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Foreclosures Fall

admin — Fri, 17 Jun 2011 14:24:02 +0000

Smart Real Estate News & Commentary by Chris McLaughlin June 9, 2011

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Foreclosures fall

According to RealtyTrac, the online marketplace of foreclosed properties, foreclosure filings fell 33% In May from a year earlier and 2% month-over-month. The number of homes repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year. The huge year-over-year drop in foreclosures doesn’t necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the “robo-signing” scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents. There’s another factor at play, as well. The banks can’t sell the homes they’ve already seized so they aren’t as incentivized to repossess more homes. “There’s weak demand from buyers, making it tough for lenders to unload their REO inventory,” said Saccacio. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.” The banks don’t want to take on the expense of maintaining the homes — property taxes, heating costs, repairs and insurance — if they can’t sell them quickly. Selling off the inventory of repossessed homes is crucial to the housing market.

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they’ve stamped out the last vestiges of the robo-signing issues. Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third. The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households. A year ago, it was in the top four, along with the other “Sand States.”

Nearly 50% of Americans see another recession coming

According to a new NBC News/Wall Street Journal poll, nearly half of all Americans, and two-thirds of Republicans, believe the country is headed back into recession. A 54% majority disapproves of Obama’s handling of the economy. “The public is incredibly pessimistic about the future,” said Peter Hart, the Democratic pollster who conducts the NBC/WSJ poll with his Republican counterpart Bill McInturff. President Obama’s overall job approval dipped back to 49% from 52% in May. That signals that the popularity boost he received after the special forces raid that killed Osama bin Laden has faded. the challenge facing the president was evident when voters are asked whether they intend to support him or the Republican candidate in 2012. Obama led by a narrow 45 to 40 margin, down from 49% to 30% in May. The survey showed continued deep concern about government spending; some 63% said Washington should focus more on reducing the deficit even if it slows economic recovery, and a 45% plurality of Americans believe the 2009 economic stimulus didn’t help the economy. On raising the federal debt ceiling, Americans are split. A 39% plurality said it should not be raised, while 28% said it should be and 31% said they didn’t know enough.

Housing starts up

The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 612,000 last month, up 8.7% from the revised rate of 563,000 in April, the Commerce Department said. It was the highest monthly rate since December and was much higher than expected, with economists surveyed by Briefing.com looking for a 548,000 permit rate. Permits for single-family homes, viewed as a more stable indicator of new homebuilding activity than permits for multi-family home construction, ticked up 2.5% from April to a rate of 405,000. Housing starts, the number of new homes being built, rose 3.5% in May to an annual rate of 560,000 units from a revised 541,000 in April, the Commerce Department said. Economists had expected an annual rate of 540,000 units, according to consensus estimates from Briefing.com. Construction of single-family homes rose 3.7% to a rate of 419,000.

While permits are typically viewed as an indication of builders’ confidence in the housing market, the big jump in permits could have had a lot to do with seasonality, even allowing for the government’s adjustment, said Doug Roberts, chief investment strategist for Channel Capital Research. Roberts said that this is the prime time of year to begin construction, given the better weather. And given the flooding and bad weather in April, many builders may have gotten off to a late start — leading to a jump in permits and housing starts last month. “These are the months where the most construction occurs, so this increase could be more of a seasonal blip,” he said.

Financial regulators face limits

Under a bill released Wednesday by the House Appropriations Committee, the U.S. Securities and Exchange Commission would be denied a dramatic funding increase for the 2012 fiscal year. The Republican-led committee’s bill would also strip the newly created consumer financial watchdog of its independent funding, subjecting it to the politically charged budget process starting in 2013. “This new agency created by the Dodd-Frank legislation has not yet been fully constituted and many questions remain as to its authority and mission,” the committee said in a statement. The funding for the SEC would be kept steady at $1.2 billion for the fiscal year that starts Oct. 1, according to the bill. The Obama administration had asked for a $222 million bump in funding for the agency that was given more responsibility to police markets in last year’s Dodd-Frank financial reform law. Republicans are trying to attack the overhaul of financial regulations by denying funding to agencies responsible for overseeing the reforms.

