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NAR – 20% downpayment and stringent regulations unfair

A proposed rule by federal regulators to impose a minimum 20% down payment, stringent debt-to-income ratio requirements and rigid credit standards will deny millions of Americans access to safe, low-cost mortgages, according to the National Association of Realtors (NAR).  In a comment letter, NAR expressed dissatisfaction over the unduly narrow definition of qualified residential mortgages (QRM) that would be exempt from risk retention requirements. Non-QRM mortgages will have higher interest rates and fees, making home ownership more expensive or unattainable for many of today’s aspiring home owners. NAR urged regulators to withdraw the proposed risk retention rule and go back to the drawing board.

NAR criticized the proposed rule’s 20% minimum down payment requirement, saying it ignores strong evidence that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk. The low foreclosure rate among Federal Housing Administration and Veterans Administration loans, which have the lowest down payment requirements and relatively low default rates, is further evidence that the key to safe lending is sound underwriting and documentation rather than high down payments.  Based on NAR estimates, it would take more than a decade for a family with a median household income to save enough for a 20% down payment. A 10% down payment would take a family more than eight years to save. The impact on minority and first-time home buyers would be even worse, said Phipps.

The comment letter offered a number of suggestions to regulators. Considering the significantly higher mortgage rates and fees for non-QRM loans, regulators should define QRM to include safe and sound mortgages, coupled with sound underwriting and full documentation of income and assets, and require risk retention only for those mortgages with risky product features like teaser rates and balloon payments, or weak underwriting.  NAR also recommends dropping the rule’s debt-to-income ratio requirement because the marginal reduction in defaults is not worth the negative impact on consumers.  NAR is also concerned that certain underwriting elements of the risk retention proposal would further reduce access to credit for the commercial and multifamily real estate industry, which could curtail the nation’s economic recovery.

There is broad opposition to the regulators’ proposed QRM rule among banking, housing and consumer advocacy groups, who have joined forces and forged the Coalition for Sensible Housing Policy, which includes 46 organizations and is focused on drawing attention to the proposed regulation.

Consumer spending down

The Commerce Department said consumer spending slipped 0.2%, the first drop since September 2009, after edging up 0.1% in May.  Economists polled by Reuters had expected spending, which accounts for about 70% of U.S. economic activity, to rise 0.2%.  When adjusted for inflation, spending was flat in June after easing 0.1% the prior month. The decline came even as gasoline prices retreated from their peak just above $4 a gallon in early May and suggested the much-anticipated bounce back growth in the third quarter would lack vigor.  Consumer spending barely grew in the second quarter, inching up at an annual rate of only 0.1%—the weakest pace since the end of the 2007-09 recession. Spending increased at a 2.1% rate in the first quarter.  The weak spending in June reflected tepid income growth after employment growth ground to a near halt in June, with nonfarm payrolls rising only 18,000. Income ticked up 0.1%, the smallest increase since November, after rising 0.2% in May.  Disposable income ticked up 0.1%, also the smallest increase since November. But when adjusted for inflation, disposable income rose 0.3%. With real disposable income outpacing spending, savings rose to $620.6 billion from $581.7 billion in May.

Texas housing market trending at 2009 levels

Real estate markets nationwide reported steep drops after the federal homebuyer tax credit expired last year, but Texas sales continue to track alongside 2009 levels, according to the Texas Quarterly Housing Report.  While the Lone Star State’s second-quarter sales fell 12% from a year earlier, Texas’ total sales volume of 58,795 homes was inline with 2009 levels, suggesting the market is maintaining a steady pace with or without federal stimulus.  “Texas has dominated national headlines for economic strength, which makes it clear the recovery continues in our state,” said Jim Gaines, an economist with the Real Estate Center at Texas A&M University, which publishes the report.  “Given the impact of last year’s tax credits, I’m not surprised to see fewer sales this quarter compared to last year,” Gaines said. “If anything, I’m surprised to see that sales volumes didn’t lag further behind 2010.”

The median sales price in Texas hit $150,400 in the second quarter, up 1% from a year ago. The average price rose 4.6% to $201,288, suggesting strength in the high-end market. In both areas, Texas is an outlier since many other markets have experienced drops in both average and median price.  “The increase in the average price of Texas homes indicates more activity among higher priced homes,” Gaines said. “Buyers of higher priced homes have been less impacted by tightened mortgage lending standards and real estate has been an attractive investment vehicle due to instability in other investments, such as securities.”

Debt deal reached

Congressional leaders voiced confidence the Senate will vote today to ratify a U.S. debt- limit compromise that will avert a default even as it defers decisions on the nation’s finances to a bipartisan panel and may only modestly reduce deficits while slowing economic growth.  The House voted 269-161 yesterday to approve the measure, which raises the national debt ceiling enough to fund the government until 2013 and threatens automatic spending cuts to enforce a goal of cutting $2.4 trillion over the next decade.  That goal falls short of the long-term deficit savings that President Barack Obama and Republican leaders initially sought. The political obstacles to reaching even the lower target are formidable, though the measure’s sanctions improve prospects “a bit,” said Peter Orszag, Obama’s former budget director.  A $917 billion down payment in discretionary spending reductions contained in the measure is back-loaded so more than two-thirds of the cuts come after 2016. The spending reduction next year is $21 billion, less than two-tenths of a percent of U.S. gross domestic product.

