commerce department

Smart Real Estate News & Commentary by Chris McLaughlin January 16, 2012

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

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

Foreclosures to take longer

Reviews of hundreds of thousands of foreclosure cases ordered by regulators last year will take months longer to complete than first expected, according to documents filed with federal banking regulators.  The delays could postpone compensation for some homeowners harmed by improper foreclosure actions.  The reviews cover foreclosure actions in 2009 and 2010 by the nation’s 14 largest mortgage servicers, which handle payments for about 65% of US mortgages. They are required by enforcement orders announced by federal regulators in April.  Under the deadlines set in April, the reviews — which are being done by independent consultants hired by servicers — should have been completed this month.  But reviews of Bank of America’s (BOA) foreclosure cases could take until November, a letter that BOA’s consultant filed with the Office of the Comptroller of the Currency (OCC) indicates. BOA is the nation’s largest mortgage servicer, and the Promontory Financial Group is its consultant.  JPMorgan Chase’s consultant, Deloitte & Touche, indicated it may need about the same amount of time, according to its letter.

Review time frames have lengthened for other servicers, too, because the detail, scope and complexity of the reviews weren’t fully known in April, says OCC spokesman Bryan Hubbard.  Some companies may finish before others. Some may beat the timelines in their letters. Some deadlines may get longer, Hubbard says.  The OCC says servicers should not wait until all reviews are done to compensate homeowners.  While 4 million cases are eligible for reviews, consultants will sample only some for errors such as unlawful foreclosures and excessive fees.  Borrowers who faced a foreclosure action on their primary home by one of the 14 servicers in 2009 or 2010 are eligible for reviews. Anyone eligible who asks for a review by the April 30 deadline will get one, the OCC says.

Consumer sentiment up

The Thomson Reuters/University of Michigan preliminary January reading on its overall index of consumer sentiment rose to 74.0 from 69.9 in December for the fifth month of gains and the highest level since May 2011.  The report topped expectations of 71.5 and was in contrast to December’s weaker-than-expected retail sales reported on Thursday.  Thirty-four% of consumers polled in the consumer confidence survey said they had heard of recent job gains, a record high in the survey’s history and well above December’s 21%.  “The data suggest a stronger consumer spending outlook, rising to about a 2.1% gain in 2012,” survey director Richard Curtin said in a statement.  But consumers still lacked confidence in government economic policies with the majority rating policies unfavorably for the sixth month in a row.  Americans also remained dour on their personal finances with just 24% expecting their finances to improve in January, slightly below 25% last month.  The survey’s barometer of current economic conditions rose to the highest since February at 82.6 from 79.6, while its gauge of consumer expectations gained to 68.4 from 63.6.

2013 for housing recovery?

A poll of 23 economists and analysts found a consensus for no change in the S&P/Case-Shiller home price index in 2012, compared with a median 0.3% decline that was forecast in the last poll in November.  Many say that a recovery in the housing market is a key requirement for any vigorous rebound in the world’s largest economy. The spectacular collapse in US housing, which sent average prices plummeting by a third, was the trigger for the 2008-09 financial crisis and subsequent recession.  The meager 1.5% gain expected in 2013 will offer little comfort to the millions of Americans trapped in negative equity — owing more to their mortgage lender, and in some cases much more, than their houses are worth.  “I think we are seeing stabilization, but unfortunately it’s stability at the bottom,” said Lindsey Piegza, economist at FTN Financial, describing the grinding halt to several years of relentless price declines.  The average price of a US home is currently around where it was nine years ago, and the most recent data, from October, showed price declines still accelerating.

