CoreLogic today released its National Foreclosure Report for March, which provides monthly data on completed foreclosures, foreclosure inventory and 90+ day delinquency rates. There were 69,000 completed foreclosures in March 2012 compared to 85,000 in March 2011 and 66,000* in February 2012. Through the first quarter of 2012, there were 198,000 completed foreclosures compared to 232,000 through the first quarter of 2011. Since the start of the financial crisis in September 2008, there have been approximately 3.5 million completed foreclosures.   Approximately 1.4 million homes, or 3.4% of all homes with a mortgage, were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5%, in March 2011 and 1.4 million, or 3.4%, in February 2012. The number of loans in the foreclosure inventory decreased by nearly 100,000, or 6.0%, in March 2012 compared to March 2011.   

The share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and real estate owned (REO) assets, fell to 7.0% in March 2012 from 7.5% in March 2011, and remained unchanged from 7.0% in February 2012.  Also in March, the inventory of REO assets held by servicers nationwide grew more slowly than the pace of REO sales, as measured by the distressed clearing ratio.  The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures. The higher the distressed clearing ratio, the faster the pace of REO sales relative to the pace of completed foreclosures.  The distressed clearing ratio for March 2012 was 0.81, up from 0.76 in February 2012.

 Highlights as of March 2012

-  The five states with the largest number of completed foreclosures for the 12 months ending in March 2012 were:  California (150,000), Florida (92,000), Michigan (62,000), Arizona (58,000) and Texas (57,000). These five states account for 49.1% of all completed foreclosures nationally.

-  The% of homeowners nationally who were more than 90 days late on their mortgage payments, including homes in foreclosure and REO, was 7.0% for March 2012 compared to 7.5% for March 2011, and 7.0% in February 2012.   

-  The five states with the highest foreclosure rates were:  Florida (12.1%), New Jersey (6.6%), Illinois (5.4%), Nevada (4.9%) and New York (4.9%).

-  The five states with the lowest foreclosure rates were:  Wyoming (0.7%), Alaska (0.8%), North Dakota (0.8%), Nebraska (1.1%) and South Dakota (1.4%).

-  Of the top 100 markets, measured by Core Based Statistical Areas (CBSAs) population, 35 are showing an increase in the year-over-year foreclosure rate in March 2012, two more than in February 2012 when 33 of the top CBSAs were showing an increase in the year-over-year foreclosure rate.   

*February data was revised.  Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.

BOA to cut 400 jobs

Bank of America (BOA) is planning to cut up to 400 jobs in its investment banking, corporate banking, and sales and trading units, The Wall Street Journal reported, citing people familiar with the situation.  An expected sale of the bank’s non-US wealth-management operations in Asia, Latin America, and Europe would eliminate up to 2,000 jobs, the Journal reported.  Reuters reported on April 17 that Bank of America was looking to sell its wealth-management units outside the US for as much as $3 billion.  BOA declined to comment on the Journal report.  Last spring, the bank announced a cost-cutting program called Project New BAC that aims to eliminate 30,000 consumer banking and technology jobs over the next few years.  The bank has said it expects to wrap up plans for the second phase of the program, which focuses on investment banking, commercial banking, and related support jobs in May. The second phase is expected to cut fewer jobs than the first because it covers a smaller, more efficient part of the bank.  At the end of March, Bank of America had about 278,700 employees worldwide.

Olick – renter nation

“More Americans are renting homes, and fewer are owning them; it’s not as if this is news to anyone who follows the US housing market, but a new report from the Census Bureau today really put an historical exclamation point on the trend.  The share of US household renting reached a fifteen year high, and home ownership reached a 15-year low. Funny how those numbers travel together.  34.6% of households were renters in the first quarter of this year, and that number is climbing, as lack of credit or sufficient down payment keeps Americans young and old from becoming home owners. Rental vacancies are therefore falling, the lowest rate out West, where foreclosures have run the highest during this housing crash. That is also where investors are rushing in to buy foreclosed properties and put them up for rent. Single family homes for rent, in fact, surpassed multi-family units, taking 52% of the $3 trillion rental market, according to CoreLogic.

Both rental and homeowner vacancies are down, which is a general positive for the housing market, because empty houses are a blight on communities. ‘The vacancy rates will only decline if household formation is increasing or units are being destroyed,’ notes ISI Group’s Stephen East.  While banks have bulldozed some foreclosed properties here and there, the practice is by no means popular or widespread. That should mean that household formation is increasing, which is generally a product of an improving jobs picture. Younger Americans who have been living together or with their parents may finally be getting into their own homes, more likely into rentals, but at least they’re forming their own households. That is thanks to a small drop in the unemployment rate among 25-34 year olds to its lowest rate in three years. The home ownership rate now stands at 65.4%, down a full percentage point from a year ago, and down from just over 69% at the peak in 2004.  Since the recession began, growth in overall new households has been about 50% short of trend lines, according to analysts at Goldman Sachs. While household formation is rebounding for single or un-related Americans, formation among families is still waning; that may be due to the types of homes they need, i.e. larger, single-family homes. It thus stands to reason that pent-up demand will show itself first in single family rentals in the future and less in multi-family. No wonder investors are flooding the foreclosure market.”

No more easing?

Two top Federal Reserve officials — one with a dovish, employment-focused bent, and the other a self-avowed inflation hawk — yesterday both said they see no need for the US central bank to ease monetary policy any further.  But the comments, from San Francisco Fed President John Williams and Dallas Fed President Richard Fisher, do not mean they believe the central bank should quickly move to raise rates, which it has kept near zero for more than three years.  The economy grew at a 2.2% pace last quarter, down from its 3% growth rate in the final three months of the year. Recent economic data, including a gauge of business activity in the US Midwest, signal growth may slow further this quarter.  “I don’t think we are ready to exit yet,” Fisher, an inflation hawk, told Reuters at the Milken Institute Global Conference in Los Angeles.  Fisher said he would oppose the extension of Operation Twist, the Fed bond-buying program that is set to end in June, but stopped short of calling for outright monetary tightening.  “We’ll have to see how the year works out,” he said.

US home ownership sets new record – down

The US homeownership rate fell to the lowest level in 15 years in the first quarter as borrowers lost homes to foreclosure and tighter inventory and credit kept buyers off the market.  The rate dropped to 65.4% from 66% in the fourth quarter and fell a full percentage point from a year earlier, the Census Bureau said in a report today. That is the lowest level since the first quarter of 1997, and down from a record 69.2% in June 2004.  Mounting foreclosures are displacing borrowers, while a lack of inventory has kept home sales from accelerating amid record affordability, the National Association of Realtors reported April 19. Stricter mortgage standards are also limiting purchases as rental demand surges, said Paul Diggle, property economist with Capital Economics Ltd. in London.  “Although house prices and mortgage rates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage,” he wrote in a note today.  The US apartment vacancy rate fell to 4.9% in the first quarter, an 11-year low, according to New York-based Reis Inc. (REIS).  The vacancy rate for rental homes was 8.8% in the first quarter, compared with 9.7% a year earlier, the Census Bureau said in today’s report.

Of the estimated 132.6 million US homes, 18.5 million, or 13.9%, were vacant in the first quarter. A year earlier, about 19 million homes were vacant, according to the report. That includes homes for sale or rent or held off the market, and vacation properties used seasonally.  The ownership rate may drop below 64% by the end of 2015 and stay there for years, Scott Simon, the mortgage bond head of Pacific Investment Management Co. in Newport Beach, California, said in an e-mail today.  “It will be lower by 2017,” he said. “It will be lower in 2020.”  About 6 million borrowers will lose their properties in the next five years because of inability to pay, creating 4 million new rental households, Simon said in an April 24 interview on Bloomberg Television.  The homeownership rate fell 3 percentage points from a year earlier to 61.4% in the first quarter for people aged 35 to 44, the biggest drop of any age group. The Northeast had the biggest regional decline, with the ownership rate falling 1.4 percentage points to 62.5%. The West had the lowest ownership rate at 59.9%, down 1 percentage point from a year earlier. 

The US homeownership rate rose to a record in 2004 when President George W. Bush, running for re-election, called for expanding home-loan availability to create an “ownership society.” The current rate of 65.4% matches the average since 1965, when the Census Bureau began reporting the figures, according to data compiled by Bloomberg.  Home prices fell 3.5% in February from a year earlier and are 35% below their July 2006 peak, according to the S&P/Case-Shiller index of 20 US cities. The average rate for a 30-year fixed loan was 3.88% last week and reached 3.87% in February, the lowest level in at least four decades, according to Freddie Mac.  About 2.37 million homes were listed for sale in March, a and 6.3 month supply and down 22% from a year earlier, the Realtors association said on April 19. A six-month supply is considered a healthy market, according to the group.

Banks that made reckless home loans in south Florida have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth.  There are no owners willing to claim and care for them.  A months-long Sun Sentinel investigation of property code violations involving abandoned homes uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods.  The real estate industry calls such properties “bank walkaways.” They are no longer maintained by their legal owners, whether they were investors bailing out of unwise deals or families in financial ruin who decamped.  Nor are they being tended to by lenders, which have halted foreclosure proceedings because the remaining equity in the properties is deemed inadequate to cover the banks’ costs to reclaim title and maintain, refurbish and sell them.  The practice has contributed to South Florida’s foreclosure “limbo” problem in which thousands of vacant homes are stuck in unsettled court proceedings for years.

Spending down, income up

A Commerce Department report showed that personal spending increased 0.3% in the month, well down from the 0.9% jump in spending the month before. That was much weaker than the 0.5% gain in spending forecast by economists surveyed by Briefing.com.  Income increased a little faster, rising 0.4%, which was an improvement from the 0.2% rising the previous month. It was the first time since December that income growth outpaced spending increases, as consumers dipped into savings the previous two months in order to deal with rising prices, such as increases in gasoline prices.  But inflation moderated in March, and it allowed consumers to increase their savings again. The report showed that the savings rate, which compares after-tax income to the level of spending, edged up to 3.8% from 3.7% in February. That means the average family was saving $38 out of every $1,000 in take-home pay in the month.

ResCap bankruptcy could cost $1.2 billion

A bankruptcy filing on the ResCap mortgage unit could cost parent company Ally Financial between $400 million and $1.25 billion, according to a financial disclosure by the bank Friday.  “If a ResCap bankruptcy were to occur, we could incur significant charges, substantial litigation could result, and repayment of our credit exposure to ResCap could be at risk,” according to the filing.  On April 17, Ally disclosed the troubled mortgage unit missed an interest payment on its debt and would be considered in default if it wasn’t made within 30 days. More than $473 million on the debt is outstanding.  The unit actually forged a $191 million profit in the first quarter. But according to the filing Friday, Ally estimates the losses from litigation matters and repurchase obligations could reach as high as $4 billion over time.  Barclays Capital analysts predicted the unit could be placed into bankruptcy within one to two months, and outlined why selling the servicing rights would be critical for investors in ResCap issued mortgage-backed securities.  The unit has stopped lending to real estate developers and homebuilders in the US, according to the Ally filing Friday.

Student loans are a hot potato

In the political campaigns still taking shape, President Barack Obama, Republican challenger Mitt Romney and lawmakers of both parties say they want to protect college students from a sharp increase in interest rates on federally subsidized loans.  Agree, they might, and act they surely will. But first, they settled effortlessly into a rollicking good political brawl.  In less than 72 hours, what might have looked like a relatively simple matter mushroomed into a politically charged veto showdown that touched on the economy and health care, tax cuts and policies affecting women. Accusatory campaign commercials to follow, no doubt.  “This is beneath us. This is beneath the dignity of this House and the dignity of the public trust that we enjoy,” protested House Speaker John Boehner, R-Ohio as Democrats maneuvered for position on the student loan bill.