Senate holds mortgage hearing

The Senate Banking Committee will hold a hearing Tuesday to develop a new national mortgage servicing standard.  In January, federal regulators announced a new initiative to develop a set of servicing standards following weaknesses in the process that arose last year.  The industry immediately began pushing for a unified approach, and regulators are at work with the 50 state AGs to align new requirements, especially for servicing nonperforming loans.

Already, Congress is hearing from those who would like to be exempted from guidelines they see as too burdensome, especially for smaller institutions.  B. Dan Berger, the executive vice preside of the National Association of Credit Unions, sent a letter to Senate committee leaders Monday asking for an exemption.  “In short, credit unions have not participated in the practices that have led to discussions about the worthiness of national mortgage servicing standards and should not be unjustly punished for the shortcomings of institutions that have,” Berger said. “While it is important that the bad actors who failed thousands of their borrowers are held accountable, we would oppose extending any new compliance burden stemming from national mortgage servicing standards onto good actors such as credit unions.”

A review of more roughly 2,800 foreclosure files at the 14 largest mortgage servicers last year led regulators to conclude that although the issues were indeed widespread, the largest institutions showed the most signs of activities such as robo-signing, dual-track foreclosures and unnecessarily delayed modifications.  Sen. Olympia Snow (R-Maine) and Sen. Jeff Merkley (D-Ore.) introduced legislation in May that would establish federal standards for mortgage servicers, but it was attached as an amendment to another bill and has yet to make it out of committee.  Testifying before the committee Tuesday will be representatives from the Hope Now alliance of industry servicers, investors and counselors and a member of the Independent Community Bankers of America.  No one from the major mortgage servicers will be taking questions at the hearing.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2010.
All Rights Reserved.

http://www.shortsalesriches.com

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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
* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Real Estate News & Commentary by Chris McLaughlin, July 24, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris
Why have thousands of people watched our YouTube video

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Housing market recovery will not be uniform across the country

According to the latest quarterly survey of housing released by The Wall Street Journal, the housing market is recovering at different rates in different parts of the country. Data released by MDA DataQuick shows that home sales in Minneapolis, Southern California and the San Francisco Bay Area rose sharply in June while data from Miller Samuel Inc, shows that there was a drop in home sales in Manhattan, Long Island, N.Y., and Charlotte, N.C., among other areas. A number of factors including unemployment and extent of foreclosure are influencing housing market recovery. Parts of California and suburbs of Washington, D.C., which know to be centers of employment, are showing signs of stability or recovery. Jody Kahn, an analyst at John Burns Real Estate Consulting, says that metro areas in Detroit, Phoenix, Las Vegas, Miami-Fort Lauderdale, Chicago, New York, Seattle and Portland, “still have a long road to recovery”. Mark Zandi, chief economist at Moody’s Economy.com, emphasized on the importance of employment for housing market recovery. “If people don’t have jobs or fear losing their jobs, then buying homes is out of the question,” said Zandi.

Government watchdog criticizes mortgage modification program

The Government Accountability Office (GAO), in a report released this week, has exhorted the government to implement measures to remove glitches in the $75 billion mortgage modification program. The Obama administration has been criticized for the lack of effectiveness of the program so far. The GAO also said the administration’s estimate of 4 million people benefiting from the program could be an exaggeration. According to the GAO, the Treasury Department expects that servicers covering 90% of the distressed loans will be covered under the program and 65% of eligible borrowers would apply. However, servicers covering only 85% of loans have signed up so far.

The data on the ground suggests that “Treasury’s estimate of the participation rate may well be optimistic.” The GAO also said it is “critically important” to implement effective controls and emphasized the need for better oversight. Officials in the Treasury Department have defended program implementation. “We recognize that challenges remain in implementation and scaling of the program and are committed to working with the servicers to overcome those challenges to reach as many borrowers as possible,” said a Treasury spokeswoman.

“Green homes” growing in popularity

With energy prices going up, homeowners are increasingly seeking the assistance of real estate professionals who are specializing in environment friendly buildings. “Many of the consumers that come to me want to know more about energy efficiency, healthy building design, what to look for in a home,” says Michael Kiefer, a real estate broker, who is a specialist in environment friendly buildings. EcoBroker, a company which provides “green designation” for real estate professionals, has trained over 5000 real estate professionals in the U.S. and abroad. The National Association of Realtors (NAR), which launched its Green Designee program last year, says the response to its program has been overwhelming. “All across the country, almost every time the courses being offered have been full,” NAR spokesman Andy Norton said. “And by the end of this year, the National Association is predicting that close to 4,000 realtors will have gone through the course, which is way ahead of the expectation.” Experts say that environmentally friendly homes often cost more than traditional homes, but the additional cost be recovered over time by way of energy efficiency. With homeowners getting more aware of the importance of environmental friendliness, the demand for real estate professionals with green certification is likely to grow in future.

