its triple- sized cash incentives, would shore up that $4 billion hole. Funny how he mentioned that hole on Monday, and the Treasury announced the new plan Friday. ‘If he [DeMarco] doesn’t get to yes, then he has no political leg to stand on,’ says FBR’s Ed Mills, who estimates the enhanced program could add one million borrowers to its ranks. Mills says a ‘no’ from DeMarco would enable the Obama Administration to replace him, which it tried to do once before, only to be blocked by members of Congress. ‘It would be an appropriate response for him to do it,’ says Barr of DeMarco. ‘I do think they should participate.’ I asked Barr why the Treasury waited three years to use the TARP funds for principal reduction. The obvious answer is that this is presidential election year, and the housing market is still floundering, but Barr claims the Treasury was just being careful. ‘It’s a use of taxpayer funds, and you want to make sure you’re not providing more of an incentive than is required,’ he said. ‘One person’s successful program is another person’s bailout.’”

Treasury department stirs the pot

The Treasury Department is investigating a report that Freddie Mac, the mortgage giant, bet against homeowners’ ability to refinance their loans even as it was making it more difficult for them to do so, Jay Carney, the White House spokesman, said yesterday. ProPublica and National Public Radio reported that Freddie Mac, which maintained slightly tighter restrictions than Fannie on homeowners’ eligibility to refinance, had a multibillion-dollar investment whose value hinged on borrowers continuing to pay higher interest rates. Beginning in 2010, Freddie bought several billion dollars’ worth of “inverse floater” securities — essentially the interest-paying portion of a bundle of mortgages — for its investment portfolio while selling the far less risky principal portion. Fannie and Freddie are supposed to be decreasing the size of their investment portfolios. There is no evidence that Freddie tailored its refinancing standards to its investing strategy, but “inverse floaters” make less money if the loans they cover refinance to a lower interest rate. Freddie issued a statement yesterday defending its commitment to helping homeowners. “Freddie Mac is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates,” it said. The company said refinancing accounted for 78% of its loan purchases in 2011.

HAMP 2.0
The expansion of the Home Affordable Modification Program (HAMP) by the Treasury Department is expected to benefit special mortgage servicers, mortgage insurers and nonagency mortgage-backed securities holders, while having no material effect on agency MBS, Keefe, Bruyette & Woods said yesterday. Previously, if a borrower’s first-lien monthly mortgage payment was lower than 31% of income, the borrower was ineligible for HAMP. Factoring other debts to the evaluation will expand the pool of borrowers who can now qualify for HAMP. Investors also were given new incentives for accepting principal write-downs, with the financial benefits for such an action increasing from a range of 6 to 21 cents on the dollar to 18 to 63 cents. The Obama administration also extended the HAMP program deadline through December 2013. “We believe that the more flexible debt-to-income ratio and the inclusion of some investor properties will have a positive impact on modification activity,” KBW analysts said in its research note. “The impact of the increased principal reduction incentives remains unclear.

While it should help the nonagency sector, the impact would be far greater if there was GSE participation. The response from FHFA on Friday afternoon suggests that the GSEs might not participate,” according to KBW analysts. The research firm expects the changes to have “no material impact on agency MBS prepayment speeds.” However, special servicers in the mortgage industry are expected to benefit from the modifications. Ocwen Financial Corp. earned $28.3 million in HAMP incentive fees in the first nine months of 2011, and KBW believes other firms also will benefit from an expanded HAMP program. Barclays Capital analysts also see the changes as having no significant impact on agency MBS. “The reason is that the vast majority of debt forgiveness will be on delinquent loans, which are typically already bought out of the agency MBS trust,” Barclays wrote. “The only effect might be from the moral hazard side: if underwater borrowers in agency MBS pools start going delinquent on purpose to qualify for debt forgiveness, speeds will obviously rise. But we think this is unlikely to have a significant effect on agency speeds.”

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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

{ 0 comments }

60 BOA short sales in Florida

by admin on February 1, 2012

Smart Real Estate News & Commentary by Chris McLaughlin January 27, 2012

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60 BOA short sales in Florida

Only 60 Floridians have received cash from a Bank of America (BOA) program that pays up to $20,000 to homeowners who sell distressed properties in a short sale.  The lender still expects thousands more in the Sunshine State to collect the money before the pilot program ends in August. Bank spokesman Richard Simon said it’s too early to judge the results.  “There are some encouraging signs in this early stage,” he said. “This is just the start of the process.”  Several Realtors and title agents around Tampa Bay said deals are in the pipeline, but none has finalized any of the sales.  Real estate agents say some lenders have been closing the deals in 45 to 60 days instead of a year or longer.  Bank of America had targeted 20,000 of the 1.1 million mortgages it services in Florida.  In the program, qualified homeowners would get 5% of the unpaid mortgage balance as of August 2011, with a minimum payout of $5,000. And so on up to a maximum of $20,000. The sales price does not impact the payout.  By offering the incentive, Bank of America saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.  To sweeten the deal further, the lender said it would consider waiving the deficiency on the mortgages, which would allow homeowners to sell the house for less than they owe for it without having to make up the difference to the bank.  The bank tested the program only in Florida because of the higher foreclosure rates.