“It shouldn’t be a Republican or a Democratic issue. This is an American issue,” Obama said in North Carolina last week as he broached the topic of legislation in a move to gain support students in the fall election. He urged his listeners to tweet their lawmakers and urge them to block an increase in interest rates on federally subsidized loans issued beginning July 1.  There was partisan pop behind Obama’s message, though.  Over two days of campaign-style appearances on college campuses, he quoted one unnamed Republican lawmaker as saying she had “very little tolerance for people who tell me they graduate with debt because there’s no reason for that.” Another GOP lawmaker likened student loans to “stage three cancer of socialism,” he said. Both Republicans quickly said they had been quoted out of context. 

Within a day, Romney told reporters he agreed on the need to prevent the rate increase, while conceding nothing to Obama in the search for political advantage. “I support extending the temporary relief on interest rates for students,” he said, and cited “extraordinarily poor conditions in the job market” in a jab at the president’s handling of the economy.  Congressional Democrats announced they would write legislation to prevent a doubling of the current 3.4% interest rate, and cover the $6 billion cost by requiring more wealthy individuals to pay Social Security and Medicare payroll tax.  It was a not-so-subtle reprise of a campaign perennial, the allegation that Republicans want to cut programs benefiting those who aren’t rich to protect tax cuts for those who are.  “Let’s be honest,” said Senate Republican leader Mitch McConnell of Kentucky. “The only reason Democrats have proposed this particular solution to the problem is to get Republicans to oppose it, to make us cast a vote they think will make us look bad to the voters they need to win the next election.”  He then accused Democrats of wanting to pay for the legislation “by raiding Social Security and Medicare, and by making it even harder for small businesses to hire.”

TARP exec pleads guilty to fraud

Reginald Harper, former CEO of First Community Bank of Hammond, La., pleaded guilty to defrauding the firm out of millions of dollars in phony mortgages.  Harper faces up to five years in prison and a $250,000 fine. His sentencing is scheduled for Sept. 13. First Community applied for and was approved for $3.3 million in Troubled Asset Relief Program bailouts in 2008 but withdrew its application afterward.  Four years prior, Harper loaned $2 million to real estate developer Troy Foquet in 2004 to build out parcels of real estate, according to the charges.  Once it became difficult to find qualified homebuyers, Harper would loan potential buyers money to make it appear to the mortgage lender the borrower had more cash than they actually did. He also used “straw” buyers to obtain mortgages, which were used to pay off the original loans to Foquet.  Foquet also paid Harper with insufficient checks, which were credited as a loan payment in order to avoid reporting the delinquency.  Foquet pleaded guilty to the charges in March.  Executives had the choice of writing off losses on bad loans or covering up those losses through fraud,” said Special Inspector General for TARP Director Christy Romero. “Harper chose the latter and concealed the status of the loans from others at First Community Bank, from the bank’s regulators and in the bank’s TARP application.”

RealtyStore has completed a new study of the foreclosure status in three major housing markets, finding the amount of pending listings exceeds the amount of active foreclosures listed for sale by a margin of over 2 to 1. This shadow inventory of foreclosed homes illustrates the significant overhang of foreclosure listings that are anticipated to be unleashed on the housing in the wake of resolving the so-called foreclosure robo-signing situation in late 2010. The study was conducted for Cook County, IL (including metro Chicago), Miami-Dade County, FL (including metro Miami) and Maricopa County, AZ (including metro Phoenix).  Foreclosure counts in each location were tabulated by owner, including bank or lender owned homes, foreclosures owned by Fannie Mae or Freddie Mac, and HUD homes. Although Arizona had previously been one of the hardest hit areas for foreclosure activity, Cook County, IL shows a near equal total amount of foreclosed homes. Miami-Dade foreclosures number at roughly half the count of either other market.

The breakdown of active foreclosure listings vs pending, or shadow inventory, foreclosures listings was consistent across each market surveyed. On average, 29% of total foreclosures across the counties are currently listed for sale. Cook County, IL foreclosures were most heavily represented with active listings, with 32% of its foreclosures presently being marketed to buyers, and 68% of foreclosures pending listing. Maricopa County, AZ foreclosure listings for sale represent only 25% of recorded foreclosures in the county, with 75% of local foreclosures yet to be listed for re-sale. Miami-Dade, FL currently offers 29% of its total foreclosures on the market for re-sale, with 71% of its foreclosure inventory awaiting listing on the market.  According to RealtyStore, median list prices of foreclosures for sale in Cook, Maricopa and Miami-Dade counties continue to run below average home prices. Cook County foreclosures are listed at a median price of just $72,650 and an average price of $95,997. Miami-Dade foreclosures list at a median price of $106,900 and average $145,059, while Maricopa lists foreclosed homes slightly higher with a median of $109,900 and the average foreclosure listed at a price of $168,744.

The foreclosure median list prices come in at 56% and 42% below the median sales prices of single-family homes selling in metro-Chicago and Miami, respectively, as reported by the NAR in Q4, 2011. Metro-Phoenix posts a smaller price gap at 7%, suggesting foreclosure saturation may be peaking in Maricopa County.  Individual foreclosure listings continue to cover all portions of the pricing spectrum, ranging from as low as $5,900 for a single family foreclosed home in Chicago, IL to as high as a foreclosed estate in Paradise Valley, AZ listed at $5,700,000.

Jobless claims up

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. But the prior week’s figure was revised up to 388,000 from the previously reported 380,000.  The four-week moving average for new claims, considered a better measure of labor market trends, rose 5,500 to 374,750.  Economists polled by Reuters had forecast claims falling to 370,000 last week.  The claims data covered the week for April’s nonfarm payrolls survey. The four-week average of new applications rose marginally between the March and April survey periods, suggesting not much change in labor market conditions.  Employers added 120,000 new jobs to their payrolls in March, the least since October, after averaging 246,000 jobs per month over the prior three months. Most economists have viewed the pull-back in job growth as payback after the weather-induced gains in the previous months.  The number of people still receiving benefits under regular state programs after an initial week of aid rose 26,000 to 3.30 million in the week ended April 7.  The number of Americans on emergency unemployment benefits fell 19,419 to 2.78 million in the week ended March 31, the latest week for which data is available.  A total of 6.77 million people were claiming unemployment benefits during that period under all programs, down 187,807 from the prior week.

CoreLogic – First Quarter 2012 Multifamily Applicant Risk Index Report

CoreLogic today announced that CoreLogic SafeRent, provider of the nation’s leading suite of screening and risk management services designed for the multifamily housing industry, released its first quarter 2012 multifamily applicant risk (MAR) index report. The first quarter MAR Index value increased one point from the fourth quarter 2011 and three points from a year ago, indicating an increase in national renter credit quality and slightly better applicant pool.  The MAR Index for first quarter 2012 is based exclusively on applicant traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model (Registry ScorePLUS) and is updated quarterly to provide property owners and managers with a benchmark against which to evaluate their applicant credit quality trends against market based MAR Index trends. This comparison indicates the relative strength of their property portfolio to attract and secure applicants with higher credit quality and an increased likelihood of fulfilling lease obligations.

When comparing applicants for one- versus two-bedroom units, the first quarter 2012 MAR Index is slightly higher for one-bedroom units at 102, compared with 101 for two-bedroom units.  Regionally, the South and Midwest reflected the lowest MAR Index, each with values of 98, a one point increase from the fourth quarter 2011. The Northeast continues to maintain the highest MAR Index with a value of 111.  The three Metropolitan Statistical Areas (MSA) with the steepest decreases in the MAR Index were Cincinnati-Middletown, Ohio, Ky., Ind.; Columbus, Ohio; and Birmingham-Hoover, Ala.; each with decreases of three points. The three MSAs with the greatest increases in the MAR Index were Chicago-Naperville-Joliet, Ill., Ind., Wis.; Denver-Aurora, Colo.; and Salt Lake City, Utah; each with increases of four points. 

Understanding the Multifamily Applicant Risk Index (MAR Index)

The MAR Index is published quarterly by CoreLogic SafeRent. It provides trends of national and regional traffic credit quality scores whereby a lower index value indicates an applicant pool with a higher risk of not fulfilling lease obligations. A MAR Index value of 100 indicates that market conditions are equal to the national mean for the index’s base period of 2004. A MAR Index value greater than 100 indicates market conditions with reduced average risk of default relative to the index’s base period mean. A value less than 100 indicates market conditions with increased average risk of default relative to the index’s base period mean. The MAR Index is derived from the statistical screening model from CoreLogic SafeRent, which is the multifamily industry’s only screening model that is both empirically derived and statistically validated. The statistical screening model was developed from historical resident lease performance data to specifically evaluate the potential risk of a resident’s future lease performance. The model generates scores for each applicant indicating the relative risk of the applicant not fulfilling lease obligations. A lower score indicates a more risky applicant.

BOA tops estimates

Bank of America (BOA) reported lower first-quarter profit as the second-largest US bank took accounting charges related to its debt, but results topped analysts’ estimates as credit quality improved.  The bank reported charges of $4.8 billion related to changes in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.  Excluding debt valuation adjustments, it earned 31 cents a share.  First-quarter net income was $653 million, or 3 cents a share, down from $2.05 billion, or 17 cents per share, a year earlier.  Revenue declined to $22.3 billion from $26.9 billion.  The Charlotte, N.C.-based bank took a loan-loss provision of $2.4 billion, compared with $3.8 billion a year ago.  In its capital markets operations, Bank of America reported sales and trading revenue of $3.8 billion, up from $1.5 billion in the fourth quarter but down from $4.6 billion a year ago.

California foreclosure reform moves forward

Seven bills reforming some foreclosure rules passed committees in the California state legislature this week.  The bills were introduced in February. One set of bills extends protections to tenants, giving them 90 days before eviction after the foreclosure sale of the property. Another increases penalties to banks that fail to maintain blighted homes.  Servicers would be required to provide documentation to the borrower establishing its right to foreclose before the filing first step in the process, under other passed bills. Evidence of ownership and chain of title must also be shown to the borrower.  Two other bills charge servicers a $25 fee for every notice of default recording. The money will fund investigations for California AG Kamala Harris. Another piece of legislation passed by committee allows Harris to convene a grand jury to investigate financial crimes in different jurisdictions.  “All Californians have been impacted by the toll the mortgage and foreclosure process has taken on our neighborhoods,” Harris said. “Our California Homeowner Bill of Rights will provide relief for homeowners, tenants and communities. I thank the authors and supporters of these important bills.”

Short sale volumes may not have experienced the boom many predicted, but they’re certainly moving up.  Late last week, the Office of the Comptroller of the Currency issued a report on year-end loss mitigation activity for most of the mortgages serviced by the nation’s largest banks.  The 227,570 new short sales completed in 2011 was a 12% increase from one year ago and more than double the 112,000 measured in 2009, according to the report.  As the robo-signing freeze thaws, and new requirements under the attorneys general settlement are enforced, short sales may continue upward in 2012.

Eurozone unemployment hits new record

Unemployment in the 17 nation euro zone rose to 10.8% in February — as expected by economists’ polled by Reuters — and compared to 10.7% in January, the European Union’s statistics office Eurostat said on Monday.  Joblessness last reached February’s levels in May and June 1997 and was only slightly higher in April 1997 at 10.9%.  In February, unemployment was 10.2% of the working population in the wider, 27-nation EU, or some 24.5 million people, rising from 10.1% in January, Eurostat said.  Europe’s debt crisis has forced governments to drastically cut spending, while business confidence collapsed late last year, leaving many Europeans struggling to find work at a time when the euro zone heads into a recession.  The European Commission expects the euro zone’s output to shrink 0.3% in 2012, and data released separately on Monday showed that the bloc’s manufacturing activity contracted for an eighth successive month in March.