Jobless checks arrive late for millions of unemployed workers

The dismal state of finances in state governments is impacting jobless individuals seeking state assistance. Sixteen states are now paying jobless workers with borrowed cash and there are considerable delays in jobless workers receiving their benefit checks. Workers who wish to file an application for jobless claims are also seeing enormous delays. While the program makes over 80% of initial payments within 3 weeks, which is slightly below federal standard, individual cases which require review are prone to delays. Labor Secretary Hilda Solis said: “Obviously, some of our states were in a pickle. The system wasn’t prepared to deal with the enormity of the calls coming in.”

When unemployment was low, delays in distribution of benefits didn’t come under the spotlight. Now it is different. “Payments are later than they should be, and later than they used to be, but states have been overwhelmed,” said Rich Hobbie, director of the National Association of State Workforce Agencies. “Considering the significant problems in the program, unemployment is responding well.” Analysts say that states were ill-prepared to meet the rise in unemployment. When the recession began in late 2007, most of the states had just about 6 months of benefits in reserve, as against the recommended 12 months of reserve. “The attitude became, ‘We don’t need a firehouse — we can buy hoses when the fire starts,’” said Wayne Vroman of the Urban Institute, a research group.

Congress applauds Goldman warrants

Goldman Sachs has paid the government $1.1 billion as the redemption value of the stock-purchase warrants it issued Treasury under the Troubled Assets Relief Program (TARP). “The Goldman Sachs TARP warrant deal is the best deal that taxpayers have got to date,” said Linus Wilson, an assistant finance professor at the University of Louisiana. “Since at least April 2009, representatives from Goldman Sachs have said that taxpayers deserve a fair return for their investments. They lived up to their word.” The investment in Goldman yielded an annual return of 23% to taxpayers. Lawmakers were pleased with the return. “That sounds pretty good,” said Dennis Moore, Democratic member of the House of Representatives. “But is it good enough?” A recent report from the Congressional Oversight Panel headed by Elizabeth Warren estimated that the Treasury Department has recovered just 66% of the value of warrants in repurchase transactions with banks. Herb Allison, the assistant Treasury secretary for financial stability, said the Treasury Department will look into the matter and will “continue to refine our process with the aim of protecting the taxpayer’s investment.” Wilson said: “Goldman has done very well under the bailout, and they just wanted to end their involvement. Everyone isn’t going to be so eager to get out quickly.”

Now on to our real estate investor education section…

Hottest Trends for 2010

Want a head start on the competition? Learn how to catch the eyes of clients with the hottest trends for 2010. From colors to upgrades, these are the styles and statements coming soon to advertisements near you.

Colors

What’s Hot…

You know that paint can make or break the look of a home but exactly which color looks best remains a mystery. Clear up the confusion by going with these sure-fire hits. According to industry leader Pantone, interior designers are opting for rich, complex color styles with earth friendly coatings.  As for colors, try yellow (Thanks to the Obama’s, yellow is the new white…even in the White House), green (the new neutral) and grey.

What’s Not…

Chili Pepper red, lavender and aqua simply scream “pain me – now!”.

Textures

Yes, textures are back and bigger than ever but forget shag rugs or faux rock walls, today’s textures are truly inspired by nature. Simple, clean lines with a functional foundation and simple form. Natural tile rather than carpeting, stainless steel rather than plastics and reclaimed wood or bamboo versus exotic hardwoods.

Appliances

European. Bigger isn’t better and American’s are finally catching on to what Europeans have known for a long time; simplicity makes sense. Kitchens are making a big comeback as people entertain at home and search for healthier – and less expensive – food options. Make it easy to prepare, clean and maintain the kitchen with quality appliances that emphasize the home rather than restaurant.

Outdoors

People are spending more time in the yard but don’t expect them to do yard work. The hottest trend is low maintenance yards that require little to no mowing, weeding and primping. With the average cost of lawn maintenance approaching $2,500 annually, people expect to derive a real benefit. Greenhouse & Gardens are making a major come-back as are outdoor entertaining centers. Fruit trees, workshops and outdoor living space is in – picture perfect lawns that require hours of unpaid work each week or high priced maintenance service are waaay out.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches (Watch out latest video!)

“Strange New Automation Strategy Closes Short Sales

Fast and Easy!”

Think of it! My new automatic system for finding and

closing short sales is letting people cut their

work-week in half… and triple their income!

If you’re ready to say good-bye to endless hours of

labor, and far too few dollars in return, find out

more for fr-ee – no cost, no obligation. Just click

the link below and join us Sunday night at 8:30 PM ET,

5:30 PM PST:

https://www2.gotomeeting.com/register/741193067
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

—-
“2 Careers That Boom in a Recession!”
I’ll tell you about one of these for fr*ee
in my no-charge, no-cost, no-obligation
webinar right here this Saturday at 3 PM ET:

https://www2.gotomeeting.com/register/899440029

Why would I do that for no charge?  Because
I want a chance to tell you about the other
high-income opportunity, too.

