federal reserve

Smart Real Estate News & Commentary by Chris McLaughlin August 16, 2010 

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

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

Grab your spot to hear The Negotiation Nanny solve all the steps for your LOAN MODIFICATIONS, short sales, deed in lieus,

forensic audits, forbearance and Lease Back Programs…

forever.  You never talk to banks again!

https://www2.gotomeeting.com/register/165671459

TODAY at 3 PM ET, NOON PST

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

Lowes shows profit 

Lowe’s, the home improvement retailer, reported a profit of $832 million, or 58 cents per share, for the quarter ended July 30. That was below the 59 cents per share analysts were forecasting, but was up 9.6% from $759 million, or 51 cents a share, a year earlier, thanks to cost-cutting measures.  Sales for the quarter rose 3.7% to $14.4 billion from $13.8 billion a year earlier. Analysts were expecting revenue to jump 5% to $14.5 billion.  Lowe’s also gave a more cautious outlook for the year. 

“Longer term, we believe improvements in labor and housing markets will be necessary to support more consistent improvement in demand for home improvement products,” said Robert A. Niblock, Lowe’s chairman and chief executive.  Lowe’s is anticipating earnings per share of up to $1.45 for the fiscal year ending in January, down from $1.47 it previously projected.  Total sales are expected to increase about 4%, a drop from the 5% to 7% increase the company said it was expecting at the end of the first quarter.  Lowe’s stock was up 48 cents to $20.17 in premarket trading.

10 year yield down

Demand for safe-haven Treasurys dragged the yield on the benchmark 10-year note to 2.68% Friday from 2.75% late Thursday. Bond prices and yields move in opposite directions. “The belief that we’re in this stagnating growth phase, which is based on the idea that higher taxes and more uncertainty are going to limit growth, makes the Treasury market a lot more attractive,” said Larkin.  The fact that the yield on the 10-year note is hovering under 3% is a very bad sign for the economic outlook, and if investors don’t become more confident, the yield could sink even lower, he said.  “When yields get this low, it means trouble, and alarm bells should be going off in investors’ minds,” said Larkin. “A lot of people are betting that the economy’s not going to get enough steam, which is leading to frustration, confusion and impatience.” 

Struggling stocks, lackluster economic data and fears of a slowing economic recovery all boosted the appeal of Treasuries on Friday.  A report from the Commerce Department said July retail sales edged up 0.4%, missing economists’ forecasts of a 0.5% gain.  The University of Michigan Consumer Sentiment Index for early August rose to 69.6 from 67.8 the previous month, also just missing expectations.  The Labor Department said its July Consumer Price Index, a key measure of inflation, edged up 0.3% in July, slightly more than the 0.2% rise economists expected.

No wind down of Fannie and Freddie

It’s probably not a big surprise that this administration isn’t about to abolish an institution that it already has its fingers in.  According to officials, any credible proposal to overhaul the government-sponsored enterprises, as Fannie and Freddie are called, would need to include a “thoughtful approach” to prevent house prices from dipping lower.  In all fairness, without government backing, some large investors have said they would stop buying mortgage bonds, a development that would be catastrophic both for the housing market and the broader economy, but pressure is building on the Obama administration, which has promised to submit a proposal to Congress by January, to find a solution.  Since being taken over by the government in 2008, Fannie and Freddie have absorbed nearly $150 billion in aid, making them by far the costliest part of a bail-out that rescued carmakers and financial institutions.  Conservatives argue that the private markets, not the government, should provide financing for home loans.

But liberals say the government should have some role. They point out that the private markets seized up during the credit crisis.  “It’s clear there is no good short-term solution,” said Rajiv Setia, of Barclays Capital.   Last month Mr Geithner promised that an overhaul of Fannie and Freddie would bring “fundamental change” and that they would not survive “in anything like their current form”.  But he added: “I think there’s going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so, again, homeowners have the ability to borrow to finance a home, even in a very difficult recession.”  That sounds like nothing much will happen if the administration is left to tackle this alone.