The market is still under pressure from an excess of homes up for sale. Fifteen of 20 respondents said monthly foreclosures should subside this year, while five didn’t see any let-up until 2013.  Among 20 respondents, 15 said they expect foreclosures to ease some time this year, while five said it would not happen until 2013.  Gains in home sales and new home construction in November, and recent improvement in homebuilder sentiment, added only a touch of optimism at the end of last year.  Still, while the gain expected over the next two years is tiny compared with the more than 30% plunge from the peak in 2006, it is still a more cheery outlook than in some other parts of the world.  A recent Reuters poll predicted British home prices, which have not dropped anywhere near as far as they have in the US, will slip 1.7% this year. In China, they are expected to fall 10 to 20%.

Excess regulations hamper economy

Regulatory policies are badly undermining the economic objectives of governments around the globe by hampering bank activity, JPMorgan Chase chief executive Jamie Dimon said in a conference call discussing fourth-quarter earnings Friday morning.  “Regulatory policy is completely contradictory to government objectives,” Dimon said, citing restrictions on trading and new capital regulations as regulatory sources of slower economic growth.  Dimon said that although regulators have provided additional clarity on new capital rules, the clarifications are have demonstrated that the capital rules are “bad.”  He noted that higher capital requirements have made risk weighting even more important for banks. Under international capital standards, different kinds of bank assets receive different capital treatment, a practice known as risk weighting.

Dimon also criticized the so-called Volcker rule banning proprietary trading. He warned that if the rule is not carefully crafted, it could limit not just prop trading but market making.  “The United States has the widest and deepest and most transparent capital markets in the world,” Dimon said. “And the most liquid.   If you lose liquidity because you lose market making, you cost investors money.”  He said that pension funds, retirees, and other large investors could lose out if restrictions on trading go too far.  “We have to be very careful that we don’t destroy that [market making] as we try to limit — put a fair limit — on proprietary trading,” Dimon said.

Fitch downgrades Merrill mortgage securities

Fitch Ratings downgraded four classes of Merrill Lynch Mortgage Trust securities certificates backed by commercial real estate because the underlying loans are expecting losses.  At the same time, 17 classes of loans in the same series of securities were affirmed by the ratings giant.  Fitch specifically classified 76 loans as mortgages of concern. About 25 of those 76 are specially serviced loans.  The entire loan pool subjected to the downgrade had an aggregate principal balance of $2.2 billion at the end of December, compared to $2.5 billion at issuance.  Of those loans in special servicing, 16 are real-estate owned, three are in foreclosure, another three are delinquent and 1% are current.  One of the largest contributors to the expected losses in the pool is a three-story office building in Scottsdale, Ariz. The loan was moved into special servicing in October of 2009 when a large tenant that fully occupied one of the buildings terminated its lease and vacated the premises. As of mid-last year, the building’s occupancy rate stood at 62%.  A hotel located in Tampa, Fla., also is contributing to uncertainty over the pool of loans with a special servicer saying it would like to pursue a foreclosure.

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

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

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

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

Senate committee approves statewide guidelines for foreclosures

The Banking and Finance Committee voted 5-2 in favor of sending the substitute to House Bill 110 to a full vote, which could happen as soon as this week.  According to the proposal, the bill would authorize cities and counties to create foreclosure registries that would have statewide requirements. The fee to register a property would not exceed $175, and the penalties for failing to register properties would be limited to $500 a month and $2,000 total.  The proposal does not preempt city or county ordinances requiring registration of foreclosed properties for repeated violations that remain uncorrected for at least 60 days, but would it would stop any other local foreclosure registries currently in existence.  Banking Committee Chairman Sen. Jack Murphy said such a law is needed to prevent cities and counties from treating fees associated with foreclosures and vacant properties as a cash cow.  “It can’t become a revenue source,” Murphy said. “That’s a tax. We need something standardized that everybody has to go by. That will keep abuse from occurring.”  Murphy cited reports that DeKalb County raked in more than $550,000 in fees in less than a year.