And I can’t do it in an email.

But If you’re finally ready to blast out of
this economic mess, then get a move on… I’d
hate for you to miss out, because we always fill
up a day or so early.  See if there’re any spots
left:

https://www2.gotomeeting.com/register/899440029
—-
There’s still a fair amount of confusion regarding the new home buyer tax credit, as the legislation isn’t final and the draft is still pending a final vote in Congress.   As you know, I’m not happy about Congress’s wimpy $8,000 credit versus the $15,000 proposed, but something is better than nothing. 

According to today’s Wall Street Journal, the tax credit is for first time home buyers only that are buying between April 2008 and June 2009.  The credit is now nonrefundable.  That means that the existing $7,500 credit is increased by $500 and no longer needs to be paid back as an interest free loan over 15 years, as was previously the case.

The National Association of Realtors provided a different window on effective dates, however.  They indicate that the pending legislation is $8,000, but that it is for purchases made between January 1, 2009 to December 1, 2009.   And if the home is resold within 3 years the credit must be recaptured on the sale of the property, but if it is held for more than 3 years it is nonrefundable.

In addition, the existing credit was ineligible for homeowners utilizing revenue bond financing.  That provision, according to NAR, has been eliminated.

Stay tuned: once the legislation passes both the House and Senate we’ll have the final facts to you ASAP! 

Now, on to our real estate investing section…

Short Sales Real Estate – The Perfect Baby Gift?

Grandparents or parents searching for the perfect baby gift should pass by those standard Savings Bonds and instead, turn to short sales for the perfect baby gift that is able to transform a life forever. Think this sounds a little “over the top”? Consider how real estate would have performed in the past by using these simple steps:

1.      Purchase an affordable short sale home in a growing area or college town. Finance it for 15 to 20 years using a fixed interest mortgage.

2.      Rent the home while the child is growing up. If you make money – consider it a big bonus or reinvest the extra to help pay tuition or other expenses.

3.      Once the child is ready to begin college the home will be paid in full. College cost will be dramatically reduced since they do not need a dorm and can actually generate a small income by renting out rooms to other college students. Less work means more study time for your future student!

4.      After college they can continue to rent for an even larger monthly profit, exchange the property for one closer to their new work location or sell the property to purchase their first family sized home…with a huge down payment and instant equity or perhaps even pay cash if desired.

5.      If they continue to hold, the property will only increase in value while gaining greater appreciation over the years.

Now ask yourself…how would your life have been different without big student loan debt? Never having to worry about a roof over your head? A small rental income coming in every month? Enough money to purchase a great family home or even a retirement account in old age? You can provide this plus so much more simply by purchasing a short sale property with a 15 to 20 year mortgage on behalf of a special child.

It is hard to determine what the future may have in store for the younger generation although most experts agree, inflation is likely to make college less affordable than ever.  As the federal government prints their way out of the current economic crisis, higher than average rates of inflation are likely to impact every area of life, resulting in severely limited futures for many young Americans.

On the other hand, even with low rates of inflation, the price of a home typically doubles or even triples every 20 years. Today’s ultra low priced short sale home could easily double or triple in value by the time your child begins college then double or triple again by the time they are in middle age. For example, a $100,000 home could easily be worth $200,000 by the time they start college – all paid in full! If inflation continued to creep along the same house could be worth $400,000 by the time they are in their 40’s and $800,000 by their early 60’s. This one gift could radically alter the rest of their productive life and even the lives of your great-grandchildren. So, buy a short sale house and place it into a trust to assure the financial future of that very special child in your life.

See you at the top!

Chris McLaughlin

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

P.S.

This week’s webinar replay is right here…

http://www.webinarwizards.com/custom/index.cfm?id=170879

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com/welcome.html
http://www.youtube.com/shortsalesriches
*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…

http://www.shortsalesriches.com/blog
*************************************************

About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month

   * Long-time authority on real estate investing
      and rapid flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

     * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building

 —

Market News & Commentary by Chris McLaughlin, January 16, 2009
http://www.shortsalesriches.com/welcome.html

——
This is your year, right??  Let’s make it happen!  Forget the headlines, forget all the negativity, and forget all the turmoil.  More millionaires are created during times like these than any other time … so are you ready to make it happen?  If so, be one of the 23 spots that we have left for our Saturday webinar at 4 PM EST and 1 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”

The link is right here, so jump on this now:

https://www2.gotomeeting.com/register/783035902

———

Even before taking the oath of office President elect Barack Obama got what he wanted for Congress.  The US Senate voted yesterday to release the second half of the $700 billion TARP fund, and the incoming Obama group has planned to allocate between $50 and $100 billion toward foreclosure prevention.  In a positive sign for Realtors and investors looking for buyers, the new President’s team has signaled that stimulating buyer demand for homes is a priority, possibly by reducing interest rates even further is part of such a strategy.  We’ll have to wait for more information to come.