Olick – foreigners jump into real estate market

“Falling home prices may be plaguing the US economy, but they are candy to foreign investors, who already have a weak dollar on their side. Buyers from overseas spent roughly $41 billion on US residential real estate last year, a bump up from the previous year. US real estate agents report a surge this Spring especially, as foreign buyers see continued pressure on home prices and ample bargains. ‘I don’t think they’re so concerned about the prices dropping as they are about getting value for their money,’ says Rick Ambrose, a Coldwell Banker agent in Lake Mohawk, NJ. Ambrose and his colleague Mary Pat Spekhardt recently hosted two groups of Japanese investors searching for homes on the scenic lake just about an hour outside of New York City. ‘They can work here, be close to the city, be close to their corporations and still feel like they’re on vacation. I think that’s really what grabbed everybody. That’s what got them,’ says Spekhardt. The group of about 35 from Japan also toured properties in Las Vegas and Los Angeles, which are more popular choices among foreign investors.

A new survey by Trulia.com that tracks searches from potential foreign buyers found LA ranked number one in potential interest traffic, trailed by New York City, Cape Coral, Fl, Fort Lauderdale, FL and Las Vegas. The greatest interest is from buyers in the UK, Canada and Australia. ‘Prices now in the US are generally 30-40% off from the peak. In addition, the weakness of the dollar gives the Japanese an advantage, as it does the Europeans, of another 20-25% off, so they’re seeing real bargains and opportunities,’ notes Ambrose. The interest is pretty widespread, with Brazilians trolling Miami and Russians and Chinese hunting in Chicago, according to Trulia’s survey. What’s so interesting to me, though, is that foreigners are so much more ready to jump into the market now than US investors. Granted, they have, as noted, the weak dollar on their side, but they also seem to have a longer term view. US buyers are so afraid to lose a little in the short term on paper, they don’t realize they could gain a lot in the long term. Of course foreign buyers are largely using cash, which many US buyers are lacking. Credit, or lack thereof, is playing against the US investor. Prices in Miami are actually beginning to recover, especially in the condo market, thanks to foreign buyers, so much so that the foreigners are beating out the Americans.

I remember all the rage a long time ago when the Japanese were buying up commercial real estate in New York City. Everyone was so appalled. Not so much now, even up in Lake Mohawk, NJ…’It isn’t popular. It is unforeseen territory, and it’s unique. I think it’s a very smart choice. It’s not where everyone is looking,’ says Spekhardt.”

Data hopeful for the economy?

Initial claims for state unemployment insurance slipped 16,000 to 414,000, the Labor Department said on Thursday, suggesting the jobs market was regaining some momentum after stumbling badly in May. Initial jobless claims remained above the 400,000 level for a tenth straight week. Economists say claims would need to drop below that level to offer a clear sign of an improving labor market. U.S. financial markets, however, were little moved by the data, which was eclipsed by concerns Greece could default on its debt. “The broader theme we have to look at is that the pace of job destruction is slowing but the pace of job creation is also a bit tepid,” said Ian Pollick an economic strategist at TD Securities in Toronto. A report earlier this month showed U.S. employers added a scant 54,000 workers to their payrolls in May, with the jobless rate rising to 9.1%. The report on jobless claims showed the number of Americans who continued to receive benefits under regular state programs after an initial week of aid eased to 3.68 million from 3.70 million in the week to June 4, the latest week for which data is available. Under all benefit programs, including emergency benefits extended by Congress, 7.4 million were on the rolls in the week ended May 28, down about 200,000 from a week earlier. The data suggested the long-term unemployed were finding it somewhat easier to find jobs, although if May’s dismal pace of job creation continues their hopes could be dashed anew.

Home builders confidence low

The National Association of Home Builder’s sentiment survey fell three points in June to 13, as builders face not only competition from distressed properties, but rising costs of materials. Fifty is the line between positive and negative sentiment on the survey. “Roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. Builders reported weaker confidence in current sales and buyer traffic, which in turn pushed them to revise their sales outlook over the next six months. The “expectations” component of the survey dropped four points to tie a record low set back in February of 2009.

As the big banks, Fannie Mae and Freddie Mac ramp up short sales and foreclosures and funnel ever more distressed properties onto an already overflowing market, pressure on home prices continues unabated. Prices nationally fell 5.1% in the first quarter of this year compared to one year ago, according to the S&P/Case Shiller Home Price Index. Researchers there declared the “double-dip” in prices for the first time since home prices began recovering with the help of the home buyer tax credit in 2009. “Potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy,” notes the NAHB’s chief economist David Crowe. “Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”

See you at the top!

Chris McLaughlin

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

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)

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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

Construction spending figures likely to fall (January)

admin — Tue, 01 Mar 2011 21:04:37 +0000

Smart Real Estate News & Commentary by Chris McLaughlin March 1, 2011

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Construction spending figures likely to fall (January)

The consensus view of economists is that builders trimmed their activity by 0.5% in January following declines of 2.5% in December and 0.2% in November. The Commerce Department will release the new report at 10 a.m. today. The consecutive declines in November and December pushed building activity down to a seasonally adjusted annual rate of $787.9 billion in December, the lowest monthly level since July 2000. That surpassed the previous low hit in August and underscored that conditions in the building industry remain extremely weak.