Asia to drive natural gas demand

Despite natural gas prices falling to near 10-year lows last week, Royal Dutch Shell’s CEO Peter Voser says demand for gas will be much higher than oil in the long term with the Asia-Pacific region driving the sector’s growth.  “I think you cannot travel around Asia at the moment without getting the question, ‘can you sell us some LNG (liquefied natural gas)?’” Voser at the World Economic Forum in Davos.  Low demand and high inventory levels in the US has deterred some companies from future investments, but according to Voser, America’s waning demand doesn’t reflect what is happening in the rest of the world.  “If you’re talking about North American gas, clearly the current price levels are not sufficient to actually bring all the developments forward. You have seen a lot of companies starting to cut their production.”  With oil and gas production normally taking seven to eight years to come on stream, Voser says Shell is sticking to its long-term strategy to produce more natural gas.  “We produce more gas in 2012 now, 52% versus 48% oil,” he said. “Clearly Asia-Pacific, that’s going to be the driver.”

WSJ – mortgage rates rise

Rates for fixed mortgages moved higher over the past week amid positive signals from the long-suffering US housing market, according to Freddie Mac’s weekly survey of mortgage rates.  “Fixed mortgage rates ticked up this week as the housing market ended 2011 on a high note,” said Freddie Mac Chief Economist Frank Nothaft, noting encouraging data like a report that existing home sales rose 5% at the end of the year to 4.61 million houses, the largest amount since May 2010.  The 30-year fixed-rate mortgage averaged 3.98% for the week ended Thursday, up from 3.88% the previous week, though below 4.8% a year ago. Rates on 15-year fixed-rate mortgages averaged 3.24%, up from 3.17% last week and below 4.09% a year earlier.  Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARM, averaged 2.85%, up from 2.82% last week and below 3.7% a year ago. One-year Treasury-indexed ARM rates averaged 2.74%, matching the prior week and below 3.26% last year.  To obtain the rates, 30-year and 15-year fixed-rate mortgages required an average 0.7 percentage point and 0.8 percentage point payment, respectively. Five-year and one-year adjustable rate mortgages required an average 0.7 percentage point and 0.6 percentage point payment, respectively. A point is 1% of the mortgage amount, charged as prepaid interest.

Growth up in Q4

US gross domestic product expanded at a 2.8% annual rate, the Commerce Department said on Friday, a sharp acceleration from the 1.8% clip of the prior three months and the quickest pace since the second quarter of 2010.  It was, however, a touch below economists’ expectations for a 3.0% rate.  Consumer spending, which accounts for about 70% of US economic activity, stepped to a 2% rate from the third-quarter’s 1.7% pace – largely driven by pent-up demand for motor vehicles.  Spending was also lifted by moderate inflation.  A price index for personal spending rose at a 0.7% rate in the fourth-quarter, the slowest increase in 1-1/2 years, after rising at a 2.3% pace in the July-September period.  A core inflation measure, which strips out food and energy costs, increased at a 1.1% rate after rising 2.1% in the third quarter.  The increase last quarter was the smallest in a year and put this measure well below the Fed’s 2% target.

Growth in the fourth quarter got a temporary boost from the rebuilding of business inventories, which was the fastest since the third quarter of 2010, after they declined in the third-quarter for the first time since late 2009.  Inventories increased $56.0 billion, adding 1.94 percentage points to GDP growth. Excluding inventories, the economy grew at a tepid 0.8% rate, a sharp step-down from the prior period’s 3.2% pace.  The robust stock accumulation suggests the recovery will lose a step in early 2012.  Also pointing to slower growth, business spending on capital goods was the slowest since 2009, a sign the debt crisis in Europe was starting to take its toll.  Expectations of soft growth led the Federal Reserve on Wednesday to say it expected to keep interest rates at rock bottom levels at least through late 2014.  Fed Chairman Ben Bernanke said the central bank, which forecast growth this year in a 2.2% to 2.7% range, was mulling further asset purchases to speed up the recovery.  The Fed warned the economy still faced big risks, a suggestion the euro zone debt crisis could still hit hard.

Absorption rates to improve in 2012?

Net absorption rates in the US turned positive during 2011 for all major property types, according to CBRE Econometrics, which expects the trends to continue in 2012 on the heels of employment growth and then accelerate in 2013.  The absorption rate is the percentage of units expected to be rented or purchased over a period of time.  After a downturn across all property types, annualized apartment absorption turned positive at the beginning of 2010, office by mid-2010, industrial in 2010, and finally retail in mid-2011, analysts at Barclays Capital said.  In the apartment sector, CBRE forecasts a 0.7% absorption rate in 2012 and then 1.2% in 2013. Office property, the company said, will experience a 0.6% rate in 2012 and 1% in 2013, while the industrial sector should see a 1.1% rate in 2012 and 1.5% in 2013. Retail property will have a 0.7% absorption rate in 2012 and then 1.2% in 2013.  Grubb & Ellis said the overall outlook for the office market is stronger for 2012. The real estate services firm also expects the industrial sector to experience increased demand this year with total net absorption of 110 million square feet.  Net absorption rates usually follow employment growth. An exception came during the recent downturn when each property type outperformed relative to the levels of job losses suffered during 2008 and 2009.  Given the positive net absorption across property types and almost no new construction, occupancy rates, or the number of occupied units at a given time, began to improve in the third quarter.  According to CBRE, apartment occupancy rose 0.8% from a year earlier to 95%. Office occupancy increased 0.6% to 83.8%, while the industrial sector inched higher 0.9% to 86.3%. Retail, the only laggard, is down 0.1% from a year earlier to 86.8%.

See you at the top!
Chris McLaughlin

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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 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

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