Detroit razing houses

More than a quarter of homes in Detroit whose loans failed at the height of the foreclosure crisis in 2006 and 2007 have already been razed or are on the demolition list, becoming a huge obstacle to the city’s rebirth, a Detroit News analysis shows.  In neighborhoods on the far west side and the northeast corner of the city, as many as two-thirds of the properties that went into foreclosure just five years ago are in the city’s crosshairs or already on the ground. The worst-hit areas almost mirror perfectly parts of the city where the most subprime mortgages were issued before they helped trigger the collapse of the banking industry.  And more vacancies could be on the way: Although the rate has slowed, lenders have foreclosed on 28,000 more homes since 2007, according to records from RealtyTrac.  Mayor Dave Bing has made reshaping the city one of his top priorities, and his Detroit Works Project is focusing on fixing targeted neighborhoods. But increasing vacancy squeezes the city’s already feeble tax base, diminishes the quality of life and undercuts the city’s recovery efforts.  In parts of the city least able to absorb abandonment, evictions are almost instantly followed by strippers who can gut properties in days.

Detroit has struggled with abandoned homes for years, and its population fell 25% to 713,777 from 2000 to 2010. But foreclosures from 2006 and 2007 alone have added 7,600 homes to the demolition list. Now, there are an estimated 38,000 homes in some stage of demolition, a number equal to 10% of all housing units in the city.   The city has knocked down 4,200 homes since 2010 and hopes to get to 6,000 more, which could take another three years at its current pace. That doesn’t take into account the 1,800 homes the Detroit City Council has targeted for demolition, or the 26,300 homes that are in the process of being considered for demolition.  If foreclosures continue to increase vacancies, the city will be hard-pressed to keep up with demolitions. City leaders are working with banks and other institutions to find ways to preserve occupancy, said Karla Henderson, Detroit’s group executive of planning and facilities.

Eurozone manufacturing in trouble

The euro zone’s manufacturing sector shrank for an eighth month and at a faster pace in March, adding to signs the bloc is in recession as the downturn spread to core members France and Germany, a survey showed today.  Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.7 last month from 49.0 in February, in line with a preliminary reading.  It has now been below the 50 mark that divides growth from contraction since August.  Earlier data from Germany, Europe’s largest economy, showed its manufacturing sector contracted last month and it was a similar story in neighboring France.  In Spain, struggling to implement swinging austerity measures demanded by the European Union to meet tough deficit targets, the sector contracted for the 11th month.  Manufacturing in Italy shrank for an eighth month.  The economic slump will make it even harder for the 17-nation euro zone to overcome its debt crisis as it will depress tax revenues and hurt consumer spending.  Periphery countries have borne the brunt of the sharp downturn as their own austerity measures continue to hamper a return to growth, particularly Greece where the sharp decline in manufacturing continued last month.

Mortgage insurance slightly up

Members of trade group Mortgage Insurance Companies of America wrote $5.4 billion of primary new insurance in February, up from $5 billion in January and $4.2 billion from February 2011, the group reported on Friday.  The members, who include Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, and Radian Guaranty Inc., posted number for primary insurance in force was $397.7 billion, which is down from $399.2 in January and down greatly from $625,764.7 the February before.  February’s cure to default ration was 113.5%, that’s up from January’s 80.9% ratio and slightly up from February of last year, when the rate sat at 112.2%, continuing the trend of February, March and April seeing cure to default ratios of above 100%, which is not so for the rest of the year. 

In April, the Federal Housing Administration (FHA) will increase its insurance premiums.  But already, the FHA insurance premiums have risen significantly over the past 18 months, according to Genworth Financial, increasing a mortgage payment by $95 a month for borrowers at or above 95% loan-to-value ratios.  While many mortgage insurers are operating under state capital ratio waivers, some claim they are ready to take over market share from the FHA.  “Private mortgage insurance is more competitive than ever with FHA, and is well-positioned to take on new risk,” according to statement from Genworth Financial. “By contrast, the FHA is dealing with an unprecedented increase in delinquencies and defaults, and this precarious financial position suggests that FHA may continue to increase costs for FHA loans.”

Undaunted that legislators killed a bill requiring that lenders prove their right to foreclose on a home backers of the failed proposal have filed it as a ballot initiative with a harder approach: Foreclosures can’t happen unless all loan papers are properly recorded with the county first.  That means anytime a lender sells or transfers a note, as has been the practice for several years in the mortgage-backed securities business, the holder must file it with the county recorder of deeds.  Colorado has not required assignments — the legal word for when a mortgage or note exchanges hands — to be recorded for years, a critical part of the problem in determining who actually owns a note during a foreclosure, proponents of the initiative say.  “The intent is to ensure there are no gaps in the line of title,” attorney Stephen Brunette said. “Title records now are being totally messed with. Colorado’s foreclosure process today is fundamentally unsound.”  The ballot initiative — called the Foreclosure Due Process and Fraud Prevention Initiative — squarely takes on Colorado law that uniquely allows for “no-doc” foreclosures, where lenders can take a home without ever having to prove they have that right.

Opponents of House Bill 1156 who helped kill it in a Republican-controlled committee March 13 said the initiative could push lenders from the market.  “Our one concern is that nothing hurt lending in Colorado,” said Don Childears, president of the Colorado Bankers Association. “We’re not jumping to a conclusion that it’s automatically bad and have organizations against it tomorrow. But we’re aggressively thinking through its impact.”  HB 1156 sought to have lenders provide proof — theoretically a certified copy of a mortgage or loan note — that they had the right to foreclose on a property. It also would have required a judge to review the paperwork and certify a lender’s standing before ordering the public auction of a foreclosed home.  The proposed initiative is scheduled for a hearing at the Legislative Council on April 6, the first step to reaching November’s ballot. The proposal would need more than 87,100 validated signatures to get on the ballot, according to the Colorado secretary of state’s office.

3 major banks brace for downgrades

Moody’s Investors Service, one of the two big ratings agencies, has said it will decide in mid-May whether to lower its ratings for 17 global financial companies. Morgan Stanley, which was hit hard in the financial crisis, appears to be the most vulnerable. Moody’s is threatening to cut the bank’s ratings by three notches, to a level that would be well below the rating of a rival like JPMorgan Chase.  Bank of America and Citigroup may also fall to the same level as Morgan Stanley, but those two are helped by having higher-rated subsidiaries.  Credit ratings are particularly important for financial companies, which greatly depend on the confidence of their creditors and the companies they trade with. A high credit rating enables banks to put up less money, which they can borrow cheaply, while a lower credit rating can mean they have to put up more money and perhaps pay more for their loans.  The three banks that stand to be the most affected by a ratings downgrade have already said that they would have to put up billions of dollars more in collateral to back trading contracts.

Olick – investors swarm housing

“The number of homes sold to investors more than doubled last year, as rising rents and low-priced distressed properties fueled demand. Investors, half of them using no mortgage, bought 1.23 million homes in 2011, a 65% jump from 2010, according to the National Association of Realtors. Half of the homes purchased were distressed properties, that is, foreclosures or short sales (when the bank allows the home to be sold for less than the value of the mortgage).  ‘Rising rental income easily beat cash sitting in banks as an added inducement,’ says NAR’s chief economist Lawrence Yun. ‘In addition, 41% of investment buyers purchased more than one property.’  Half of investment buyers said they purchased primarily to generate rental income, according to the Realtors’ report. 34% wanted to diversify their investments, as 2011 saw a volatile stock market due to the debt crisis at home and overseas.

While nearly half of investment buyers said they were likely to purchase another property within two years, housing and mortgage analyst Mark Hanson calls them a ‘thin cohort’ and worries that they add ever more volatility to the current housing recovery.  ‘They are fickle and volatile. They will go away on the slightest of conditions changes. They also won’t chase prices higher or buy new homes from builders. Lastly, without the heavy flow of distressed supply, there is no US housing market recovery. Distressed sales ARE the market,’ says Hanson.  Foreclosure supply is still running high, with 65,000 completed foreclosures in February of this year, according to a just-released report from CoreLogic. 862,000 foreclosures were completed in the twelve months ending in February. While there are still 1.4 million homes in the foreclosures process, all of these numbers are coming down, albeit very slowly, and sales of bank-owned properties (REO) are speeding up.  Even the Realtors are concerned, like Hanson, that new programs by the government and banks to sell foreclosed properties in bulk discounts to large-scale investors, will cut off a robust individual sales market for smaller investors.  ‘Small-time investors are helping the market heal, since REO inventory is not lingering for an extended period,’ says Yun, clearly looking out for his Realtor constituents. ‘Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas.’”

Consumer spending up

The Commerce Department said on Friday consumer spending rose 0.8%, as households probably stepped up purchases of motor vehicles, despite a spike in gasoline prices.  January’s spending was revised up to 0.4% from a previously reported 0.2% gain. Economists polled by Reuters had expected spending, which accounts for two-thirds of US economic activity, to rise 0.6% last month.  When adjusted for inflation, spending rose 0.5%, the largest gain since September, after gaining 0.2% in January. That could cause analysts to raise their forecasts for 2% first-quarter growth.  The economy expanded at an annual rate of 3% in the final three months of 2011 as it got a boost from restocking by businesses, a stimulus that is expected to be lost this quarter.  Consumer spending rose at a 2.1% rate in the fourth quarter and last month’s increase suggested consumers were taking surging gasoline prices in stride, and saving less to supplement their low income.  Spending on goods meant to last more than three years rose 1.6% in February after advancing 1.4% the prior month. Spending on services rose 0.4%. Unseasonably warm weather had curbed demand for utilities in the prior months.

WSJ – investors buying vacation homes

In its annual survey of investment- and vacation-home sales, the National Association of Realtors found that the number of homes purchased by investors rose 65% during 2011 to 1.2 million, accounting for 27% of all home sales. In 2010, investment properties accounted for 17% of all sales.  The number of homes purchased as second or vacation homes jumped 7% last year to 502,000—accounting for 11% of all transactions, up from 10% of all sales in 2010.  While the majority of homes sold last year went to traditional buyers who plan to use the home as a primary residence, their presence in the market declined to 61% from 73% in 2010.  During the housing boom, speculators were blamed for helping to inflate the bubble by snapping up homes, especially new homes, and then quickly reselling them as prices rose higher. That led to overbuilding. Some economists now believe that investors are helping to stabilize the market by buying up excess inventory.

In some of the hardest-hit housing markets, investors are the largest category of buyers. But unlike during the boom years, when many investors were buying properties to “flip” quickly for a profit, many of today’s investors buy the homes with plans to rent them out and sell them when the market improves.  “Obviously, it’s a great rental market, and it’s going to be a great rental market for a while,” said Geoffrey Jacobs, principal at Empire Group, a developer that has amassed a portfolio of nearly 1,000 single-family homes in Phoenix since 2009. Because the typical home that he buys is only about 10 years old, “it’ll compete well with a new home down the road when we go to sell the houses,” Mr. Jacobs said.   Amid increased demand from investors, real-estate agents say there aren’t enough foreclosed homes in good condition available in some markets, including parts of California and Florida. Thirty% of vacation-home buyers said they plan to use the property as a primary residence in the future, indicating that buyers who can afford to take advantage of low prices and low interest rates to buy their future retirement homes are doing so.

Housing markets bottomed in 2009?