The original legislation was sponsored by state Rep. Mike Jacobs, a Republican lawmaker whose district includes DeKalb County.  The bill is a carryover from last year, when it stalled as lobbyists for cities and counties raised concerns that the bill could have unintended consequences. Several people representing groups who opposed the original version remarked that they had not seen the updated proposal until Monday’s committee hearing and were still evaluating whether it is an improvement.  “County and city elected officials are hearing a lot from the public about this,” said Clint Mueller, a spokesman for the Association of County Commissioners of Georgia. “There are a lot of foreclosed and properties that are not being taken care of. We have no idea where to even begin to find out who is responsible.”  Still, Mueller said it is important to ensure that municipalities are not punished in an effort to address the issue through state legislation.  “It could have far-reaching effects if it’s not done right,” he said.  If approved, the law would take effect July 1.

Small business optimism edges up

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 1.8 points to 93.8.  Eight of the index’s 10 components were either improved or flat. About half the gain was due to reduced concern about business conditions six months into the future, the NFIB said.  The index is still in recession territory, however, 6 points below the pre-recession average and more than 10 points below the same point in the recovery from the 2001 recession.  The gains in the index are supportive of the view that economic growth will pick up in 2012, but the gains are not likely to be substantial unless the index rises more sharply, the business group said.  The NFIB reported earlier this month that small businesses cut staff in December. The% of businesses reporting reductions in employment remained relatively low, but the percentage increasing employment, though larger, did not offset the losses and remains historically low for an expansion.

Zillow – 3 – 5 years away from normal

Real estate website Zillow.com on Tuesday released a report that shows South Florida home values were flat in November.  Zillow’s Home Value Index for Palm Beach, Broward and Miami-Dade counties was $137,000 – up 0.1% from October.  Values here have been flat or positive for seven of the past nine months. Prior to that, though, values had declined in 66 of the previous 67 months.  Zillow said home values in South Florida have fallen about 4% from a year ago and 55% from the 2006 peak.  Zillow’s report comes a day after a mostly encouraging forecast from the Clear Capital research firm.  Stan Humphries, chief economist for Zillow, said in a statement that supply and demand are still out of whack in many markets, and more foreclosures in 2012 are expected to hurt home values.  “Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values,” he said. “We’re still three to five years away from ‘normal’ housing market conditions.”

New details for MF Global

The investigation into MF Global is intensifying as federal authorities unearth new details and confront potential obstacles in their hunt for roughly $1.2 billion in customer money that disappeared from the brokerage firm.  While prosecutors and regulators have jointly conducted dozens of depositions with former and current employees, a senior official in the Chicago office of MF Global recently declined to meet with the federal authorities, people briefed on the investigation said.  That official, Edith O’Brien, a treasurer at MF Global, is considered a “person of interest” in the investigation, the people said. Federal authorities suspect that she transferred about $200 million to JPMorgan Chase in London on the eve of the bankruptcy of MF Global, money that turned out to be customer cash.  Authorities had expected to interview Ms. O’Brien last month. She instead balked at meeting voluntarily, asking first to strike a deal with criminal authorities that would excuse her from prosecution, the people said. The criminal investigation is led by the Federal Bureau of Investigation and federal prosecutors in Chicago and Manhattan.  The request by Ms. O’Brien is the first in this case, one person briefed on the investigation said. Still, such requests are common in federal investigations and it does not suggest that she violated Wall Street regulations. Ms. O’Brien has not been accused of any wrongdoing, and there is no indication that she intentionally transferred customer money to JPMorgan.  Ms. O’Brien’s lawyer, Reid H. Weingarten, did not respond to requests for comment.

WSJ – mall occupancy up slightly

US malls and shopping centers experienced a slight improvement in occupancy during the fourth quarter, a relief for landlords that have been battling lackluster demand from retailers for most of the downturn.  But data service Reis Inc. cautioned that any recovery remains precarious and the outlook for this year is mixed, given the clouds hovering over the economy. While some retailers are expanding—such as Forever 21 Inc., Dick’s Sporting Goods Inc. and Dollar General Corp.—landlords can expect more headaches from high-profile store closures by companies such as Sears Holdings Corp. and Gap Inc.  The fourth quarter typically is the strongest for retail landlords as well as their tenants. Still, the fourth quarter of last year was one of the strongest since the recession hit, in terms of rising rents and occupancies.