Analysts said a healthy level for construction would have total spending around $1.5 trillion, about double the current level. That building pace is not expected to be reached until the middle of this decade. For all of 2010, construction spending fell by 10.3%, marking the fourth annual decline. Builders have struggled with falling demand since the housing bubble burst. The housing downturn helped push the country into a deep recession and that downturn cut into demand for office buildings, hotels and shopping centers. Homebuilders are having hard time competing with record foreclosures which dump even more supply onto a glutted market. And the budget crisis at the state and local level, along with fading federal stimulus money, means governments are pulling back on other types of projects such as highway construction.

CEO calls Obama “anti-business”

3M CEO George Buckley called Obama’s policies “Robin Hood-esque” and told the Financial Times that manufacturers like 3M may have to shift production to other countries in order to stay competitive. “We know what his instincts are … he is anti business,” Buckley said in an interview that ran late Sunday. Buckley said his company, which makes thousands of products ranging from Post-It notes to Scotch Tape, “will do business where it’s good and friendly.” Buckley says he’s not alone. “There is a sense among companies that [the U.S.] is a difficult place to do business,” he told the FT. “We’ve got a real choice between manufacturing in Canada or Mexico — which tend to be more pro-business — and America.” Former General Electric CEO Jack Welch agrees. Welch said the supposed shift toward the center from the president’s liberal base hasn’t amounted to much as far as policy is concerned. “The tack to the center is verbal, it’s not actionable,” he said.

As an example, he cited Obama’s move last month that permitted employees of the Transportation Security Administration to unionize. The directive has come under criticism as further evidence of the president’s anti-business position and a further placation of organized labor. “Let’s hope he’s moving to the center,” Welch said. “But from what I see—unionizing 43,000 TSA workers on a Friday and giving a speech (to the US Chamber of Commerce) Monday morning—show me the money.”

Olick – builders may be doing better than we think

“Last week the Realtors were on the block, criticized for overestimating the number of existing home sales in 2010. They admitted there were some issues with their ‘benchmarking,’ and are currently working on a quick fix. That acknowledgement was certainly a bombshell to those of us who cover housing, but it didn’t really affect investors, as it’s more of a macro-economic issue than a tradable one. Well here’s a new one that could affect how you stock players trade. Housing analyst Ivy Zelman, much renowned during her time at Credit Suisse for calling the crash of the subprime mortgage and charting adjustable rate mortgage resets, tells me the Census Department’s data on sales of new construction is also way off: ‘In December, our survey channel checks implied a 12% sequential decline in seasonally-adjusted new home sales, which was consistent with what the public builders had said throughout earnings season, yet the Census reported an 18% increase.”

“In January, our survey suggested that gross new home orders increased 11% on a seasonally-adjusted basis, yet the Census data released today (Thursday) reported a 13% decline. We were estimating a new home sale pace of 395,000 and the Census reported 284,000, but given the significant divergence between our December estimate and the Census’ results, we weren’t overly surprised to see the January number fall below our forecast.’ ‘While it would appear that the Census’ numbers are troubling for new home sales, and you are right that new home inventory is depressed, we believe the new home sales pace is materially above what the Census has reported in recent months, suggesting there is not as much ‘doom and gloom’ on the new home side as what is being widely reported.’ So why do the two diverge? Zelman’s researchers say it may be the very small Census sample size, which leads to a huge margin of error (in the Northeast it was +/- 82.5% in January!). It may even be in the low-to-mid single-digit range. Zelman’s survey covers 13% of the total new home market, and is made up entirely of private builders. The public builders represent another 30-40% of the market.”

Gas prices up

The national average price for a gallon of regular gasoline rose Tuesday to $3.375, according to AAA. That was up 0.7 cent from $3.686 a gallon on Monday, and marked the seventh day in a row that prices have increased. Gas prices nationwide averaged about $3.17 a gallon last month, compared with $2.65 a gallon in February 2010. As in recent weeks, Hawaii reported the highest gas prices in the nation, with drivers in the state paying an average of $3.784 a gallon. The lowest gas prices were in Montana, at $3.065 an average gallon. US oil futures for April delivery were holding near $97 a barrel on Tuesday, down from a high above $103 last week. Oil prices had already been drifting higher before the protest movement that started this year in Tunisia spread to Egypt, Libya, Yemen, Bahrain and Oman. Analysts worry that prices could spike again if other oil-exporting nations are destabilized. Gas prices remain below the record highs seen in July 2008, when the national average price rose to $4.114 a gallon. Consumers cut back on driving and curtailed discretionary spending the last time gas prices rose above $4 a gallon, and many economists worry that a sustained period of high gas prices could hurt the still fragile economy.