Bank of America announced its worst financial performance in 17 years today – they lost $2.39 billion.  Ouch!  The bank also announced that it would take on another $20 billion in TARP money.  Why?  Two words: Merrill Lynch.  As  Bank of America readies itself to buy the brokerage firm, the bank is discovering that the “mark to market” write downs, an accounting rule that requires Bank of America to write down assets to their existing market price, not the price that they might be worth if you took the time to sell them.  How does this accounting rule affect banks? 

Let me give you an example.  Let’s say Merrill Lynch has a billion worth of mortgage backed securities.  Let’s also say that 25% of those are now in default, but 75% of them are paying just fine and are on time.  You would think that the valuation of the securities would be $750 million or less, right?  Well, given how mad investors are with the rating agencies they just don’t want them on their balance sheets.  Period.  So what would be considered $750 million worth of good loans are now worth $100 million at today’s market value.  No one wants them: they are toxic at any price!

Now let’s assume the Merrill Lynch has to recognize these assets on their financials.  What used to be a billion is now $100 million in the current market.  So even though the securities would be worth a lot more than $100 million if they were to go through an orderly process of selling off the assets, the bank is required to report it based on what it is worth now—in an illiquid market.

Now understand that we got these new “mark to market” rules after the Enron scandal, and they do have validity, because without them banks can essentially lie about what their assets are.  But in this instance, when extraordinary circumstances have created tremendous illiquidity, many banks are frankly being forced to unfairly write down assets that will be worth much more than their current liquid valuation. 

If the new Congress wants to save some taxpayer money, they should modify the mark to market accounting rules to have an outside appraisal identify what they assets are really worth versus forcing banks to mark down assets that are viewed as toxic. 

Now on to our real estate education section…

Unemployment Claims Crashing Websites – Create Your Own “Safety Net”

As pink slips pile up, jobless claims have become so prevalent they are literally crashing websites and phone systems as workers rush to file unemployment claims. New York, Ohio and North Carolina were forced to shut systems down completely due to heavy volume; considering the average unemployment wages are less than $400 per week or roughly $1,600 per month (or less), one might wonder if there is a better way to create your own safety net.

As it turns out…there is! Short sales offer investors of any background the ability to take their financial future into their own hands rather than stand in line waiting for the government to provide minimal income replacement. It doesn’t require a lot of money, time or extensive training to create your own safety net with an income stream as high or low as desired.

In less time than you might spend on “hold” when applying for a Michigan unemployment benefits (average hold time of four hours according to some clients), you could be well on your way to submitting an offer on your first short sale transaction worth thousands – or even tens of thousands. With a straight 12 months of job losses, 2008 is shaping up to be the worst on record in over 50 years. 

Learn how to create your own safety net with these short sale related resolutions for the new year:

1.      Do it daily. Each and every day do something toward growing your short sale empire. It doesn’t need to be a lot but you should get into the mindset of profit and success.

2.      Try something new. Once you master a formula that works (like the one provided by ShortSalesRiches) then continue to refine it and add to your portfolio of tools and resources.

3.      Expand. Begin small then build a base by incorporating new areas, different types of real estate or other potentially profitable relationships.

4.      Educate. Never stop learning. Find a mentor and learn from others as you go along. Share your knowledge with others along the way.

5.      Add a subscription. Find a source of reliable, pertinent and up-to-date information like that provided by the ShortSalesRiches.com/blog to keep a pulse on the trends.

6.      Query like crazy. Set a personal “outreach goal” for the next month to revitalize and jump-start this year’s success.

7.      Embrace the Internet. Learn how to use it then stick to it. If you don’t have the time to dedicate to doing it all yourself then hire someone to help. It’s an investment in success.

8.      Don’t be fearful. During tough economic times there is a tendency for people to run for cover and settle for less – often much less – rather than bet on their own skills and tenacity.

9.      Get organized. Stop procrastinating and take the time needed to put everything in its place, set up the tools you need and start using them.

10.  Be a bit of a brag! Yes, when you have a success it is important to pat yourself on the back…just be selective. While you are making thousands or tens of thousands of dollars on short sales, don’t expect your unemployed brother in law to be thrilled for you. Instead, teach him how to join you in creating a long term safety net and life you love.

See you at the top!

Chris McLaughlin

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

P.S.: Be one of the 23 spots that we have left for our Saturday webinar at 4 PM EST and 1 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”

The link is right here, so jump on this now:

https://www2.gotomeeting.com/register/783035902

—

——
Are you a Realtor looking to make serious money in 2009?  The Holy Grail of REO is coming to an end, as the last of 50 Seven Figure REO Wealth Building Systems will be sold this weekend.  The other 450+ systems flew off the shelves this week. The product was developed by Chris Guldi, one of the TOP REO Agents in 2008 with GCI from foreclosures over $1.5MM.  If you want his secret list of asset managers and tricks to making more money than ever in real estate, go here now to be among the final 50 to listen to Chris LIVE on Saturday at 5 PM ET:

https://www2.gotomeeting.com/register/693464027

——

There was a little bit of news that dampened the New Years’ good spirits today, as the Labor Department reported that the nation’s unemployment rate is now 7.2%, the highest level in 16 years.  For the full year in 2008, there was a net loss of 2.6 million jobs.  And the news is expected to worsen, as a lot of companies that put off layoffs due to the December holidays are now in full-blown layoff mode.   In another sign that incomes are dropping, corporate America also reduced the American workforces’ hours to an average of 33.3 hours, the lowest level since records began on the subject in 1964.   President elect Barack Obama stated that “Today’s jobs report only underscores the need to move with a sense of urgency and common purpose.”