The housing industry fell apart quickly and then began a protracted recovery.  Many housing markets hit bottom three years ago in early 2009 when prognosticators claimed that home prices had much further to fall, according to data released by Pro Teck Valuation Services.  The Waltham, Mass.-based real estate valuation firm explored the turnover rate (number of non-distressed sales divided by the total housing stock in a region) as an indication of future home prices. The analysis, the firm says, demonstrates that home prices in many areas are already rebounding from the bottom of the market.   “The Miami and Los Angeles markets are highly representative of what we foresee for most of the important coastal US real estate markets,” Pro Teck Chief Executive Tom O’Grady said. “In particular, we see stabilizing and then gradually increasing prices over the next few years.”  According to Pro Teck, the significant decline in prices in 2009 made home values so compelling that both new owner-occupant homebuyers and astute US and foreign investors came into these markets. The new demand prevented further declines, they say, creating the longer-term “bouncing around the bottom” prices seen today. 

In addition to sales activity, the firm released a listing of the 10 best and 10 worst performing metros as ranked by its market condition-ranking model. The rankings are run for the single-family home markets in the top 200 statistical areas and based on the number of active listings, average listing price, number of sales, average active market time, average sold price, number of foreclosure sales and number of new listings.  “In March, the top ranked metros show a strong connection to states such as Texas and Oklahoma, which directly benefit from the resurgence in the US oil exploration industries,” Michael Sklarz, principal at Collateral Analytics, said. “In addition, most of these markets did not experience price bubbles during the mid-2000s boom period and, thus, never became overpriced in the first place.”

Though the pace of foreclosures slowed, the overall inventory fell because sales of properties seized by lenders rose last month, Mark Fleming, chief economist at CoreLogic, said in a statement.  “With the spring buying season upon us, the inventory may decline further as the pace of distressed-asset sales rises along with the rest of the housing market,” said Fleming.  The share of homeowners that are more than 90 days behind on their mortgage payments edged up to 7.3% from 7.2% in January but was down from 7.8% a year ago.  The inventory of seized homes held by servicers grew faster in February than the pace of sales and the distressed clearing ratio rose to 0.73 from 0.66.  A higher ratio shows a faster rate of home sales compared to completed foreclosures.

Natural gas prices dropping

The collapse in natural gas prices to decade lows amid record supplies have changed the dynamic of the energy industry.  Natural gas is already displacing coal in power generation, driving coal’s share to the lowest level since the 1970s, and promises to drive it even lower. And there’s more talk now that it could replace some gasoline in transportation.  But for now, natural gas is being overproduced across the country, as companies extract shale gas in 32 states and off shore. In just a few short years, the shale gas industry has turned the US from a potential importer of natural gas to a potential major exporter.  This abundance of supply and an unusually warm winter combined to create a record amount of natural gas in storage for this time of year. The latest weekly inventory data is released today at 10:30 a.m. ET by the EIA.  “We are right now at 2.38 trillion cubic feet. It’s a record for this time of year, and it’s 55% above the five-year average,” said John Kilduff of Again Capital.  “April historically sees the start of natural gas injection, or the build in inventories, but this year it started in March,” Kilduff said. The injection period typically runs to Nov. 1, when gas starts to get drawn down for heating.

Housing close to bottom?

Yes, we’ve heard it before, but according to JPMorgan Chase CEO Jamie Dimon, the US housing market is very close to a bottom and there are already signs its improvement is giving a boost to the overall economy.  “I believe we’re very close to the inflection point. People look at prices that are still coming down but all the other signs are flashing green,” Dimon said during a job fair in New York for hiring veterans.  Housing is more affordable and “the shadow inventory everyone talks about is lower today than it was 12 months ago. It will be a lot lower 12 months from now,” he said.  Distressed inventory “is actually coming down, not going up. Homes for sale are about half what they were four years ago. You could come up with a pretty bullish case. If the economy grows, housing gets better, quicker.”  He said the US economy is “getting stronger all the time. It’s broad-based, companies are in great shape…Consumers are in great shape.”

So are the banks — JPMorgan was one of those that passed the Federal Reserve’s latest round of stress tests. The bank was so pleased by this it jumped the gun and announced it was raising its dividend and buying back shares before the official release of the test results.  Dimon believes the threat of a double-dip recession is behind us.  “No one can forecast the economy with certainty,” Dimon said, “but most of us in business [have] got growth plans that have nothing to do with the actual state of the economy. We’re going to always open new branches,” do more marketing, hire more people and work to bring in more customers.

Survey says we’re worse off than before

A CNBC survey found that just 28% of Americans say they are better off now than they were four years. Thirty-seven% said they were better off before President George H.W. Bush lost his re-election bid in 1992 to Bill Clinton.  Fewer people deemed the economy in poor shape than was the case in the previous CNBC survey published in December.  Only 36% of the 836 people in CNBC’s poll conducted between March 19 to 22 said the economy would be better in the next year. By comparison, an NBC/Wall Street Journal poll conducted from Feb. 29 through March 3 found that 40% believe the economy will improve during the next year, a three-point increase in that poll from January.  Overall, respondents in the CNBC survey held a poor view of the economy — with worries about jobs, gasoline and housing prices, as well as the budget deficit, continuing to drag on confidence.

More than half (53%) in the All-America survey described the economy as poor, and 35% said fair. In addition, 52% of respondents say they are worse off than four years ago.  “These are troublesome numbers for the president,” adds Campbell, noting that the better/worse combination is the poorest of six presidential election cycles dating to 1992.  Only one in five suburban women voters felt better off, compared with 53% who felt worse off. The results were slightly better for independents (24% better, 57% worse), and blue-collar workers (28%/59%).

Olick – have refis run out?

“The average rate on the 30-year fixed mortgage is up about a half a percentage point since the middle of February, when they hit a record low. Mortgage refinances, however, dropped 24% in the same period of time.  That’s a huge reaction to a small move from a record low.  ‘Rates have been there (3.75%) for so long that most everybody who could benefit from lower rates has applied,’ says mortgage analyst Mark Hanson. ‘Now, when rates pop up over 4%, it chokes off refi activity, which is sad. 5% rates in the US are now prohibitively high.’  Again, a little perspective here. Mortgage rates, spurred by government intervention in the market, of course, are still incredibly low. The problem is that the refinance business has changed fundamentally. This from analyst Barry Eisbruck:  ‘There used to be a product called cash out refinancing. Those quarterly refinancing numbers are amazing from 2003 vs. 2011. In 2003 you had 4.3T of total mortgage volume, 3T in cash out/refinancing and 1.3T in purchase origination. In 2011 it was around 1.3T of total mortgage volume, 75-80% of that was refinancing, so probably around 300-400B of purchase origination. These numbers are happening with record low rates and home prices at 1Q2003 levels.’

Here’s another strange point: In the fourth quarter of 2011, mortgages were cheaper than they’ve ever been, and yet refinancing was lower than the previous year, when rates were much higher. It all leads to the question: have refis run out?  ‘The decline in the Refinance Index this week was driven largely by a 12.0% drop in government refinance activity, while conventional refinance applications fell by less, decreasing 3.4% from the previous week,’ according to today’s mortgage applications report from the Mortgage Bankers Association.  That’s a problem, because government mortgages (largely FHA) are going to get even more expensive on April 1, when the FHA raises insurance premiums.  There will still be some refis going through the government’s HARP2 program, which allows borrowers who have Fannie Mae and Freddie Mac loans to refinance, even if they owe more on their mortgages than their homes are currently worth (‘underwater’). Those borrowers have been priced out of the refi market until now, but the program has just kicked into gear, so that could provide a boost.  For others, though, the return on a refi is getting ever smaller as rates go higher. Why do we care about refis? Because they put extra money in consumers’ pockets…money they generally spend, fueling the greater economy.”

GDP slow, joblessness slightly down

The US economy expanded a bit more slowly than expected in the fourth quarter while personal income grew at a much faster pace than previously thought, which should help underpin spending this quarter.  At the same time, new US claims for unemployment benefits fell to a fresh four-year low last week, according to a government report that showed ongoing healing in the labor market.  Gross domestic product increased at a 3.0% annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its final estimate today, unrevised from last month’s estimate.  That was below most economists’ expectations of 3.2%, though some had put the number at 3.0%, right on target for the final print. The economy grew at a 1.8% rate in the third quarter.  However, personal income was $13.162 trillion at a seasonally adjusted annual rate, $3.3 billion more than previously reported. Disposable income was $10.6 billion more than previously thought, likely reflecting the strengthening labor market.  Gross domestic income, which measures output from the income side, increased at a 4.4% rate — the fastest since the first quarter of 2010 — from a 2.6% rise in the third quarter.  The department also said after-tax profits increased at a 1.1% rate, slowing from 2.7% the prior quarter. The slowdown in profits reflects the increase in wage costs as companies step up hiring.

WSJ – cutting loan balances

Fannie Mae and Freddie Mac aren’t granting reductions in homeowners’ loan balances, as has been widely noted of late. Nevertheless, some Americans who have gotten into trouble on their mortgages are actually seeing their loan balances cut, as a debate rages in Washington about whether doing so on a wider scale will be effective.  More than 35,000 homeowners received principal reductions from their lender last year, the Office of the Comptroller of the Currency (OCC) said in a report yesterday. The total was up about 20% from about 29,000 in 2010. But it was still down 23% from nearly 46,000 in 2009, when banks started to write down loans acquired at a discount from failed institutions.  Banks are mainly granting homeowners write-downs if they hold those loans on their balance sheet and tend to do so for loans that are significantly under water. They are not permitted to do so for loans that they have sold to Fannie Mae and Freddie Mac, the federally controlled mortgage investors.  Principal reductions made up about 8.5% of all loan modifications completed in the fourth quarter, compared with 7.8% in the third quarter of last year and 2.7% in the fourth quarter of 2010, the regulator said. 

The OCC’s quarterly “mortgage metrics” report covers 31.4 million loans worth $5.4 trillion, or 60% of US home loans. Of those mortgages, about 3.8 million, or 12% had missed at least one mortgage payment, and 1.3 million were in foreclosure as of the end of last year.  Whether to encourage more loan reductions for troubled homeowners has been a matter of intense public interest. The Obama administration has stepped up pressure on the independent regulator for Fannie and Freddie to grant more reductions, offering new incentives to do so.  The federal regulator, the Federal Housing Finance Agency, has been evaluating the incentives the administration has offered. But the agency’s acting director, Edward DeMarco, has resisted doing so, saying that it may not make economic sense for Fannie and Freddie and could encourage more borrowers to default.

In addition to Fannie and Freddie, other government agencies including the Federal Housing Administration and Veterans Administration do not grant principal write-downs.  Fannie and Freddie do use a similar form of loan assistance, known as principal forbearance. That kind of program does not require lenders to forgive debt. Instead, lenders set aside a portion of the loan, not requiring any payments on it until the borrower sells the home or pays off the loan.  Lenders’ use of this approach has grown significantly more than principal write-downs. They enacted nearly 103,000 principal forbearance plans enacted last year, up from about 94,000 in 2010 and 15,000 in 2009. In a letter sent to lawmakers in January, Mr. DeMarco indicated a preference for those forbearance plans, arguing that it “achieves marginally lower losses” for the taxpayer-backed company than principal forgiveness.

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Fed to fine banks

The Federal Reserve says that it plans to fine eight additional US bank holding companies for improperly foreclosing on homeowners. The financial firms — EverBank, Goldman Sachs Group, HSBC Holdings PLC, PNC Financial Services Group, MetLife, OneWest Bank, SunTrust Banks and US Bancorp — were not part of last month’s settlement over alleged foreclosure abuses. Suzanne G. Killian, a senior associate director at the Federal Reserve, called the fines “appropriate” during a congressional hearing in Brooklyn, New York. Killian offered few details about the size of the fines or when they will be levied. The nation’s five biggest lenders — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial — last month agreed to a $25 billion settlement with state and federal government agencies last month after a 16-month probe. As part of that settlement, the five banks agreed to reduce mortgages for about 1 million homeowners. They also will pay into a fund that will send $2,000 to 750,000 homeowners who were improperly foreclosed upon. Separately, government regulators last April ordered 14 mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon. Since then, letters have been sent to 4.3 million borrowers who were at risk of foreclosure during 2009 and 2010. The deadline for borrowers to seek money under the orders is July 31. So far, nearly 122,000 homeowners have asked for an auditor to review their foreclosures.