Malls in the top 80 US markets posted an average vacancy rate of 9.2% in the quarter, down from the 11-year high of 9.4% in the third quarter, according to Reis, which began tracking mall data in 2000. Mall vacancies had been climbing steadily for most of the downturn since 2007, when the vacancy rate fell as low as 5.5%.  Demand for space at neighborhood and community shopping centers also strengthened in the quarter, with stores occupying an additional 3.1 million square feet in the top 80 markets. Because of new construction, vacancy in this category remained at 11%, where it has been for three quarters, a level last seen in 1991.  Owners of retail property have been hit hard during the downturn by overbuilding, consumer caution and competition from online shopping. In the three years covering 2008 through 2010, retailers at neighborhood and community shopping centers vacated a total of 31.6 million square feet, according to Reis.  But the most recent quarter’s results indicate that the worst might be over, especially with the economy adding jobs. A decent holiday shopping season also gave the retail property sector a boost, with 23 national chains reporting an average sales gain of 3.4% in November and December at stores open at least a year, according to Retail Metrics Inc.

The average annual rent at US malls rose to $38.92 a square foot in the fourth quarter, a 0.3% increase from the third quarter and the second consecutive quarterly gain, according to Reis. Mall rents had been mostly flat or declining since 2008.  Average annual rents at US strip centers increased 0.1% in the fourth quarter to $19.04 a square foot after 13 consecutive quarters of remaining flat or declining.  Retail landlords also have been helped by a virtual shutdown in new store construction, meaning they face less competition for tenants. Only 4.5 million square feet of shopping-center space opened in 2010, the lowest figure in 31 years, according to Reis. Last year was slightly higher, with only 4.9 million square feet being delivered.

HARP 2.0 effects to be seen soon

Effects of the retooled Home Affordable Refinance Program (HARP) may start to appear next month, analysts said yesterday.  Since the Federal Housing Finance Agency (FHFA) announced changes to HARP in October, servicers have been adjusting operations. Upfront fees, loan-to-value ratio caps and representation and warranty claims on the old loan file were eliminated for eligible borrowers.  The program launched in March 2009. Roughly 838,000 Fannie Mae and Freddie Mac borrowers were able to refinance into lower rates, but only about 7% of them had LTVs above 105%.

Prepayments slowed in December, according to Bank of America Merrill Lynch (BOAML) analysts, dropping 6% on Fannie Mae securities backed by 30-year fixed-rate mortgages.  “We anticipate another uneventful month in January before February provides the first glimpse into the new program’s prospects. Even before then, it is interesting to note that HARP-eligible pools — which responded slowly at the start of the current refinancing wave — continued to show slow, steady prepayment increases this month,” BOAML analysts said.

Rumors stirred of another plan from the White House to boost more refinancing. A white paper from the Federal Reserve made the case for one, along with other suggestions to address still lingering housing problems.  Analysts at JPMorgan Chase said Monday that modifying all coupon stacks of mortgage-backed securities would violate the prospectus. The loans, analysts said, need to be at risk of imminent default for such an action. If Washington started a refi wave on GSE loans and everything was moved into a 4% mortgage, Chase analysts believe it would only result in a total of $25 billion to $30 billion in annual savings for borrowers.  “The dollar savings of such a move are modest in light of the overall economy,” the analysts said and would merely be a transfer of wealth from investors to borrowers. “HARP 2.0 theoretically addresses many refi hurdles, and we will learn over the next six months how successful it will be.”