Home prices drop 4.3%

US home prices fell 4.3% on a year-over-year basis in the fourth quarter as foreclosures and slowing sales buoyed inventory levels, Freddie Mac said Monday in its Conventional Mortgage Home Price Index. “Foreclosed-property and short sales remain a big part of the market. However, new foreclosures will begin to gradually slow,” said Frank Nothaft, Freddie Mac’s chief economist. “Delinquency rates reported by the Mortgage Bankers Association continue to recede from their peaks but remain high, particularly in distressed areas of the country.” Home prices fell in every US geographical region in the fourth quarter, with the steepest declines occurring in the Mountain region, where home values fell more than 4%. The region includes the states of Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming. Home values in the mountain region also plummeted 9.6% in the past 12 months and 20% over a five-year period. Prices remained the most stable in the Mid-Atlantic region, where the states of New Jersey, New York and Pennsylvania experienced a 1.1% drop in fourth-quarter home prices.

WSJ – US dollar shunned

For years, whenever significant political or financial turmoil reared its head anywhere on the globe, investors would turn to the U.S. dollar as a safe haven. Yet as the chaos in North Africa has grown over the past month, investors have largely shunned the dollar and sought shelter elsewhere. They have turned to other traditional islands of stability, buying Japanese yen and the Swiss franc. What has especially raised eyebrows has been the move by investors to buy euros, a currency traditionally seen as a riskier prospect than the dollar, especially with the euro zone’s debt problems still largely unresolved. This has sparked a debate over whether the dollar has lost its safe-haven status. “Over the last 20 years, people have always moved into the dollar on any sort of uncertainty in the global economic space, but what we’ve seen over the past two weeks is actually a terrific move out of the dollar,” says Douglas Borthwick, a managing director at Faros Trading in Stamford, Conn.

That, he says, reflects the emergence of a lack of confidence in the dollar as a safe place to stash money in times of trouble, thanks in part to concerns about rising government budget deficits in the US Some say it reflects a broader move in global financial markets where, very slowly, the dollar is facing competition from other currencies as a reserve currency. Others see the lack of dollar buying as reflecting the specifics of the turmoil that started in Tunisia in late January and has spread over the past month. The inflationary impact of rising oil prices is seen as tilting the odds more in favor of interest-rate increases in Europe. In the US, the Federal Reserve has said it still believes core inflation is contained, despite rising energy prices. So for now, the argument goes, there are better safe havens available to investors than the U.S. currency. Even on individual days when events have sent a scare through the financial markets, the dollar hasn’t benefited.

On Jan. 25, when the protests in Egypt first flared up, the euro advanced more than two cents to almost $1.39. This contrasts with other episodes of flight-to-safety currency buying in the past. During the 2008 global financial crisis, the dollar rose by roughly 24%. Analysts at BCA Research also point out that some investors also are looking to gold as a more appealing safe-haven investment. “We would agree with this assessment,” the analysts wrote. Gold rose 5.7% in February, its biggest monthly gain since April 2010. With investors increasingly wary of the ability of the U.S. to solve its fiscal problems and the Fed perceived to be “printing dollars” as part of its quantitative-easing strategy to support the economy, there’s less confidence that the U.S. dollar is “safe” in the sense, Mr. Borthwick says. “It’s the knee-jerk reaction that matters,” he said. “Nowadays the knee-jerk reaction is buy euros and not to buy dollars. The mindset of buying euros is a complete switch.”

Now for our real estate education section…

The Scoop on Starter Homes

Only a few short years ago starter homes were scorned by all but the most impoverished home buyer. Why purchase a property in need of improvements when it was possible to buy a sparkling new McMansion with no money down instead? Today all that has changed as investors and first-time buyers, retirees and former homeowners in search of more financial security all compete for affordable dwellings without the high carrying cost.

In fact, starter homes are among the most highly sought after types of real estate on the market today. A recent nationwide survey indicates some major changes in the mindset of buyers including a near complete reversal regarding who is purchasing so called “starter homes”.

Trend #1 – Investors not first-time buyers seeking the deals.