North America the next middle east for oil?

Increased production of energy from a number of sources including deepwater drilling, natural gas exploration and Canada’s oil sands could make North America the next Middle East, according to a new report from Citigroup. The bank estimates that total North American energy production will rise from 15.4 million barrels per day in 2011 to almost 26.6 million barrels per day by 2020, boosting gross domestic product (GDP) and creating ripple effects throughout the economy. Citigroup analysts say the US will see large gains in oil production from deepwater drilling, while Mexico will begin to reverse recent declines in output. Production of shale gas liquids will increase by 3.8 million barrels per day by 2020. The report says this new production would amount to about 7% of additional global production, “a higher growth rate than OPEC can sustain.” That increase in energy supply will also be accompanied with a decline in demand. US consumption of oil products has fallen by 2 million barrels per day since its peak in 2005, and the Citi report says demand will fall by another 2 million barrels per day over the next decade.

Citgroup expects the shift in energy supply and demand to increase real GDP by between 2 and 3.3%. It also estimates that some 550,000 new jobs will be created directly in the oil and gas extraction sector by 2020. An additional 2.2 to 2.3 million new jobs will be created from the resulting economic stimulus effects of new production by 2020. In its analysis, Citigroup acknowledges infrastructure bottlenecks and legislation that blocks exports of crude oil of US origin. It also points out that new environmental regulations could prevent the scenario from playing out. But the analysts point out the surge in energy production could be game-changing. “It would not only improve incomes and create jobs, but also improve national energy security and reverse perennial current account deficits.”

MBA – mortgage applications down

Mortgage applications decreased 7.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 16, 2012. The Market Composite Index, a measure of mortgage loan application volume, decreased 7.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7.1% compared with the previous week. The Refinance Index decreased 9.3% from the previous week. The seasonally adjusted Purchase Index decreased 1.0% from one week earlier. The unadjusted Purchase Index decreased 0.6% compared with the previous week and was 1.9% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 2.79%. The four week moving average is up 3.25% for the seasonally adjusted Purchase Index, while this average is down 4.31% for the Refinance Index.

The refinance share of mortgage activity decreased to 73.4% of total applications, the lowest since July 2011, from 75.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6% from 5.8% of total applications from the previous week. “With the rate increase last week, refinances are obviously slowing, and the refinance share at 73% is down to its lowest level since last July. With rate/term refinances falling as we go forward, HARP will be a bigger percentage of refinances but will be more concentrated in certain states,” said Jay Brinkmann, MBA’s Senior Vice President of Research and Education. Brinkmann continued, “Some of the largest institutions are reporting that the HARP share of their refinances remained at about 30% last week, but HARP volume is not equal across the country. The states that I started referring to years ago as the sand states that had the worst delinquencies we now should start calling the HARP states for mortgage refinances. We saw big state-level differences in refinance applications for February over January: Florida was up 49%, Arizona was up 61%, and Nevada was up 71%. Refinances in the rest of the country were generally flat or even down. For example, Texas had no change, Colorado was down 3%, Connecticut was up only 2%, and Virginia was up 1%. HARP clearly is a driving force in those states that saw the most defaults and the biggest drops in home equity.”

The average loan size of all loans for home purchase in the US was $225,463 in February 2012, up from $216,888 in January. The average loan size for a refinance was $222,048, down from $227,563 in January. The largest purchase loans were made in the Pacific region at $ 324,606. The largest refinance loans were also made in the Pacific region at $ 305,949.

US exempts EU from sanctions

The United States on Tuesday exempted Japan and 10 EU nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran’s top customers China and India exposed to the possibility of such steps. The decision is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the US financial system under new sanctions designed to pressure Iran over its nuclear program. The list did not, however, include China and India, Iran’s top two crude oil importers, nor US allies South Korea and Turkey, which are among the top-10 consumers of Iranian oil. A US official held up Japan’s estimated 15-22% cut in oil purchases from Iran in the second half of last year as an example for other nations, saying it did so after the “tragedy” of the earthquake that caused the Fukushima nuclear disaster. “Japan was a model,” State Department Special Envoy and Coordinator for International Energy Affairs Carlos Pascual told lawmakers. “If Japan was able to do what it did … that should be an example to others that they could potentially do more.”

Olick – rising rates may not hurt housing

“It was barely a few weeks ago that mortgage rates were sitting at record lows. The idea of rates over 4% on the 30-year fixed seemed a distant memory. And here they are now at 4.05% on the Bankrate.com overnight, thanks to the recent rise in Treasury yields. The housing market, it seems, just can’t catch a break. Or can it? As the economy improves, the job market improves, and that is a key driver for housing. But on the flip side, as the economy improves, investors finally crawl out of the Treasury bunkers, driving yields higher, and mortgage rates generally follow the 10-year Treasury. ‘We will definitely see a freeze up in refi’s immediately but the decision on a purchase still won’t be impacted until rates get at least to 4.5% I believe,’ says Peter Boockvar at Miller Tabak. ‘Assuming a $200k mortgage, going from 4 to 4.5% in mortgage rate adds about $60 per month to one’s payments, and while an extra $700 per year matters, I’m not sure if it’s a deal breaker.’

While rates have moved a good quarter of a% in the past few weeks, most analysts don’t think they’ll go much higher. ‘Mortgage rates were too high anyway, relative to the 10-year Treasury, so I don’t think you will see a parallel shift,’ says FBR’s Paul Miller, who spoke to several bankers today. They told him mortgage volume is good, which helps keep rates competitive. ‘But it does take time for this stuff to flow through the markets,’ he adds. And then there could be one other phenomenon, as described by Freddie Mac’s chief economist Frank Nothaft: ‘When rates tick up, you may see some potential home buyers who have been sitting on the sidelines, suddenly they may get up, as they are concerned that maybe this is the beginning of a trend, and they don’t want to miss out on these 60-year low mortgage rates. In the near term it can encourage buyers.’”

Oil up to $107 per barrel

Oil prices rose to near $107 a barrel Wednesday after a report showed US crude supplies fell unexpectedly, a sign demand may be improving in the world’s largest economy. By early afternoon in Europe, benchmark oil for May delivery was up 49 cents to $106.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.49 to settle at $106.07 per barrel in New York on Tuesday after Saudi Arabia said it could pump more oil to cover any shortages. In London, Brent crude for May delivery was up 27 cents at $124.39 a barrel on the ICE Futures exchange. The American Petroleum Institute said late Tuesday that crude inventories fell 1.4 million barrels last week, breaking a two-month trend of growing supplies. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels. Inventories of gasoline fell 1.4 million barrels last week while distillates rose 600,000 barrels, the API said.

LPS – first look report
Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, reports the following “first look” at February 2012 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans.

Total US loan delinquency rate:7.57%
Month-over-month change in delinquency rate: -5.0%
Year-over-year change in delinquency rate: -14.0%
Total U.S foreclosure pre-sale inventory rate: 4.13%
Month-over-month change in foreclosure presale inventory rate: -0.5%
Year-over-year change in foreclosure presale inventory rate: -0.3%
Number of properties that are 30 or more days past due, but not in foreclosure: (A) 3,781,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:1,722,000
Number of properties in foreclosure pre-sale inventory: (B) 2,065,000
Number of properties that are 30 or more days delinquent or in foreclosure: (A+B) 5,846,000
States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL
States with the lowest percentage of non-current* loans: MT, AK, WY, SD, ND

*Non-current totals combine foreclosures and delinquencies as a% of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets
(2) All whole numbers are rounded to the nearest thousand
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by in-depth charts and graphs that reflect trend and point-in-time observations.

Money printing going out of style

The era of quantitative easing—a process by which central banks buy assets such as government bonds to inject funds in the markets—may be coming to an end, according to a survey of fund managers. According to a March survey by Bank of America Merrill Lynch, investors are more upbeat about the future and the prospects for growth and they no longer expect further quantitative easing measures to be taken by the Federal Reserve or the European Central Bank. In the survey, 28% of fund managers said they expected the global economy to strengthen in the next 12 months, up from 11% in February. This was the highest reading since March last year. But the report did find that fund managers still see sovereign debt as the biggest tail risk to the global recovery. Investors do foresee higher inflation, with a net 13% expecting it to rise in the coming year.

WSJ – housing mixed

US home building fell in February, but permits for new construction reached their highest levels in nearly 3½ years, reflecting housing’s uneven and protracted recovery. Home construction decreased 1.1% from January to a seasonally adjusted annual rate of 698,000, the Commerce Department said yesterday. Construction of single-family homes, which makes up more than 70% of housing starts, fell by 9.9% – the largest drop in a year. Meanwhile, multifamily homes with at least two units, a volatile part of the market, posted a 21.1% gain. Still, January’s figures were raised to 706,000 starts overall, a 3.7% improvement from December and the highest level since October 2008.

In a positive sign for future construction, the February data showed new building permits rose by 5.1% from a month earlier to an annual rate of 717,000 – also the highest level since October 2008. The housing sector has been healing slowly after prices collapsed more than five years ago. A National Association of Home Builders (NAHB) report on Monday showed that US home builders’ confidence in the market held steady in March at the highest level since 2007. “The level of activity still remains far short of the pace implied by the NAHB index so we look for further gains over the next few months in both sales and starts,” said Ian Shepherdson, chief US economist at High Frequency Economics. “Housing will add to growth all year, and beyond.”

But Joshua Shapiro, chief US economist at MFR Inc., said that so far, the home builders association’s level of confidence hasn’t been matched by actual construction. “Our view remains that single-family housing starts are in a long-term bottoming process but that an enormous overhang of existing single-family home supply will prevent sharp gains in single-family starts in the near to medium term,” Mr. Shapiro said. NAHB said Monday that its members continue to face obstacles, including tight credit for both builders and buyers and a large inventory of inexpensive, foreclosed homes in many markets. The Commerce Department data showed that housing starts were mixed across four US regions. The Northeast posted a 12.3% decline, while starts in the West dropped 5.9% last month. Starts rose 3% in the Midwest and 1.5% in the South. Actual housing starts, calculated without seasonal adjustments, grew to 48,100 in February from 46,500 in January. Lumber and commodities markets watch those numbers closely to gauge demand.
See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

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

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 150 high-value, high-profit
properties

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

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

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

* Follow me on Twitter: http://twitter.com/mclaughlinchris

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

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Christian Science Monitor – ten best cities to buy short sales

10. Seattle-Tacoma-Bellevue, Wash. (average short sale discount – 24.5%)

Short sales took off in the Seattle area in the fourth quarter of 2011: 925 pre-foreclosure homes were sold. That’s a whopping 46% increase from the same period a year earlier and represented 7.4% of all home sales in the area, at an average price of $245,403. Buyers of short sale homes reaped a nearly 25% discount off non-foreclosure homes. Seattle is also among the top metros to buy foreclosure properties generally, at an average discount of 43%.

9. Phoenix-Mesa-Scottsdale, Ariz. (24.7%)

Phoenix is the sixth-most populous city in the United States. Known as the Valley of the Sun, the Phoenix metropolitan area had the second-highest number of pre-foreclosure home sales on the list, with 7,112 (up 43% from the fourth quarter of 2010). Short sales made up 20.3% of all homes sold in the area, at an average price of $122,212. As a state, Arizona saw one of the largest year-over-year increases in pre-foreclosure sales, up 48%.