New York Manufacturing grows

The New York Fed’s “Empire State” general business conditions index increased to 7.10 in August from 5.08 in July.  The August reading was below market expectations. Economists polled by Reuters had expected a figure of 8.00 for August.  Employment gauges showed improvement. The index for the number of employees rose to 14.29 in August from 7.94 in July. The average employee workweek index jumped to 7.14 from -9.52.  The new orders index, however, fell below zero for the first time since June 2009. 

The index of business conditions six months ahead fell to 35.71 in August, the lowest since July 2009, from 41.27 in July.  Despite a small rise this month, the index remains well below its recent high near 32 reached in April. It’s consistent with other recent data showing the U.S. economy has slowed considerably in the past few months, though most economists say a double-dip recession remains unlikely.  The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

HAHB index higher?

The National Association of Home Builders’ housing market index for August is expected to tick up to 15, according to the consensus forecast of economists surveyed by Thomson Reuters.  That would be a modest improvement from July, when the monthly reading sank to 14 — the lowest since March 2009. Readings below 50 indicate negative sentiment about the market.  The index is set for release at 10 a.m. EDT on Monday.  The lackluster economy has made potential buyers skittish about shopping for homes. 

Sales of new homes jumped in June, but it was still the second-weakest month on record. May’s sales were the worst on records dating back to 1963.  The industry received a boost in the first half of the year when the government offered tax credits to homebuyers. But since they expired in April, the number of people looking to buy has dropped. That has happened even though buyers are able to take advantage of the lowest mortgage rates in decades.

House prices slow in June

National home prices rose in June from the same time in 2009, marking the fifth consecutive month of year-over-year increases, according to the latest report from real estate services and data provider CoreLogic.  National prices, including distressed sales, rose by 1.4% in June from a year earlier. The yearly appreciation slowed from the 3.7% increase in May from one year earlier. The May increase was revised up from the initial 2.9% estimate. 

“Home price volatility and collateral risk remain very high,” said CoreLogic chief economist Mark Fleming. “The stabilization phase and policy intervention since the spring of 2009 has run its course. Prices are expected to further moderately decline as the economy remains weak through the fall.”  CoreLogic called the 2.3 percentage point deceleration from May “very large by historical standards,” with deceleration most pronounced in more expensive and distressed housing markets.  Excluding distressed sales, prices rose 0.2% in June from one year earlier.

Now for our real estate education section…

What’s Better – ADR’s or Real Estate?

What’s better…American Deposit Receipts (ADR’s for short) or real estate? In recent months there has been a great deal of interest in ADR’s as a convenient way for American investors to own shares of foreign corporations without the risk associated with overseas investing. Add in the prospect of dividend paying ADR’s and you have a recipe for success…or do you? Today we will investigate the pros and cons of investing in ADR’s to determine how it measures up against real estate.

ADR’s Defined

American Deposit Receipts are a special type of stock that allows investors the opportunity to mirror the value of foreign corporation shares while retaining the convenience of purchasing just like stocks while using US dollars and without the need to use a foreign trading desk.

The benefits of an ADR are impressive; the ability to easily purchase a stake in a foreign owned corporation, dividend paying yields and many of the same protections investors have come to rely upon when investing domestically.

ADR’s Profit Potential & Pitfalls

 Not only do ADR’s benefit from the currency exchange, rapidly rising economy in emerging markets and general growth trends but some ADR’s also pay dividends which can create an even more enticing profit potential.

Unfortunately, all that glitters isn’t gold especially when it comes to ADR’s. ADR’s are handled very differently when it comes to the underlying deposits on hand at the bank so it is essential to fully understand who is holding what and the reporting requirements before investing. It’s also important to note that the exchange rate may work in reverse, effectively reducing profits and yield due to exchange imbalance.

Compare & Contrast

By now it should be obvious that ADR’s certainly represent an interesting investment prospect; rising dividends, potential for capital appreciation and exchange rate returns… but how do they compare to real estate? After all, the most important aspect isn’t what the media thinks but how much profit an investment can generate for your personal portfolio.