Among first time buyers, 87% cite the need for a “move-in” ready home. Increased down payment requirements combined with little access to second mortgages has made it difficult for new buyers to foot the bill for improvements or modifications.

Take away – Short sale investors and wholesalers are positioned to reap the rewards by providing property that is move in ready especially for homes selling in the $100,000 or below price range.

Trend #2 – Location still matters most but urban is making a big come-back.

First time buyers are rejecting rural and suburban areas with long commutes in exchange for homes located near major shopping, public transportation, employment and schools.

Take away – Make the most of urban renewal programs or other incentives by purchasing in historic districts, revitalization zones or other areas with appealing access. Like the old adage “everything old is new again”, expect this trend to continue into the near future.

Trend #3 – Better by the dozen.

In this interesting tidbit, the same study found new home buyers are now looking at nearly a dozen different homes (in person) before making a final decision. This is after taking advantage of online photographs and virtual tours, Google maps and other tools.

Take away – It is essential to provide as many photographs, links and other tools as possible to attract attention to your properties. Buyers understand the advantages to shopping online so make it easy for them to find relevant information that will lead them to view the home in person. Be sure to mention school districts, parks, shopping and other meaningful amenities up front then follow-up with ample photographs and virtual tour when possible.

See you at the top!

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

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.

* 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
–

FBI looking at foreclosure mess

admin — Thu, 21 Oct 2010 14:13:33 +0000

Smart Real Estate News & Commentary by Chris McLaughlin October 20, 2010

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Straight talk from Chris McLaughlin about the REO Riches Formula system.

Watch a 15 minute video from Chris that talks about the strengths and weaknesses of this system and help determine whether it is right for you:

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FBI looking at foreclosure mess

As much as the big banks want to end the mess and move on; as much as the country NEEDS this mess to be over, it looks like it’s around for a while. Attorneys general in all 50 states are jointly investigating whether lenders violated state laws, lawyers for evicted homeowners are preparing lawsuits against major lenders, state judges have signaled they will review the banks’ foreclosure documents with skepticism, and lawmakers on Capitol Hill plan to hold hearings. On top of all that, now and unnamed official has told CNBC that the FBI is in the initial stages of trying to determine whether the financial industry may have broken criminal laws in the mortgage foreclosure crisis. The law enforcement official says the question is whether some in the industry were acting with criminal intent or were simply overwhelmed by events in the wake of the housing market’s collapse.

The official spoke on condition of anonymity because the investigation is just getting under way. Hundreds of judges around the country have the authority to penalize bank officials who violate their procedural rules. They could also force thousands of foreclosure cases to go to full trials rather than issue a quick ruling. Judges won’t take well to banks that filed erroneous documents with their courts, said Indiana Attorney General Greg Zoeller. “There could be some serious consequences,” including criminal charges, Zoeller said. Even if there aren’t, lawsuits are likely to continue for years, said Guy Cecala, publisher of trade publication Inside Mortgage Finance. “Some of these plaintiffs’ attorneys clearly smell blood in the water,” Cecala said.

Mortgage apps down

Data from the Mortgage Banker’s Association shows mortgage applications slumped last week as interest rates on 15- and 30-year fixed-rate mortgages rose for the first time in six weeks. seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Oct. 15 decreased 10.5 percent. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 0.4 percent. Demand for home refinancing loans fell for the sixth time in seven weeks. The MBA’s seasonally adjusted index of refinancing applications decreased 11.2 percent. The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, decreased 6.7 percent. Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina, said the drop in demand is a reflection of the inability of many homeowners to take advantage of record low interest rates.

“Tight lending standards are preventing many homeowners from home loan refinancing,” he said. “Low credit scores and high unemployment are also playing a big role.” Vitner said “underwater” mortgages — where the amount owed on the mortgage exceeds the value of the home — are one of the biggest banes of the homeowners. This negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.

Colvin – uncertainty is killing the recovery

And yes, it is the fault of Obama and the Democratic establishment. Geoff Colvin is a senior editor at large for CNN: “Life is inherently uncertain, of course, but this is different. As I travel around the country, businesspeople tell me they’ve rarely felt so unsure of what the laws and rules governing their business will be. Like Kelly, they sense major changes ahead — but what? So instead of investing and hiring as usual in a recovery, U.S. companies are sitting on more cash than ever. We shouldn’t be surprised. It has always been true that the more activist the administration in Washington, the more uncertainty it spawns. The reasons are several. Sweeping new laws — like the 2,400-page health care law and the 2,300-page Dodd-Frank financial services law — create winners and losers, but the horsetrading continues almost until the President’s pen signs the bill. Did you know that Dodd-Frank exempts car dealers from the oversight of the new Consumer Financial Protection Bureau? Such oddities are legion, but in major legislation still to come, such as an energy bill, no one knows what they’ll be.