8. Portland-Vancouver-Beaverton, Ore./Wash. (26.1%)

The Pacific Northwest is a pricier housing market that Phoenix, with fewer homes available. The area sold only 679 pre-foreclosure homes in the fourth quarter, which is the third-lowest number on the list (the minimum for inclusion is 500 homes). Still, that’s up 37.2% from 2010, and a willing buyer can get a short sale home for an average price of $190,042, which represents an average discount of 26.1% below market value.

7. Los Angeles-Long Beach-Santa Ana, Calif. (28.0%)

The most populous state in the country, California saw short sales increase in the fourth quarter. Los Angeles led the charge, with the most short sale houses sold of any metro in the country, let alone the state, at an average sale price of $342,668. In terms of total home sales, Los Angeles also boasts the highest percentage of short sales on the list, at 22%.

6. Jacksonville, Fla.(28.8%)

Situated on the St. Johns river at the top of Florida’s Atlantic coast, Jacksonville is the largest metropolitan area in the country from a geographical standpoint. It’s cheap, too – 677 short sale homes were sold in the area in 2011′s fourth quarter, at an average sale price of $116,447. Jacksonville saw a 41.34% increase in short sales from 2010, with pre-foreclosures making up 12.4% of all home sales in the area.

5. St. Louis (29.6%)

The St. Louis area has by far the cheapest housing market of the short sale metros on the Top 10 list. Nearly 600 pre-foreclosure homes were sold there in the fourth quarter of 2011, at an average price tag of $96,131. Short sales made up only 5.7% of home sales in St. Louis (the lowest proportion on the list), but short sales increased 19.9% from 2010.

4. Atlanta-Sandy Springs-Marietta, Ga. (32.9%)

Georgia’s foreclosure problem has continued to worsen in recent years. Foreclosure sales made up 39% of total home sales for the state in the fourth quarter of 2011, the third-highest of any state. As a result, the Atlanta area ranks high in both short sales and foreclosure sales.  The area saw the biggest surge in short sales of all the cities on the Top 10 list, with 3,387 homes sold, up 63% since the same period in 2010. Short sales made up 14% of all home sales in the quarter, with an average price tag of $123,271.

3. Chicago-Naperville-Joliet Ill./Ind./Wis. (33.5%)

In addition to a deep average discount on short sales, the Chicago metro is one of the top places to buy foreclosed homes, with an average discount of 49.1%. Chicago sold 2,409 pre-foreclosure homes in the fourth quarter of 2011, at an average sale price of $156,349. That’s a 28.9% increase from the fourth quarter of 2010.

2. San Jose-Sunnyvale-Santa Clara, Calif. (37.3%)

Home to Silicon Valley, the San Jose metro area is located just south of San Francisco and is the third largest metro in the state. In the fourth quarter of 2011, 1,169 homes were sold in short sales at an average price of $398,413. That’s the highest price among the cities on the Top 10 list, even with one of the biggest discounts in the US. Short sales increased 34.1% from the end of 2010 and made up 18.6% of all home sales in the San Jose area.

1. San Francisco-Oakland-Freemont, Calif. (41.0%)

Discounts for short sale homes don’t come any bigger than this in major metropolitan areas: more than 40% in San Francisco. Such sales surged 50% in the San Francisco metropolitan area from the fourth quarter of 2010: Nearly 3,000 homes in pre-foreclosure were sold in 2011′s fourth quarter, at an average price of $330,733. Short sales made up 19.2% of all home sales. The city is not among the top markets  for deeply discounted foreclosure homes, indicating that lenders are taking measures to help homeowners avoid foreclosure.

Goldman Sachs cut jobs

Goldman Sachs has begun a new round of staff cuts in its trading and investment banking divisions, three sources familiar with the matter said, a sign of continued cutbacks on Wall Street.  The job cuts follow 2,400 positions Goldman eliminated last year, and further reductions are possible as the company continues to reduce costs to raise profitability, the sources said.  The latest round of cuts is part of Goldman’s annual employee review process.  The new job cuts are taking place in all of Goldman’s four main divisions, including sales and trading, investment banking, wealth management and investing and lending, according to one source familiar with the matter.  Many of the cuts are aimed at traders who can be replaced with new technology, or back-office, technology and operations staff who can be replaced with less expensive employees, the source said. The bank has been pushing aggressively to replace staff in high-cost areas like New York and New Jersey with less costly workers in Salt Lake City, where the company is building a sizable workforce.

Housing starts down

The Commerce Department said housing starts slipped 1.1% to a seasonally adjusted annual rate of 698,000 units. January’s starts were revised up to a 706,000-unit pace from a previously reported 699,000 unit rate.  Economists polled by Reuters had forecast housing starts little changed at a 700,000-unit rate. Compared to February last year, residential construction was up 34.7%, the biggest year-on-year rise since April 2010.  New building permits surged 5.1% to a 717,000-unit pace last month, far exceeding economists’ expectations for an advance to a 690,000-unit pace from January’s 682,000-unit rate.  Housing starts last month were pulled down by a 9.9% drop in the construction of single-family homes — which account for a large portion of the market.  Groundbreaking for multifamily housing projects soared 21.1%. This segment is benefiting from rising demand for rental apartments, as falling house prices discourage some Americans from owning a home.  Housing starts in the South rose to their highest level since October 2008.  Permits to build single-family homes jumped 4.9% to a 472,000-unit pace — the highest since April 2010. Permits for multifamily homes increased 5.6% to a 245,000-unit rate.

Small cars costing more

Across the board, prices for these cars are moving up along with gas prices.  KBB tracks used car prices week to week. For the week ending March 2nd, it found used car prices jumped 1.3% to $12,286. That should not come as a surprise given the way auction prices have shot up. Used car auction house Adesa says the average compact car sold for $6,942 (up 4.4%) on the wholesale market in February.  While automakers are moving as quickly as possible to ramp-up production of small cars or at least the small fuel-efficient engines to put in those cars, it won’t happen overnight. So expect the tight inventories for many small cars to continue for some time. Eventually, that could play out with small cars selling with a minimal discount to the sticker price. Perhaps even at a premium to the MSRP.  One thing is certain, we won’t see increased incentives or rebates for new cars anytime soon. Automakers don’t need to grease a market where buyers are coming into the showroom.

Olick – did a warm winter steal spring housing?

“As if we really needed a reminder that today’s housing market is still very fragile, the first installment in a slew of housing data to be released this week came in below expectations.  Home builder sentiment, as measured by the National Association of Home Builders’ monthly sentiment survey, was unchanged in March, and February’s reading was revised down.  This after five straight months of gains in builder confidence.  ‘Many of our members continue to cite obstacles on the road to recovery, including persistently tight builder and buyer credit and the ongoing inventory of distressed properties in some markets,’ said NAHB chief economist David Crowe in a release.

Most troubling was a big drop in sentiment out West, which is where the bulk of the nation’s foreclosures and distressed properties are. Banks are really ramping up the foreclosure process now that the so-called ‘Robo-signing’ settlement is behind them and new guidelines are in place. That means more foreclosed properties will be hitting the housing market, as the still-swelled pipeline finally begins to empty.  While the all-important South region, most meaningful for the builders, saw an increase in sentiment, it is still below the national average, and overall current sales were down and buyer traffic was flat. Only sales expectations over the next six months rose. That could have a lot to do with unseasonably warm weather.  With temperatures in most of the country hitting near record highs in January and February, it begs the question, did much of the Spring market start early, and did it steal from the historically strong months of March and April?  ‘We think it has pulled forward a useful amount,’ says analyst Stephen East of ISI Group. ‘It definitely helps breaking ground and has been a big help on the jobs front.’

In fact ISI studied weather in all four regions and reported that while favorable economic trends and specifically job growth are the primary driver of renewed housing activity, ‘We believe some demand was pulled forward from the later Spring months, implying the first quarter could be above investor expectations, while the second quarter could be below expectations.’  Weather cannot be discounted in home sales, especially sales of new construction, since builders can offer potentially faster turnarounds for new orders if they’re not hampered by frozen earth. February saw a big spike in the ‘current sales’ component of the home builder sentiment index. Buyer traffic in March was unchanged.”

House GOP wants to overhaul tax code

House Republicans will call for overhauling the US tax code by reducing rates as well as the number of income tax brackets as part of their 2013 budget proposal.  House Budget Committee Chairman Paul Ryan of Wisconsin is slated to unveil today a tax and spending plan that would shrink the number of brackets to two from six with rates set at 25% and 10%. The top rate now is 35%.  Ryan’s proposal would also eliminate the alternative minimum tax while reducing the corporate tax rate from 35% now to 25%, according to documents provided by his office.  The plan may revive Republicans’ call last year for overhauling Medicare, though with a compromise Ryan has since written with Oregon Democratic Senator Ron Wyden on the health program for the elderly and disabled. It may also spur a reprise of proposals to carve big savings from other safety net programs to drive down the government’s $1.2 trillion deficit.  Though the proposals probably won’t become law anytime soon, they are certain to inflame an election year debate over what to do about government red ink.  “We’re back with a budget that offers real solutions,” Ryan said in a video posted yesterday on his website. “Americans have a choice to make — a choice that’s going to determine our country’s future.”

Fast foreclosure bill may return

Florida’s quickie foreclosure bill died quietly in the Senate on the last day of the 2012 legislative session, and although homeowner advocates fear it will reappear next year, sponsor Kathleen Passidomo said it may not be her pushing it.  The Naples Republican is confident the controversial bill, dubbed the Florida Fair Foreclosure Act, would have passed if it had come up for a vote by the full membership. Instead, she said it got lost in the last minute hustle to hear dozens of proposals before the end of the session March 9.  The Florida Bankers Association agrees there were enough votes in the Senate to pass the nationally watched proposal, which flew through the House in a 94-17 vote on Feb. 29.  But Anthony DiMarco, executive vice president of government affairs for the association, said it’s too early to tell what kind of expedited foreclosure plan may materialize in 2013.

The association said in its end-of-session newsletter that it believes “internal Senate politics” led to the bill’s demise and that it will push for similar foreclosure legislation next year.  “I think there will be a foreclosure bill filed next year if the prediction of a huge glut of foreclosures in the courts holds true, but whether I file it or not, I don’t know,” said Passidomo, noting that she has other interests and that this was the second time she tried and failed to streamline the state’s foreclosure logjam with legislation. “This was a missed opportunity.”  Still, it was the furthest a bill aimed at reducing Florida’s mounting foreclosure backlog has made it since the real estate crash. An estimated 368,000 foreclosure cases are in the courts statewide, with more on the way.  February foreclosure statistics released last week by the research group RealtyTrac showed a nearly 53% increase in South Florida filings compared with the same time in 2011. The spike was 40% statewide.  “I would be very surprised if the bill does not come back,” Boca Raton attorney Margery Golant said. “The industry is pushing everywhere it can to be able to move faster on foreclosures.”

WSJ – Wall Street keys on rentals

Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae.  The idea is that the new owners would rent out the homes at first rather than reselling – potentially aiding a housing-market recovery by reducing the number of properties clogging the market. The fact that big-name investors are interested also suggests they anticipate sizable future profits in housing.  Currently, banks selling through regular real-estate listings are getting more than 90 cents on the dollar of their asking price, according to industry analysts. They could be reluctant to unload properties in bulk if it means selling for much less.  Firms considering bids include Austin, Texas-based broker-dealer Amherst Securities Group and a fund run by mortgage-bond pioneer Lewis Ranieri. Hedge-fund manager Paulson & Co. and private-equity investors Colony Capital LLC are also considering bids, according to people familiar with the process.  The sale consists of 2,500 homes divided into eight regional pools, ranging from 572 properties in Atlanta to 99 in Chicago. The total current market value is $320 million, according to an offering document prepared by Credit Suisse, which is advising Fannie.