To find out the facts, we took the time to research some of the most attractive dividend paying ADR’s currently available and found the majority provide dividends of less than 5% (most in the 1% to 3% range) yet trade at premium levels when compared to the cost of purchasing a similar product in the original nation of origin. Use of leverage may be restricted, lack of familiarity with ADR’s often results in a less robust trading floor due to decreased volume and perhaps most important of all…the real rates of returns often fall short of those enjoyed by average real estate investors just like yourself.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

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

Smart Real Estate News & Commentary by Chris McLaughlin August 11, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

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

Free Planning Session:  Make Money With This Proven Short Sale Strategy… In As Little As One Week!

Discover why there’s been so much excitement about the cash investors that are raking it in with The Short Sale Tsunami… but this free offer is available for a limited time only.  (Which is about all it takes to start making cash with this easy-to-use system.)

Even with no cash, credit, or experience… 

Join us tonight at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/991860034

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

MBA – no major change in mortgage apps

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 0.6% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 0.4% compared with the previous week.  The Refinance Index increased 0.6% from the previous week and the seasonally adjusted Purchase Index increased 0.3% from one week earlier. The unadjusted Purchase Index decreased 0.3% compared with the previous week and was 34.1% lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 1.2%.  The four week moving average is up 1.8% for the seasonally adjusted Purchase Index, while this average is up 1.0% for the Refinance Index.  The refinance share of mortgage activity increased to 78.1% of total applications from 78.0% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.4% of total applications from the previous week.

Fed pessimistic about growth 

At the conclusion of its meeting yesterday, the Federal Reserve warned that the U.S. economic recovery is weakening.  “The pace of recovery in output and employment has slowed in recent months,” the Fed said in its statement. It said while it still expects the economy to grow, the improvement will be “more modest in the near term than had been anticipated.”  The Fed also announced its plan to buy additional long-term Treasurys. The purchase was seen as moving “one step closer to reinstituting a more aggressive policy,” according to a note from Deutsche Bank economists.  Yesterday’s statement was seen as the strongest statement of concern yet by the Fed. 

As expected, the fed funds rate, the central bank’s key tool to spur the economy, remained near 0%, where it has been since December 2008, and it repeated its outlook of the last 17 months that weakness in the economy will keep the fed funds rate at “exceptionally low levels” for an “extended period.”  The Fed made a modest change in that policy at Tuesday’s meeting as it announced it would not allow its balance sheet to shrink as securities reached maturity. Instead, it will reinvest principal payments into long-term Treasuries, concentrating on purchases of 2-year and 10-year Treasuries. Paul Ashworth, senior U.S. economist for Capital Economics, said the reinvestment announcement is “a largely symbolic gesture, designed to reassure the markets rather than boost the economy.” He estimates that it will amount to about $100 billion in additional Treasury purchases a year, a modest amount in the scheme of the Fed’s overall holdings.

Olick – lower rates no major impact on mortgages

“Are you kidding?  What do you mean mortgage rates mean nothing to housing?  Well, we’ve been sitting around record lows on the 30-year fixed for many many months now, and while the refinance market has certainly seen a boost, the home purchase market has not.  A full 78% of residential mortgage applications today are for refis, not purchases. Would things be worse if rates were higher? Of course. I’m just saying they wouldn’t be much better if rates dropped another 40 or even 50 basis points.  Today the Fed Funds rate remained unchanged, which doesn’t tie directly to the 30-year fixed, but in the additional comments, Fed governors said they would put proceeds from maturing mortgage bonds into treasury debt.  So much for an exit strategy. 

The Vanguard Group’s Ken Volpert said he reads in that: ‘Mortgage rates are low and being lower is not going to make a difference.’  Capital Growth Management’s Ken Heebner adds of the Fed and mortgage rates, ‘They don’t need to drive them lower. You could see mortgages go lower but I think this action reinforces their commitment to drive stimulus.’  But I guess I didn’t need all these learned Wall Street types to tell me that, as I spent the morning with a real estate agent, as he prepared for a Realtor’s open house on a Chevy Chase, Maryland property that just dropped in price by more than $200,000.  Mortgage rates? ‘It is a piece of the equation; it is relatively small though in the big picture of things,” he tells me. “Issues like stability of employment, cash that the buyers may be pulling out of the stock market in order to pay for the home, and just the insecurity they may have regarding what is the price or the value of the home going to do after they go to settlement? The cumulative of those different issues, I think, have created some timidity for the purchasers out there.’  He also added something a little more startling to hear in this upscale neighborhood: ‘They are coming in the door with definite interest in buying a home, but there is a concern: Are they going to have the ability to keep the house?’”