Once these mammoth laws are enacted, government agencies must write new rules to implement them. For example, the Dodd-Frank law requires 243 new rules, by the count of the Davis Polk & Wardwell law firm, and no one yet knows what they’ll require. It takes a long time to figure out what the new rules really mean, especially at 2,000 pages. When I asked AT&T chief Randall Stephenson whether the new health care law might cause him to drop medical coverage for his employees, he did not say anything to reassure workers. “We don’t know exactly what we’ve got here yet,” he said. “But something will change.” McDonald’s recently said it might drop medical coverage for 30,000 employees because of a rule buried in the new law. Such surprises are only beginning. These historic new laws bestow significant new powers on administrators, who are not elected and are highly unpredictable. For example, the new Consumer Financial Protection Bureau has been granted extremely broad powers; its director (not yet nominated) is apparently “beyond the control of the President, the Fed, and the Congress,” says Investment News magazine, citing the new law. What new rules will it promulgate in its first five years? Uncertainty is a Republican talking point in the midterm elections, so Democrats disparage it, maybe leaving ordinary citizens to dismiss the debate as partisan sniping. That would be a shame. The businesspeople I talk to aren’t libertarians who want a minimalist government. They’re pragmatic managers who want to make an honest buck. As Dick Kelly says, “If they explain the rules, we’ll figure it out. We’ve always figured it out, and we’ll figure it out again.” More than at any time in many years, businesspeople just don’t know what the rules are. They’re frozen. Writ small, that’s a frustration. Writ large, it’s an economy that can’t get going.

Construction activity up

The September Architecture Billings Index was up 2.2 points to 50.4, marking the fourth consecutive month of increases, the American Institute of Architects (AIA) said. The score reflects a rise in demand for design services, as any score above 50 indicates an increase in billings, the AIA said. “The strong upturn in design activity in the commercial and industrial sector certainly suggests that this upturn can possibly be sustained,” said Kermit Baker, AIA’s chief economist. “But we will need to see consistent improvement over the next few months in order to feel comfortable about the state of the design and construction industry.” The AIA’S separate, less predictive, project inquiries index rose to 62.3, from 54.6 in August, reaching its best level since July 2007. Project inquiries typically produce a higher reading than actual billings because multiple architecture firms bid on the same work. The billings index is an indicator of construction spending nine to 12 months in the future. It is regularly cited by companies that sell into the sector as a reliable gauge of demand. Most diversified industrial companies get at least some revenue from nonresidential construction, selling either machinery used in construction or the components of a building: elevators, electrical and lighting systems, heating and cooling and security networks, for example.

Olick – is the mess over?

“As I was driving in to work today, the lead story at the top of the hour on the radio was Bank of America’s announcement that it would start submitting foreclosure sale paperwork again on Monday. The anchors made it out like, okay, we’re all done. Little two-week snafu, but that’s that. Then the president of the New York Fed, William Dudley, during a briefing at his bank on the regional economic outlook, said ‘The Federal Reserve actively encourages efforts to find viable alternatives to foreclosure, like loan modifications, or deeds in lieu,’ but he also added that, ‘It’s important foreclosures that comply with state and federal laws can take place as this is a necessary part of adjustment that will lead to more normal conditions in the housing market.’ Shortly after that, White House Press Secretary Robert Gibbs put out the following statement: ‘As institutions are determining their next steps in addressing these issues, we remain committed to holding accountable any bank that has violated the law. In addition to strongly supporting the investigation by the state attorneys general, the administration’s Federal Housing Administration and Financial Fraud Enforcement Task Force have undertaken their own regulatory and enforcement investigation into the foreclosure process.’

Then the Texas state attorney general, Greg Abbott, one of the 50 state attorneys general who announced a major joint investigation last week, went on CNBC charging that paperwork needs to be cleaned up and, ‘we have to deal with appropriate title to these homes.’ But he also added that with regards to dealing with robo-signing, ‘there’s no reason why all these financiers can’t get that accomplished by the end of October.’ The big banks seem to be taking a legal stand, and trust me, they have plenty of high-priced lawyers telling them what they can and can’t stand on. This is not to say that law suits won’t abound, and we will hear ever more stories in the local news about ‘wrongful’ foreclosures. But this creates something of a conundrum: It feels like there’s a little bit of backpedaling and a lot of continuing to tow the popular political line. Yes, apparently the banks are clearing some things up, but let’s not lose that great momentum of keeping folks in their homes…at least until election day.”