Bulk sales, however, pose a trade-off. While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs. It is unclear which would be least costly ultimately to taxpayers, who are responsible for the big mortgage-finance company’s losses.  Purely in dollar terms, the sale would be small by Wall Street standards. But it could offer clues about whether investors are willing to pay prices high enough to entice Fannie Mae – along with its sibling Freddie Mac, federal agencies and banks-to do more bulk-sale deals in the future.

Bernanke justifies Fed

Federal Reserve Chairman Ben S. Bernanke returns to his roots as a university professor today, seeking to explain and justify the existence of the central bank ahead of the 100th anniversary of its founding next year.  Bernanke will deliver the first of four hour-long lectures on the history of the Fed as part of what public relations specialist Richard Dukas called a “P.R. offensive” to buff the central bank’s tarnished image. The Fed is being attacked from both the left and the right, with liberals criticizing it for not doing enough to bring down unemployment, and conservatives blaming it for doing too much and risking faster inflation.  Bernanke’s return to the milieu where he spent more than two decades will give the Fed’s top policy maker an opportunity to “set the narrative” on the central bank’s role during and after the financial meltdown, said Princeton University professor and former Fed Vice Chairman Alan Blinder. “The question of who gets to write the history is an important one.”  If Americans lose faith in the Fed’s ability to manage the economy and contain inflation, that will rob monetary policy of some of its potency, according to Dana Saporta, director of US economics research for Credit Suisse Securities in New York. Policy has “less effect the less confidence the public has in the Fed,” she said.

HARP still a massive failure

Fewer underwater homeowners worked through the Home Affordable Refinance Program (HARP) in December than in any other month in more than a year, despite changes that removed previous barriers.  About 2,700 mortgages with a loan-to-value ratio between 105% and 125% received a HARP refinancing in December, down 47% from November and the lowest since October 2010. All HARP refis fell 36% monthly to 23,000 in December, hitting a low not seen since November 2009.  Total refinancings at Fannie Mae and Freddie Mac rose 5% to 376,000.  The data released by the Federal Housing Finance Agency (FHFA) included no loans with LTV ratios above 125% — now considered eligible. Those changes, dubbed HARP 2.0, took effect at the beginning of December.  Corinne Russell, a spokeswoman for the FHFA, said the agency’s data likely won’t reflect the changes until it releases numbers for the first quarter of this year. She said it typically takes 60 days to originate and close a loan and another 90 days from closing to loan delivery to Fannie and Freddie.

But with the changes, Russell said the agency is hearing that more lenders are refinancing loans with LTV ratios above 105%.  “Anecdotally, we know that lenders are embracing HARP 2.0, originating loans under the new terms,” Russell said in an email.  Analysts reviously predicted effects if the changes might not surface until February’s data.  HARP refinancings totaled 93,000 in the fourth quarter, bumping up the cumulative total 10% to 1.02 million over the life of the program.  Mortgage servicers closed 19,500 trials through the Home Affordable Modification Program in the fourth quarter, bringing the cumulative total to roughly 400,000. Active HAMP trials ended the fourth quarter at 36,391, down from 42,279 as of Sept. 30.  Short sales and deed-in-lieu deals increased 13% to roughly 35,000 in the fourth quarter, the highest total since the government placed Fannie and Freddie into conservatorship.  Julia Gordon, FHFA manager of single-family policy, said the agency is working to streamline policies in those programs.  “It’s not as if there’s some enormous gulf between the policies,” Gordon said. “Even small differences in policy can create frictions that are not necessary.”  Foreclosure starts at the government-sponsored enterprises declined to 218,000 from 224,000 in the third quarter, and mortgages 90-plus days delinquent dipped slight to 3.78% from 3.81% of Fannie and Freddie’s portfolio. Florida led states in those delinquencies at 11.5%, followed by Nevada and New Jersey at 8.3% and 6.3%, respectively.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

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

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties

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

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

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

* Follow me on Twitter: http://twitter.com/mclaughlinchris

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

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Settlement to boost short sales

The government’s $25 billion settlement with the nation’s five biggest mortgage servicers over so-called “robo-signing” practices could boost short sales, as loan servicers will receive credit when they approve sales that include forgiveness of a portion of underwater homeowners’ debt.  Although the settlement is only expected to help a fraction of homeowners who owe more their properties are worth — perhaps one in 20, according to one estimate — it will also help bring certainty back to housing markets by removing some of the obstacles that have been keeping homes stuck in the foreclosure pipeline.  Announced last month, detailed terms of the agreement between mortgage servicers and a coalition of state attorneys general and federal agencies were filed today.

Broadly, the settlement calls for mortgage servicers to pay $5 billion in fines and commit to a minimum of $17 billion in homeowner relief, including principal reductions. Another $3 billion is earmarked for helping underwater borrowers refinance. “We will see an increase in short sales, because lenders and loan servicers will get the same credit for doing a short sale, as if they did a loan modification or principal reduction,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings LLC.  Allowing debt forgiveness on approved short sales to count against the required $17 billion in principal reductions helped secure a settlement that will reach more borrowers, the paper said. Loan servicers will also get partial credit even when it’s investors, rather than the banks themselves, taking the loss.

Also, if the remaining six to 14 loan servicers sign on to the settlement, it would grow to about $30 billion with more than $45 billion in benefit to homeowners, HUD said.  Cade Holleman, executive director of the Irvine, Calif.-based National Association of Women REO Brokerages, said the day is fast approaching when brokers and agents who have concentrated heavily in real-estate owned properties will have to diversify.  Short sales, refinancings, and loan modifications are each “pulling REO inventory out of the game,” he said.  “You’ve got to keep your eye on that process,” Holleman said.  “You can no longer be 80% REO,” but must diversify into short sales and property management.

Retail sales up

Total retail sales increased 1.1%, the Commerce Department said, after an upwardly revised 0.6% rise in January.  Economists polled by Reuters had forecast retail sales rising 1% after a previously reported 0.4% gain in January.  Sales last month were buoyed by a 1.6% rise in sales of motor vehicles, reflecting pent-up demand by households and growing confidence in the economy as job creation speeds up.  Excluding autos, retail sales advanced 0.9% last month, adding to January’s upwardly revised 1.1% gain.  Gas prices rose 20 cents last month, according to government data.  Sales at gasoline stations surged 3.3%, the biggest gain since March last year, after rising 1.9% in January. Excluding autos and gasoline, sales rose 0.6% in February after increasing 1% the prior month. Gasoline accounted for 11.5% of retail sales in February.

Outside autos and gas stations, details of the report were fairly upbeat, suggesting recent solid gains in employment were supporting consumer spending.  Last month, clothing store receipts jumped 1.8%, the largest increase since November 2010, while sales at building materials and garden equipment suppliers advanced 1.4%.  So-called core retail sales, which exclude autos, gasoline and building materials, were up 0.5% after advancing 1.0% in January.  Core sales correspond most closely with the consumer spending component of the government’s gross domestic product report.   Sales at restaurants and bars rose 0.8%, while receipts at sporting goods, hobby, book and music stores increased 1.0%.  Sales of electronics and appliances rose 1.0%, while receipts at furniture stores fell 1.2%.

Olick – rent bubble?

“Typically when rents go up, more renters turn to home buying.  When home prices go up, more turn to renting, but today’s housing market is anything but typical.  Rents were up 3% nationally in January, year-over-year, according to a soon-to-be released new rental index from Zillow.com. Home prices, however, were down 4.6% annually.  When you look locally, the numbers are more dramatic.  In some markets, rents rose almost as much as home values fell. Take Chicago, for example, where rents were up just over 9% annually while home values were down just over 10%. The same is true for Minneapolis, where the divide is nearly the same. In San Francisco and Detroit, rents are up around 5% while home prices are down the same. It begs the question, as the rent vs. own divide grows, will the rental bubble suddenly burst?  Right now investors are rushing to get in on cheap foreclosures, hoping to turn them around for quick rental income. The regulator of Fannie Mae and Freddie Mac, the FHFA, is in the midst of a pilot program to sell 2500 foreclosed properties to investors as rentals. The bulk of these properties are already rented, which means buyers get a turn-key investment with instant returns.  In the meantime, multi-family housing starts were up over 14% in January from December and have been rising steadily as developers look to cash in on high rental demand and relatively low supply. Multi-family REITs are seeing big returns.

So what exactly is the tipping point, given that mortgage availability is still tough, consumer confidence in housing is still weak, and employment, while improving, is still not where it needs to be to spur strong buyer demand?  ’While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales, as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes,’ says Zillow chief economist Stan Humphries.  More supply of rental homes, especially single family, could slow the upward trajectory of rent rates, which in turn would make renting more attractive and buying less so. It just raises a red flag to see home affordability at a record high, investors rushing in, and rents so strongly outpacing home values.”

Banks to face tough reviews

Banks will face stiff penalties and intense public scrutiny if they fail to live up to the standards of a $25 billion mortgage settlement with state and federal authorities, according to court documents filed as part of the deal Monday in federal court in Washington.  While the broad outline of the deal was announced last month, the mechanics of the agreement that took more than a year to negotiate were laid out in Monday’s filing, including exactly how much credit the five banks would receive for varying levels of loan forgiveness and just what kind of conduct from the past is off-limits to future investigations.  Banks must review their adherence to the new rules every quarter through a random sampling of cases, with a maximum threshold for errors at 1% in some cases if they are to avoid fines. “Any error that is found during the sampling process will have to be corrected,” the official said.  In some cases, servicers would face civil penalties of up to $1 million for each violation of Monday’s consent order.  Repeat violations could bring fines of $5 million each. An independent monitoring and enforcement office is being set up under the agreement, to be paid for by the banks, that will be led by Joseph A. Smith Jr., the former North Carolina banking commissioner.

The complaint, which specifies the terms of the settlement, comes nearly 18 months after reports of “robo-signing” and other abuses in the foreclosure process set off a nationwide furor, and marks another legal milestone in the wake of the bursting of the housing bubble and the financial crisis of 2008-9.  The five banks covered by the settlement - Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally - engaged “in a pattern of unfair and deceptive practices,” according to the complaint. Besides failing to perform modifications for borrowers seeking to ease the terms of their loans, the documents also cite what consumers have been complaining about for years: lost applications and other paperwork, inadequately trained staff and wrongfully denied modification requests.

WSJ – rise in Phoenix housing shows the way to recovery

As home prices continue to drop in most cities, a nascent real-estate rebound here holds lessons for the rest of the country.  This sprawling desert metropolis was one of the hardest hit housing markets during the bust. Phoenix home prices declined 55% from 2006 through the end of 2011, and Arizona’s foreclosure rate jumped to No. 3 in the nation in 2009. Hundreds of thousands of homeowners are underwater.  Now real-estate economists across the country are studying an early but surprisingly broad Phoenix turnaround. The sharp drop in home prices has brought new buyers into the market. Unlike other markets where housing recoveries have been snuffed out by big overhangs of homes for sale and foreclosed properties, inventories are lean here.  “Phoenix has hit a bottom,” says Thomas Lawler, an independent housing economist who was one of the first to warn six years ago that prices in overbuilt metros were poised to fall.  The nation’s hard-hit housing markets face a tough act: engineering a housing recovery without traditional trade-up buyers, many of whom are either unwilling or unable to sell because of huge price declines.

Phoenix has found a viable formula. Low prices are igniting demand from first-time buyers and investors who are converting the homes to rentals. The local economy is on the upswing with several big employers like Amazon.com Inc. and Intel Corp. hiring again, which is further increasing demand for housing. And the region is benefiting from a surge of buyers from Canada who are using their favorable exchange rate to scoop up bargains in the desert.  Local mom-and-pop investors are also playing key roles in soaking up supply. Out-of-state buyers accounted for one-quarter of all purchases last month. One in every 25 sales went to a buyer that listed a Canadian address when registering the sale, according to the Cromford Report, a local real-estate publication. Many are flush with cash from a real-estate boom of their own in Canada and an exchange rate that has given Canadians unusual buying power.