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

Smart Real Estate News & Commentary by Chris McLaughlin January 9, 2012

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

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

LPS – foreclosures stagnant

The November Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows that while mortgage delinquencies at the end of November 2011 were nearly 25% less than the January 2010 peak, the  trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted. At the same time, new problem loans – those loans seriously delinquent as of the end of November that were current six months prior – have not improved significantly in the last year. This degree of stagnation indicates that while the situation is not getting markedly worse, it is not improving either, and inventories of troubled loans remain significantly higher than pre-crisis levels across the board.  The November mortgage performance data also showed both new and repeat foreclosure starts dropped sharply in November, down nearly 30% from the month prior. As late-stage delinquencies in the pipeline still number close to 2 million, the sharp drop is more indicative of the impact of ongoing document reviews, additional state legislation and new regulatory requirements rather than a shift in trend.

Prepayment activity – a key indicator of refinances – remained strong after several consecutive months of growth; however the October origination data showed a month-over-month drop of nearly 12%. While still the second highest level for the year, originations through October 2011 were down 21% vs. the same period in 2010 and down almost 30% vs. 2009.

Other key results from LPS’ latest Mortgage Monitor report include:

​Total US loan delinquency rate:  ​8.15%

​Month-over-month change in delinquency rate:  2.7%

​Total US foreclosure pre-sale inventory rate:  ​4.16%

​Month-over-month change in foreclosure pre-sale inventory rate:-  3.0%

​States with highest percentage of non-current* loans:-  FL, MS, NV, NJ, IL

​States with the lowest percentage of non-current* loans:  ​ND, AK, WY, SD, MT
*Non-current totals combine foreclosures and delinquencies as a% of active loans in that state.

Notes:

(1)    Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets.

(2)    All whole numbers are rounded to the nearest thousand.

Service sector up

The services sector—long the engine of the US economic growth but an unusual drag in the recovery this time around—is finally showing signs of sustained strength, from job creation to overall output.  The trend has been underscored in nonfarm payroll data over the past few months, including the better-than-forecast December data released Friday, which showed healthy gains again in retail trade and leisure and hospitality.  The jobs recovery in the service sector — long overdue and anxiously expected — is most pronounced over the past six months, during which time private sector service employment rose some 850,000 to almost 92 million. Over the past 12 months, payrolls are up more 1.5 million.  The pickup is in stark contrast to the first year of the recovery, when services payrolls were essentially flat, following a deep decline during the 2007-2009 recession.  In the four recessions prior to the recent one, the number of services jobs held steady or rose slightly. In the Great Recession, some 3.4 million were lost.  During the 1990-2000 period—the longest peacetime expansion in US history—services counted for some 80% of net private sector payroll growth. In the previous US expansion, the economy added more than 6 million service jobs in the 2003-2007 period, but lost 2.5 million manufacturing ones during that time.

WSJ – mortgage rates hold near lows

Average fixed mortgage rates in the US over the past week kicked off the new year at or near record lows, according to Freddie Mac’s weekly survey of mortgage rates.  The firm noted the rate for a 30-year fixed-rate mortgage during the period matched its all-time low, making it the fifth straight week the rate has averaged below 4%.  The 30-year fixed-rate mortgage averaged 3.91% for the week ended Thursday, down from 3.95% the previous week and 4.77% a year ago. Rates on 15-year fixed-rate mortgages averaged 3.23%, down from 3.24% last week and 4.13% a year earlier.  The five-year Treasury-indexed hybrid adjustable-rate mortgage, or ARM, averaged 2.86%, down from 2.88% last week and 3.75% a year ago. One-year Treasury-indexed ARM rates averaged 2.8%, up from 2.78% the prior week, though below 3.24% last year.  To obtain the rates, 30-year and 15-year fixed-rate mortgages required an average payment of 0.8 percentage point. 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.