Now for our real estate education section…

Prospecting 101

Prospecting. Love it or hate it, everyone must master it in order to reap rewards in the real estate business. Whether you are a part-time investor, full-time flip guru or veteran agent chances are you could still benefit from refining your prospecting efforts.

Prospecting Logic

There is a natural progression or logic model to the art of prospecting; once mastered it can be used in nearly any industry with fantastic impact. The steps are deceptively simple:

1. To increase profits you must first close/sell more properties.

2. To close/sell more properties, you need to sign more contracts.

3. To sign more contracts, you must have more leads.

4. To obtain more leads, you need more referrals and first contact(s).

5. To obtain more leads and referrals, you need to prospect.

It’s All in the Numbers

We’ve said it before and we will say it again; prospecting is a numbers game. The more you manage the numbers the better the results. We have previously covered the number of contacts, ratio’s and other pertinent data here on the short sales newsletter so we won’t bore you with the data again. Suffice to say, there is one important mistake that even veteran investors and agents tend to make when calculating the target number of contacts each month; don’t forget to replace the units under contract! For example, if your personal ratio is 10:1 and you forget to replace the one unit under contact, by the end of the year your total performance will be “off” by 10 percent!

Ready-Aim-Fire!

Do you know who your target is? Hopefully you do but a surprising number of agents and investors really don’t. For example, what gives the biggest bang for the buck…pitching to other agents/investors or regular buyers? Novice investors often spend an inordinate amount of time working with individual buyers…lots of them…who will only purchase one home. On the other hand, by targeting other agents, larger investors, etc, it is often possible to cultivate a long term relationship that takes less time while yielding better results.

See you at the top!

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

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)

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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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
   * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
  * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin, February 17, 2010

admin — Wed, 17 Feb 2010 16:15:34 +0000

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Delinquencies up

According to credit reporting agency TransUnion, 6.89% of mortgage payments were 60 or more days past due in Q409 – up from 4.58% in the final three months of 2008. The previous record delinquency rate was 6.25% in the third quarter of 2009. FJ Guarrera, vice president of TransUnion’s financial services business unit, says the fourth-quarter uptick was due in part to normal seasonal spending shifts. Consumers are more likely to have trouble paying bills during the last few months of the year as they run low on cash because of holiday spending. But he says that even accounting for normal season patterns, there is some reason to be concerned about the pace of increase moving higher. “To see continuing growth in the first quarter would certainly raise an eyebrow.”

TransUnion tracks mortgages that are two months past due as an indicator of potential foreclosure, because of the difficulty involved in coming up with three payments to bring an account current. The agency said the delinquency rate stayed highest in Nevada, at 16.2%, and Florida, at 14.9%. Arizona and California, the other two states hit hardest by the housing crisis, were third and fourth, at 11.3% and 11% respectively. The highest growth rates compared with the third quarter were in the District of Columbia, Louisiana and Delaware. Guarrera noted that many homeowners still have adjustable rate mortgages written in late 2006 or early 2007 due to reset to higher rates in coming months, and that could drive foreclosures even higher, especially in areas where home prices have fallen to the point where values are lower than mortgages. “We’re not out of the woods yet,” he said.

Government jobs ballooning

Amity Shlaes at Bloomberg.com points out the growth of government. In the 1990s, former President Bill Clinton and House Speaker Newt Gingrich managed to reduce the federal workforce to less than 2 million, excluding the postal service. But from January 2000 to January 2010 — first under President George W. Bush after Sept. 11, then under Barack Obama — the number of non-postal employees in the federal government grew 15 percent, to 2.18 million from 1.89 million. The rise came in Homeland Security positions, Veterans Administration jobs, Justice Department posts, and so on. This increase would mean less if the private sector had grown as well. But over the same period, private-sector employment decreased by 3 percent, to about 107 million from about 110 million. In short, the relative picture changed.

Jobs with Uncle Sam aren’t just more numerous than they used to be. They’re better. Wages and benefits for federal civilian workers were more than double the average total compensation in the private sector: $119,982 versus $59,909. In the treacherous period between December 2007 and mid-2009, the number of federal employees earning more than $100,000 doubled, rising to 66,500 or so. The new relative appeal of a government job sends a message that private-sector work, especially self-employment or a job at a start-up, may not be worthwhile. Recent wipeouts of big businesses and the recessionary struggles of smaller ones only reinforce that message. So do politicians’ occasional disparagement of “risk.” Shlaes concludes: Today, the U.S. economy has more competition than it did in the 1950s. So the kind of policy change that would affect the jobscape, such as eliminating the capital-gains tax and simplifying the income tax, is necessary. But you won’t hear about those radical measures in the Reid-McConnell jobs debate of February 2010. That’s a shame, because right now there are young people deciding whether they will be employers or mere employees.