Nationally, housing demand still remains weak and bank-owned sales are expected to rise this year, putting more pressure on prices. Many economists say they expect home prices nationally could fall by another 3% or so this year before hitting a bottom next year. Most expect that prices will rise little for several years.  US home prices fell another 2% in the fourth quarter on a seasonally adjusted basis, according to the Standard & Poor’s/Case-Shiller index tracking 20 cities. But prices rose by 2% in Phoenix, the biggest increase of any metro area in the country. Over the past year, prices in Phoenix are down by 1.2%, the smallest drop since its prices started falling in 2006.  Big price drops, like those in Phoenix, are another key. In Detroit, prices are down by 46% over the past six years and have fallen to levels last seen in 1994. Sales have picked up in Miami, where prices are down by 51% over the past five years.

But low prices alone haven’t been enough to so stabilize other epicenters of the housing bust where job growth still lags. In Las Vegas, where prices have tumbled 62% since 2006, including 8.9% over the past year, the local economy is heavily dependent on tourism and gambling, both industries that haven’t recovered. “A lot of markets in the country have hit a bottom, but I just don’t see them coming back the way Phoenix has,” says John Burns, a homebuilding consultant in Irvine, Calif.  The improving housing market in Phoenix isn’t much comfort to anybody who bought a home there a few years ago. More than 52% of mortgage borrowers owe more than their homes are worth, according to CoreLogic, a real-estate data company. And not everyone in Phoenix is convinced that the improvements will last, especially if the economy falters or oil prices soar.  Phoenix saw a small run-up in prices three years ago when federal tax credits spurred a buying frenzy, but prices dropped again once the credits expired. Others worry that banks have delayed foreclosures and will begin to saturate the market with more properties in the coming year.

Small business optimism up

Optimism among small business owners may be increasing at a “glacial” pace, but it’s “mostly headed in the right direction.”  That’s according to William Dunkelberg, chief economist of the National Federation of Independent Business and keeper of the Small Business Optimism Index. The latest survey of 819 NFIB members showed indications that small business owners are starting to spend, and could even ramp up hiring in some sectors over the next few months.  Respondents to the February survey expressed optimism about their expectations for higher real sales, an increase in inventories and positive earnings; these three things taken together helped push the index up 0.4%, to 94.3, the sixth straight increase in the monthly index.  Inventories have decreased for many business owners in the past month – 20% of respondents reported reductions – which is good news for an economy that needs spending to make it grow.

Capital outlays, too, are being planned, according to the survey. “The capital spending number keeps going up,” he noted. “It’s the highest we’ve seen in years.” While still far from normal, he said, “Even if it’s just to fix a leaky roof, business owners’ capital expenditures are rising.”  In the past month, more business owners also added workers – 12% of owners added 3.4 workers per firm.  The November elections, as well as the uncertainty surrounding health-care reform, are causing some business owners to remain on the sidelines, said Dunkelberg, waiting to see the outcome of both before committing to spending and expansion. “There is a lot of political uncertainty between now and November,” he said.  Still, the trend, at least for now, is upward. And for many business owners, even a slow improvement is better than movement in the other direction.

Foreclosures to jump in 2012

Analysts expect between 900,000 and 1 million homes will move from delinquency into REO in 2012, back to levels seen before the robo-signing slowdown.  Servicers moved roughly 800,000 properties through the foreclosure process and into REO liquidation in 2011, according to RealtyTrac. After resolving affidavit problems late last year, banks began moving more properties through the process. JPMorgan Chase analysts expect repossessions to reach as high as 900,000 even with a wave of new alternatives to foreclosure.  “Several major policy changes in the last few months have sped up resolution of the pipeline. Of course, new delinquencies will ensure that full resolution will still take years, but the pace may be faster than we expected,” analysts said.  Daren Blomquist, vice president of RealtyTrac, said that pace could return this year.  “For 2011 we hit 804,423, not quite the 825,000 we were on pace for because of a slowdown in November and December,” Blomquist said in an interview. “We are expecting close to 1 million REOs in 2012 as some of the delayed foreclosures finally complete the process this year.”

The pace began to pick up in January but is still down from 2011. Servicers repossessed 66,500 homes that month, up 8% from December but down 15% from one year ago.  Just because a property moves into REO doesn’t mean it will be resold that year, either. For instance, Freddie Mac data shows the GSE had to wait an average of nearly 200 days to unload an REO. According to Blomquist, there were nearly 538,000 REO sales in 2011, roughly two-thirds of all homes repossessed that year.  About 2.6 million loans, or half of the total delinquency inventory, will be removed either through modification, short sale or a traditional repossession in 2012, Chase analysts said.  The AG settlement guidelines released yesterday could result in 500,000 modifications, according to Chase.  The Treasury Department expanded the Home Affordable Modification Program in January to allow more borrowers to qualify and provide higher incentives for principal reduction.

Analysts still expect the changes to result in relatively few additional modifications, roughly 140,000 added to the 220,000 permanent workouts under the program estimated this year.  If so, HAMP workouts may outnumber the 270,000 proprietary modifications, which have routinely outsized HAMP in the past.  Chase analysts also expect the Fannie Mae and Freddie Mac bulk REO sales and rental programs to reach as high as 100,000 properties. A pilot program began in February to sell just 2,500 Fannie-owned homes.  Roughly 500,000 short sales could occur in 2012, roughly one-third of all liquidations — which include the 900,000 expected repossessions and the new rental program as well.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

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http://www.smartrealestatenews.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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

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

* Follow me on Twitter: http://twitter.com/mclaughlinchris

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

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January on a high for repeat foreclosures

Repeat foreclosures hit an all-time high in January, representing 47% of all starts. Foreclosure starts rose in January suggesting the pipeline is starting to move, according to the latest mortgage monitor report from Lender Processing Services. LPS said foreclosure starts in the first month of 2012 rose 28% from December but fell 11.5% from a year earlier. The data firm says 203,458 starts were recorded in January, compared to 230,023 in January 2011. LPS sees positive changes in the foreclosure pipeline, but  says it’s too soon to call it a trend. When looking at new problem loans, the ratio of troubled mortgages is relatively low nationally but the states with the most seriously delinquent home loans in January included Nevada, Florida, Mississippi, Arizona and Georgia. Nationwide more than 40% of loans in foreclosure are more than two years past due. LPS estimates that refinance opportunities under the new HARP 2.0 are possible for 27.6 million borrowers, but only 6.8 million are probable.

Big Names Rally to Romney

Leading members of the Congress and influential conservatives are showing signs of rallying around Mitt Romney in the presidential race signaling that a coast-to-coast burst of voting on Super Tuesday should mark a moment to start concentrating on defeating President Obama. The endorsements come as the Romney campaign is pressing elected officials and activists in the 10 states that are voting Tuesday and those that do so in the following weeks to help nudge the contest toward a conclusion. A methodical effort is under way among governors, donors and top Republicans to make the case that a long nominating fight could weaken the party’s chances to win the White House, maintain control of the House and gain a majority in the Senate. It is a significant moment for Mr. Romney, but also a critical one for Rick Santorum, who is scrapping for delegates but also trying to win the popular vote in Ohio to revive doubts about Mr. Romney’s appeal among conservative and working-class voters. Newt Gingrich is also fighting to stay in the race, staking the future of his candidacy on a victory in Georgia. Here in Ohio, where voters have developed a well-earned reputation as a bellwether that captures national political sentiments, the primary will help determine the length of the presidential race and the direction of the Republican Party. The state could also provide one of the best opportunities for Mr. Santorum to slow Mr. Romney’s march to the nomination.

Olick: Buying Foreclosures – One Investor’s Key to Success

With potentially millions of foreclosed, bank-owned homes coming to the housing market over the next few years, cash-heavy investors are poised to profit, especially when buying in bulk. The Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, recently announced a pilot property sale program of 2500 foreclosures now on the books of Fannie Mae. Phoenix investor Geoffrey Jacobs is hoping to get in on it. “The ability to buy in bulk adds to our ability to grow our portfolio in a meaningful way in a short period of time,” says Jacobs, principal at Empire Group, which has already bought over 1000 Phoenix-area homes in the past two and a half  years. “When you look at how well these properties lease and the type of  rental yields, it’s a compelling investment.”  When Empire Group first began buying foreclosures in 2009, it farmed out the property management to smaller companies and individuals. Jacobs quickly learned that method was costing precious profit. Just twenty percent of the nation’s 8.7 million single family rental properties are managed by professionals, according to Steve Cook of Real Estate Economy Watch. Individual owner/investors do the bulk of the rest. Owners, according to Cook, may be spending too much time and money on maintenance. Jacobs’ group, however, is very profitable, with 8-9 percent annual returns on his properties. His renters stay, he says, with a 65-70 percent re-up rate. He credits good management and hopes, someday, that his long-term renters will become buyers. Unfortunately, that may take a while, as so many of them need to rebuild their credit. Empire Group has already passed the first round of pre-qualification for the FHFA REO to Rent program and is hoping to clear the second round and start bidding on bulk properties in the next few weeks.

Factory orders fall, as economy staggers once again

New orders for U.S. factory goods dropped in January by the most in over a year as businesses cut orders. The Commerce Department said on Monday orders for manufactured goods fell 1 percent, a less steep decline than the 1.5 percent drop expected by private forecasters in a Reuters poll. Still, it was the biggest decline since October 2010. Many economists think the expiration of some tax breaks on capital spending at the end of 2011 led businesses to bring forward investments. Orders for non-defense capital goods, excluding aircraft fell 3.9 percent in January. This is a closely watched category because it is taken as a sign of businesses’ future spending plans. Shipments for this category declined 3 percent. Business spending and manufacturing have been drivers of the recovery since the 2007-2009 recession.

Home prices fall by smallest margin: Clear Capital

National home prices fell by the smallest margin in 10 months in light of REO saturation increases, a trend that Clear Capital calls “unusual and encouraging.” Prices declined 1.9% year-over-year, according to the firm’s Home Data Index market report. Short-term prices remained stable, falling only 0.6% quarter-over-quarter, highlighting short-term stability over the last few months. All regions showed improvements in yearly and quarterly price drops, while three out of four saw upticks in real estate-owned properties for sale. Clear Capital found that the nation’s top 15 performing metropolitan statistical areas were resilient against higher REO saturation, with six of them showing quarterly price appreciation greater than 2%. Alex Villacorta, Clear Capital’s director of research and analytics, said markets such as Atlanta and Tucson, Ariz., hit hard by the foreclosure epidemic, are filled to the brim with REO properties for sale and will see a falloff in 2013 — if not before.

Ds News: Consumer Credit Points to End of Housing Downturn

Consumer credit data suggests spending will increase and the housing market will begin to emerge from its slump this year, according to Equifax and Moody’s Analytics. Both companies note that as key market data align with pre-recession totals, consumers should anticipate steady economic growth for major credit sectors. Looking across the full spectrum of consumer credit, Equifax and Moody’s found that delinquency rates for auto, bankcard, and consumer finance are back to pre-recession levels. These sectors are expected to contribute to the U.S. economy’s nascent recovery.  The home mortgage lending sector continues to see the highest percentage of delinquencies, the companies’ report notes, even with outstanding mortgage balances (including first liens and home equity lines and loans) having declined by $1 trillion since 2008 and continuing to drop. The companies also note that tighter lending guidelines are reflected in loans made to the prime risk segment. Consumers that fit the bill of a prime risk now account for more than 80 percent of all new mortgage originations.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

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

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

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties

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

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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