Now on to real estate investor education …

New Year’s Resolutions for the Short Sales Investor

Admit it. Your New Year’s resolutions look a lot like last year’s list don’t they? If you are like most people then near the top of your list is “get in shape” followed by some type of ambiguous financial goals. The trouble with most New Year’s resolutions is they fail to energize, motivate – or even make sense. When was the last time you REALLY got excited about cutting back or doing without? Rather than emphasize the negative, it’s time to create a realistic list of positive goals designed to make a lasting difference in your life. Here are some more tips designed to transform wishful thinking into reality for the coming year.

1. Write it Down. Researchers have discovered the mere action of taking the time to write it down increases the odds of actually putting the plan to work.
2. Tell it to Others. Commit to the plan of action by making it known to others; whether in person, via telephone or simply as part of an online discussion. Let others know of your goals.
3. Be Specific. Get into the nitty-gritty details; duration, specific amounts, locations or other pertinent information should be spelled out in as much detail as possible.
4. Measure Continuously. Set a schedule to measure progress on a continuous – and frequent basis.
5. Work toward it Daily. Make it a regular part of your routine to do at least one item toward your goal on a daily basis throughout 2009.
6. Dare to Dream. Don’t discount your own dreams or ability to profit…it is what excites and motivates people to take action. While the rest of America is sitting on the side-lines while the greatest buying opportunity of a generation sits in front of them, those who dare to dream of a better life are capitalizing upon it.
7. Get a Mentor. It is important to banish negativity from your vocabulary and personal goal’s; while a healthy dose of constructive criticism is always warranted – that is quite different from negativity. Constructive criticism is born of information and experience while negativity stems from fear. Surround yourself with knowledgeable professionals who are successful in the short sales field rather than those to fearful to take action.
8. Educate Yourself. Information and education are key to growing in any field. In fact, common wisdom holds it takes a minimum of 1,000 hours to become fully informed about any given topic. To put this into perspective, 1,000 hours is the equivalent of 25 weeks of full-time work. Fortunately, you don’t need to start from scratch. Benefit from the wisdom of others that have gone before you and customize it to your own situation.
9. Invest in Success. Perhaps one of the biggest mistakes most real estate investors make is failure to invest in success. Whether it is your time, money or simply opportunity cost required to put short sales real estate to work – the fact is you must make up your mind to invest in your own success before anyone else will follow.

Cram-Downs Could Hurt

If some members of Congress have their way, one aspect of the foreclosure prevention plan formerly shunned by lawmakers may be revived. It could spell bad news for banks should it come to pass: mortgage cram-downs. Essentially, the legislation would allow judges the right to rewrite a mortgage in order to make it more affordable to the current homeowner. While initially that may appear to be a good idea, critics point to several potential pitfalls:

1. Increased losses among banks. Currently, loan modifications among homeowners demonstrate dismal rates; in fact, nearly half are already falling behind. Critics point to a worsening of the current housing crisis that could spread on for years rather than putting the worst behind us and getting on with the future by selling the homes to those willing and able to make them profitable.
2. Restructuring may increase long-term competitive interest rates. By allowing a judicial mortgage modification on a “per case basis” there is fear it could slow the long term recovery of the housing market by driving prevailing market rates higher. Banks will no longer be able to justify mortgages on individual risk and will be required to offset losses in much the same manner as healthcare increases rates to compensate for write-off’s.
3. Decreased lender incentives. Currently many banks are willing and able to negotiate new terms based upon individual situations but federal oversight could standardize what is/isn’t expected.
4. Increased down payments. If passed, reform measures are also likely to increase the down payment requirements, PMI and other associated costs of obtaining a new mortgage in addition to the increased long term interest rates. Once individual assessments are not able to be adequately measured and predicted, lenders will be forced to compensate by adjusting all rates to the potential risk of under-writing less qualified individuals and homeowners.
5. Negative Incentives. To date, most mortgage modification programs have worked with current homeowners to restructure the interest rate, duration and other terms of the mortgage without impacting the principle owed. Increasingly, cram-down advocates are calling for the ability to totally re-write both the terms and principle amount of the mortgage owned creating the potential for a negative incentive.  Because of this potential problem, advocates are also urging Congress to consider implementing more aggressive bankruptcy reform measures aimed to prevent both foreclosures and associated bankruptcy proceedings.

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See you at the top!

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

P.S.:

My good friend Mike Collins is dead serious about
this “Get the People Educated” mission he’s on.