Job crisis to last years

Despite an upswing in hiring during 2011, the jobs crisis could last many more years as millions of Americans struggle to find work.  The US Labor department said employers added 200,000 jobs during December, many more than expected by Wall Street. In 2011 as a whole, 1.64 million jobs were created, well above the 940,000 in 2010 and the best showing since 2006.  But the number of jobs in the economy is still about 6.1 million lower than before the brutal 2007-2009 recession. At December’s pace of gains, it would take about 2 1/2 years just to get back to pre-recession levels of employment.  That means many people will be in for an agonizing wait.  In December, 5.6 million of the nation’s unemployed had been out of work for at least six months, the Labor Department data showed, only slightly lower than the previous month.  While job creation certainly picked up in the United States during the end of the year, economists point out that even a gain of 200,000 is underwhelming considering constant growth in the population and the still-high 8.5% unemployment rate.  In December, the construction industry added 17,000 jobs. But that sector, devastated by a burst housing bubble that helped trigger the last recession, has even farther to go than the rest of the economy before it can recover.  There were still almost a third fewer construction jobs in December than at the industry’s pre-recession peak in August 2006.

Olick – selling foreclosures in bulk

“The Obama Administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, are very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.  There are currently about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) and millions more are coming.  The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say. Late stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one, and, ‘the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted,’ according to LPS.  Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting heavily on the books of the government and sitting empty in the nation’s neighborhoods.

As the Federal Reserve alluded to in its white paper on housing last week, ‘A government-facilitated REO-to-rental program has the potential to help the housing market and improve loss recoveries on reo portfolios.’ REO’s (Real Estate Owned) are bank-owned properties, or, in this case, properties owned by the GSE’s and the FHA. Three Fed governors pushed for similar plans in speeches last week as well.  A pilot sales program will be starting in the very near future, according to administration officials. They are working on what the market potential is, what pricing would be, how government can partner with private investors, and who has the operational experience to manage so many properties.  ‘I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale,’ says Laurie Goodman of Amherst Securities. ‘But that means they have to build out a rental organization; it means they build out a management company because if you’re accumulating a hundred homes in Dallas that’s very different than running a multi-family building.’  A number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks. Sources close to these private bank negotiations say there is plenty of cash to buy properties, but building out a management structure for the rentals is pricey, and some investors are finding the math doesn’t add up to make it worth their while.

Larger investors want to be able to get real scale in any government program, in the range of 50, 100, 500 properties per deal, or one billion plus in assets, say officials close to the plan. That’s why the government is looking to test a combination of different approaches. Fannie Mae did a fifty million dollar sale last June, but that was on the small side. Officials are evaluating at what larger asset sales beyond that would look like.  ‘We expect several pilots that will involve both local investors and institutional investors. The goal here is to reduce supply by converting foreclosed homes into rental units,’ says Jaret Seiberg of Guggenheim Securities. ‘Less supply – even less fear about a flood of foreclosed homes hitting the market – could stabilize [home] prices.’  While much of this program will focus on local areas of distress, largely in the sand states, officials say they are looking at where the assets are today but are really more focused on where all the foreclosures will be in the future. It’s not about the stock of foreclosures currently, it’s about the flow of them over time and alternative ways to manage that flow.  Officials say they want to bring back private capital and help support rental opportunities for households, particularly when rent rates are up at the same time home prices are down.”

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

Smart Real Estate News & Commentary by Chris McLaughlin January 4, 2012

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

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

Short sales surged in second quarter: RealtyTrac

Second-quarter pre-foreclosure sales jumped 19% from the previous quarter, suggesting more banks and distressed borrowers are searching for efficient ways to offload properties that are near foreclosure, RealtyTrac said. Third parties acquired 102,407 pre-foreclosures in the second quarter, while 162,680 bank-owned homes were sold in the same period. Pre-foreclosure sales are generally short sales and properties sold within the foreclosure process. As for who is nabbing up distressed and bank-owned properties, RealtyTrac said third parties acquired 265,087 homes classified as in foreclosure or bank-owned in the second quarter. That is up 6% from the revised first quarter figure and down 11% from the second quarter of last year. The average sales price for foreclosures or bank-owned properties hit $164,217 in 2Q, down less than one percent from 1Q and 5% from the second quarter of 2010.  The sales price for distressed real estate was 32% below the average sales price of homes not in foreclosure. States with the largest quarterly increase in pre-foreclosure home sales included Nevada, which experienced a 43% increase; Washington (39%), California (38%); and Texas (34%). The states with the highest number of foreclosure sales included Nevada, Arizona and California.