DSNews.com – 33 months of coming foreclosures

The Standard & Poor’s (S&P) report we mentioned yesterday in connection with short sales also said the hidden supply of REOs and pending foreclosures will likely take 33 months – or nearly three years – to clear if liquidation rates hold steady. Even more unsettling is that S&P called its estimate “conservative” because the company’s analysis was based on the number of properties the company believes to be lurking in the shadows right now – repossessed homes that banks have not put on the market and already delinquent mortgages that will likely turn into foreclosures. S&P’s assessment does not take into account any loans that have yet to show serious signs of distress. The ratings agency did not give a specific number of loans in its calculated shadow supply, but said the original balance of currently seriously delinquent and REO loans stands at $426.3 billion. An earlier study by Amherst Securities estimates the dark cloud to hold about 7 million loans, while First American CoreLogic puts it at 1.7 million. Analysts at Standard & Poor’s said in the report, “It is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”

New home construction up

The Commerce Department announced today that construction of new homes climbed to an annual rate of 591,000 during the month, up 2.8% from December’s revised rate of 575,000. Economists surveyed by Briefing.com expected January housing starts to rise to an annual rate of 580,000. The number of building permits issued during January fell 4.9% to a seasonally adjusted annual rate of 621,000. Economists had predicted building permits would fall to 620,000. “It’s a positive surprise on all fronts and shows that overall demand has moved higher. That’s an important element to watch as we move through a cycle going from incentive-based to more organic growth,” said Craig Peckham, equity trading strategist at Jefferies & Co. in New York.

Groundbreaking for single-family homes rose 1.5 percent last month to an annual rate of 484,000 units after declining 3 percent in December. Starts for the volatile multifamily segment increased 9.2 percent to a 107,000 unit annual pace after rising 12.6 percent in December. New building permits, which give a sense of future home construction, fell 4.9 percent to 621,000 units last month after rising to a 14-month high of 653,000 units in December, the Commerce Department said. That’s compared to analysts’ forecasts for 620,000 units. The inventory of total houses under construction fell 2.3 percent to a record low 503,000 units last month, while the total number of units authorized but not yet started eased 0.9 percent to 94,300 units.

MBA – loan applications down

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 0.5 percent compared with the previous week. The Refinance Index decreased 1.2 percent from the previous week and the seasonally adjusted Purchase Index decreased 4.0 percent from one week earlier. The unadjusted Purchase Index increased 1.0 percent compared with the previous week and was 18.4 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 1.1 percent. The four week moving average is down 1.2 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity decreased to 69.3 percent of total applications from 69.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.4 percent from 4.5 percent of total applications from the previous week. The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990 = 100.

Now on to our real estate investing educational section…

Are YOU a Broker and Not Even Know It?

When it comes to taxes, the Internal Revenue Service defines a Broker differently than most state or business regulations; in fact, you do not even need a Broker’s license for the IRS to classify you as a broker for tax purposes. Take the following quick quiz to find out if you are a broker and not even know it according to the IRS:

1. Do you routinely sell, exchange, purchase, rent or lease real property?

2. Do you offer to sell, exchange, purchase, rent or lease property for others on a regular basis?

3. Do you negotiate the terms of real estate contracts for yourself or others on a regular basis?

4. Do you list real estate for sale, lease or exchange on a repeat or regular basis?

5. Do you procure prospective buyers and/or sellers on a consistent basis?

If you answered “yes” to the above questions then you might be considered a real estate broker for tax purposes. To determine if you qualify as a “real estate professional” you must satisfy three independent tests including:

1. The 51% Test. Do you spend more than half your working time each year toward your real estate business or activities?

2. 751 Hour Test. In addition to spending 51% or more of your work time in real estate related activities, do you spend at least 751 hours annually in the same pursuit?

3. Material Participation Test. Do you activity participate in the activities related to your real estate profits and losses?

If you answered “yes” to all three of the above questions, you may qualify as a real estate professional by IRS standards and are therefore eligible to take the real estate professional exemption which provides more than $25,000 offset for losses. All real estate related losses or deductions can be claimed including an offset against other earnings, exclusive of income limits, making this an extremely valuable tax strategy for high income earners.

See you at the top!

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

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)

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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

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About the author:

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