He promised you hard-core real estate investment videos
to jump start your 2009.

https://rehablist.infusionsoft.com/go/smash/NJur1

P.P.S.:

Are you a Realtor looking to make serious money in 2009?  The Holy Grail of REO is coming to an end, as the last of 50 Seven Figure REO Wealth Building Systems will be sold this weekend.  The other 450+ systems flew off the shelves this week. The product was developed by Chris Guldi, one of the TOP REO Agents in 2008 with GCI from foreclosures over $1.5MM.  If you want his secret list of asset managers and tricks to making more money than ever in real estate, go here now to be among the final 50 to listen to Chris LIVE on Saturday at 5 PM ET:

https://www2.gotomeeting.com/register/693464027

Mid-Day Market News & Commentary by Chris McLaughlin, December 2, 2008
http://www.shortsalesriches.com/welcome.html

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What if there was someone who would lend you money for 24 hours, regardless of your credit, your income, and whether you just filed bankruptcy?   What if you could then re-sell a property in that time and make a fortune?  What if is now reality … join us for our amazing webinar tonight!  Only 27 spots left:

Recession Proof Investing Webinar (Tuesday, 9 PM EST, 6 PM PST):

http://www.recessionproofinvestingwebinar.com

—–

Listen up folks.  You need to start calling your investors …calling those fence sitters that have been sitting too long.  The Federal Reserve just said they are going to start buying Treasury notes and bonds.  Let’s review some gobbly gook FedSpeak that Fed Chairman Ben Bernanke said yesterday in Austin, Texas:

“The second arrow in the Federal Reserve’s quiver – the provision of liquidity – remains effective,” he said. “The Fed could purchase longer-term Treasury or agency securities on the open market in substantial quantities. This approach might influence the yields on these securities, thus helping to spur aggregate demand.”

Did you catch that?  Folks mortgage rates are going EVEN LOWER.  Why?  Mortgage rate are directly tied to the 10 year treasury.  As the Fed comes in and buys them up, that will send the yield on the treasury even lower, therefore reducing the overall rate on the 30 year mortgage.   

And there’s more good news.  Just last week the Fed announced that it would be buying $100 billion in debt from Fannie and Freddie, and around $500 billion in mortgage backed securities.  Now what do markets do?  They anticipate action and price it into the equation … so if you’re a Realtor, a loan officer, or a real estate investor, this is our version of a Bailout.  Look for the 30 year fixed to stay well below 6%!

If, however, you agree with us that the government is mostly filled with morons that have been botching up this economic recovery after causing it, be sure to catch our recorded webinar on the topic:

www.shortsalesricheswebinar.com

Ok, on to other real estate related news of the day…

Are you ready for this new statistic, reported today by the Wall Street Journal?  TransUnion LLC, the Chicago-based credit bureau, predicts that 7.17% of consumers will be at least 60 days past due on their mortgages by the fourth quarter of 2009.  That’s nearly double where it is today.  “There are a lot more loans that will be resetting throughout 2009 through 2011,” Ezra Becker, principal consultant in TransUnion’s financial-services group, told the Journal.  “There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now.”

If you think that REOs and short sales are slowing you need to get your head on straight!  They will EXPLODE in 2009.  Loan modifications can only have so much impact …

Bank of America announced today that it would be eliminating at least 10,000 investment banking jobs as it soaks up Merrill Lynch.  The combined companies will have about 260,000 employees, with 50,000 representing the investment banking division.

And finally … someone got a brain in the public relations department at the Big 3 Automakers.  General Motors announced today that its CEO, Rick Wagoner, would drive to Washington instead of flying.  The CEO, who flew by private jet sipping champagne (ok, I through the champagne in for effect…you get the idea!) for his last appearance, will drive a Chevy Malibu hybrid from Detroit to DC.  Ford’s CEO, Alan Mullaly will also be driving from Detroit.  Now … it would be a public relations bonanza, and it would certainly send the right message, if we could get the two of these guys to share a ride!

Now, on to our real estate investor education section…

All Pain and No Gain? Not so Fast!

While the most recent data released by the Federal Housing Finance Agency FHFA may initially seem to indicate “all pain and no gain” taking time to delve a little deeper into the numbers shows a few clear-cut nuggets in an otherwise pan of silt.

First the pain…

U.S. home prices fell 1.8 percent in Q3 as compared to the previous quarter…the largest in the purchase only index 17 year history.

Over the past year prices have fallen 6.0 percent between Q3 of 2007 and Q3 of 2008 – not adjusted for inflation. Since the price of goods and services increased by 6.7 percent during the same period, the inflation adjusted decline is 12.7 percent.

Four states continue to see double-digit declines including Nevada (-20.9%), California (-20.8%), Florida (-16%) and Arizona (-13.5%).

A Few gains…

Some states actually managed to exhibit price increases even while most of the nation continued to show declining sales figures; North Dakota (4.0%), South Dakota (3.9%), Texas

(3.2%), Alabama (2.8%), and Oklahoma (2.8%).

Several MSA or Metropolitan Statistical Areas also showed price appreciation including Austin-Round Rock, TX (5.6%), Augusta-Richmond County, GA-SC (5.5%) and Rapid City, SD (5.4%).