Budget Deficit Estimate Cut to $1.28 Trillion: CBO

The federal budget deficit will hit $1.28 trillion this year, down slightly from the previous two years, with even bigger savings to come over the next decade, according to congressional projections released Wednesday.  The nonpartisan Congressional Budget Office says budget deficits will be reduced by a total $3.3 trillion over the next decade, largely because of the deficit reduction package passed by Congress earlier this month. Nevertheless, the federal budget will continue to be awash in red ink for years to come. Even with the savings, budget deficits will total nearly $3.5 trillion over the next decade—more if Bush-era tax cuts scheduled to expire at the end of 2012 are extended.  There is more bad news in the report: CBO projects only modest economic growth over the next few years, with the unemployment rate falling only slightly by the end of 2012. The agency projects an unemployment rate of 8.5 percent for the last four months of 2012. The presidential election is in November of that year.

“The United States is facing profound budgetary and economic challenges,” the new CBO report says. “With modest economic growth anticipated for the next few years, CBO expects employment to expand slowly.” Failure to pass a package would trigger $1.2 trillion in automatic spending cuts, affecting the Pentagon as well as domestic programs.  The new CBO report projects that the legislation will reduce deficits by a total of $2.1 trillion over the next decade. The agency also projects savings of $600 billion over the next decade from lower interest rates.

Diana Olick: Higher-End Housing Hits a Wall

Most of America won’t shed a tear for those who own higher-priced homes, especially given that the median home price in the nation has now fallen to just $174,000, but investors and homeowners alike should take note: Higher priced homes are taking a hit and the outlook for them is worse than the overall market.  That will have ramifications for recovery.  Despite the fact that just eight percent of US loans are currently jumbo, according to Inside Mortgage Finance, and that share will rise to just 10-12 percent when the conforming loan limit is lowered October 1st, high-end housing is already being hit harder than the overall market, which isn’t exactly doing so well itself. For one, weekly mortgage applications to purchase a home have been falling steadily, down 5.7 percent last week. But jumbo loan purchase applications fell 15 percent.

While sales of homes below $250,000 rose nearly 25 percent in July year over year according to the National Association of Realtors (June 2010 was the end of the home buyer tax credit, so July 2010 was artificially low, still….) sales of homes over $500,000 were basically flat.  Demand on the low end of the housing market is boosted by investors largely buying distressed properties; they either fix up and flip the homes or rent them out, waiting for the market to recover. Higher end homes have far fewer investors and may be more sensitive to a volatile stock market, as potential buyers are more likely to be invested there. Suffice it to say, we need all segments of the housing market pushing forward in order to get the full market back to health.

Markets not impacted by rise in jobless claims

Initial jobless claims rose last week, increasing by 5,000 filings for a total of 417,000 claims on a seasonally adjusted basis. That is up from the previous week’s revised figure of 403,500 claims. The Labor Department noted the numbers for the week ending Aug. 20 were impacted by 8,500 claims stemming from a labor dispute between the Communications Workers of America and Verizon Communications. Meanwhile, the advance seasonally adjusted insured unemployment rate hit 2.9% for the week ending Aug. 13, a slight decrease from the previous week’s revised rate of 3% Despite recent volatility in the stock market, analysts with Econoday said Thursday the markets “are showing little reaction to the report, which outside of the Verizon strike, points to mildly improving conditions in the labor market.”

Pre-Foreclosure Short Sales Jump 19% in Second Quarter

Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac. Over the same timeframe, a total of 162,680 bank-owned REO homes sold to third parties, virtually unchanged from the first quarter. RealtyTrac’s study also found that the time to complete a short sale is down, while the time it takes to sell an REO has increased. Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.  Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.  Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.

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