Extension of higher conforming loan limits into 2009. While the recent increase to $729,750 for high cost areas is due to end by January 1, 2009, revisions due to take effect will increase loan limits to $417,000 for all homes and up to $625,500 in high cost areas.

Quick Tip…

Take time to sign up for automatic notification of the FHFA report as it is released by sending an email to FHFAinfo@FHFA.gov. The next quarterly report covering Q4 of 2008 is scheduled for the end of February 2009 and the next monthly index is due out on December 23, 2008.

More on Wednesday!

See you at the top!

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

P.S.:

If you have the chance make sure you jump on this link now, to get the insight into why the foreclosure market is going to be THE PLACE to invest:

http://www.shortsalesricheswebinar.com

Don’t miss it – everyone that has watched it says it is perhaps the most useful tool in understanding what’s going on in the real estate market, and how to make money in today’s environment.

P.P.S.:  Join us from our next webinar TONIGHT:

A Recession Proof Real Estate Investing: Making Money in ANY Economy! 

We’ll show you how to make money with no credit, no capital, and no holding costs!  Think we’re crazy?  Find out now!

http://www.recessionproofinvestingwebinar.com

We’re limiting the webinar to 27 registrations to give individual attention to those who join … so jump on this link to register:

http://www.recessionproofinvestingwebinar.com

Join us tonight, Thursday, October 23^th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/745919360

There are only 17 spots left … log on now to claims yours!

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This probably won’t come as a surprise to the many Realtors and investors reading this e-mail, but RealtyTrac announced today that US foreclosure filings were up 71% in the third quarter over the same period last year.  Almost 766,000 homeowners had a sheriff show up at the door and with a foreclosure complaint in hand.   Six states made up for nearly 60% of the list: Arizona, California, Florida, Michigan, Ohio, and Nevada.   If you think for a moment that short sales and REOs are just a 2008 event you’re crazy.  This will continue well into 2010 as the market absorbs the inventory that is just now coming online…

Alan Greenspan, famous for his “irrational exuberance” comments that took the air out of the Internet bubble, now has a new moniker he’ll be known for: “Credit Tsunami.”  Greenspan testified before Congress this morning and told lawmakers that he was in a state of “shocked disbelief” over the extent of the credit crisis and the credit tsunami that has ensued. 

The former Fed Chairman said that the key to relief will be stabilizing home prices, which he doesn’t foresee happening for “many months in the future.”  “Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.” 

In banking news, the venerable Goldman Sachs plans to announce today that it will lay off 3,260 employees, reducing its workforce of 32,500 by 10%.  

Now, on to our real estate education section …

Back to the Future

Ahhh, the good old days. It may be hard to believe but there was a time when the average selling price of a home in this nation was under $30,000…in fact, it cost $28,900 to purchase a middle class home in 1973…a mere 35 years ago. Of course, gasoline cost 38 cents a gallon, a first class postage stamp was 8 cents and a dozen eggs were 45 cents.  Yes, wages were also lower with the median family earning just over $12,000 a year…but it took $8,000 a year to qualify for the mortgage leaving the average family an extra $4,000 a year to save or spend as they see fit…nearly 1 out of every 3 dollars earned.

Today all of that has changed. The average cost of a home is over $200,000, gasoline is $3 to $4 a gallon, stamps seem to go up by the week and a dozen eggs are $3 to $4 a dozen. Although wages are higher, the median household income of $52,000 leaves less than $7,000 needed to qualify for the mortgage even with lower interest rates.

Ask yourself one simple question…how many houses would you have bought for $28k in California, Florida or other areas of the country in 1973 if you had the opportunity? Remember, this was the median selling price –many homes could be bought for much less! Let’s take a quick walk down memory lane to see the price of homes throughout the years:

1973: $28,900

1977: $42,900

1979: $55,700

1981: $66,400

1984: $72,400

1988: $89,300

1990: $97,300

1992: $102,700

1995: 117,000

1998: $136,000

2000: $147,000

2002: $167,000

2004: $195,000

2006: $221,000

2007: $217,900

Yes, short sale investors will notice the cost of a home has dropped in recent years but take a look at the big picture and ask yourself if it would have been a good idea to have bought 10 or 12 of those homes back in 1973…for the price of one today. What would your net worth look like now if you had?

There are two people in this world…those that let inflation work for them and those that are consumed by it. Short sale investors buy low and sell high. In recent weeks and months the Federal government has been printing money like never before. Experts agree inflation is likely to consume the savings and retirement accounts of millions of Americans like never before. Sooner or later the price of goods and services is likely to increase as the ravages of inflation resume their never ending progression. Make it work for you not against you.

See you at the top!

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

Phone: (800) 452-7627

P.S.: 

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

Join us tonight, Thursday, October 23^th (Tuesday) at 9 PM EDT, 6 PM PST:

https://www2.gotomeeting.com/register/745919360

RSVP early as spaces are limited!

P.P.S.: If you already have the system, are you ready to really take it to the next level?  Go to http://www.shortsalescoach.com to learn how.