US trade gap widens

The Commerce Department reported yesterday that the monthly trade gap totaled $49.9 billion, or 18.8%, in June on a surge of consumer goods from China and other suppliers, suggesting U.S. second-quarter economic growth was much weaker than previously thought.  That deficit was wider than any of the 67 Wall Street forecasts collected before the report, and is likely to prompt analysts to ratchet down estimates of second-quarter gross domestic product growth.  U.S. imports of goods and services grew 3% in June to $200.3 billion, the highest since October 2008, in a show of strengthening domestic demand. Imports of consumer goods hit a record $43.1 billion and imports of non-petroleum goods were the highest since August 2008.  Imports from China soared to $32.9 billion, the highest since October 2008.  The closely watched U.S trade deficit with the East Asian manufacturer widened to $26.2 billion, also the highest since October 2008, while U.S. exports to China fell slightly.  The big jump in the U.S. trade deficit follows Chinese government data on Tuesday that showed China’s trade surplus surged to $28.7 billion in July, an 18-month high.

Short Refinance not very effective according to Amherst

Last week, the US Department of Housing and Urban Development (HUD) announced that the Federal Housing Administration (FHA) Short Refinance program would provide additional refinancing options to underwater homeowners starting Sept. 7.  According to Amherst Securities Group though, the number of mortgage loans eligible for the new program will be “relatively few,” given debt-to-income restraints and that it’s a volunteer program.  To be eligible for the new loan, the homeowner must be underwater but still current on the mortgage. A credit score of 500 or better is required, and once refinanced and insured by the FHA, the new refinanced loan must have a loan-to-value ratio of no more than 97.75%. 

The borrower’s existing first-lien holder must agree to write at least 10% of the unpaid principal balance, and it must bring the borrower’s combined loan-to-value ratio to no more than 115%. The existing refinanced loan cannot be an FHA-insured one.  But in order for the servicer to avoid litigation from investors for the write-down, or achieve safe harbor, they must prove the loan is in imminent default. Few servicers would be willing to label a consistently current borrower as in danger of default and needs to have the principal written down, according to Amherst.  “The true use of this program will be for loans that were once delinquent, and have been modified,” according to Amherst.

Now for our real estate education section…

Real Estate – Literally Too Good to Be True?

While most of America sit on the sidelines waiting for a full economic recovery, savvy short sale and real estate investors that recognize a good thing when they see it are reaping huge economic rewards. It’s easy to understand why they are optimistic; exceptional interest rates, huge discounts and plenty of properties to choose from…why doesn’t everyone join in?

In what might seem like a contradiction, real estate might be suffering from the perception that it is too good to be true. Rather than take the time to really crunch the numbers, most Americans rely upon the media for most of the financial information (and then wonder why they aren’t ready to retire sooner). Aside from the somewhat dubious value of that strategy, they simply don’t understand how good the current market really is; when they hear about a successful short sale transaction or investment, the reaction is disbelief or denial. For the benefit of those who are sitting on the sidelines or perhaps trying to talk a bit of sense into a friend or family member, let’s take a few minutes to run a few simple calculations and comparisons.

House Price Illusions – One of the benefits of long term real estate holdings is the inflation hedge provided…it is also a major reason more people don’t fully understand how to properly value real estate. For example, the median purchase price of a house in 1964 was roughly $19,000. As of 2009 (the last full year of data), the median purchase price was roughly $206,000…a seemingly sizable increase in nominal terms. However, when adjusted for inflation, the 2009 house would equal only $30,000 in 1964 terms.

Bargains Galore – Of course, in 1964 there were not as many houses on the market. Today it is a buyer market with many homes selling well below the $200,000 level. In many areas of the nation it’s possible to find relatively newer homes selling for less than half that amount…or the equivalent of only $15,000 in 1965 terms.

Better Rates – The savings don’t stop with prices. Interest rates really make a difference in the total cost of a house; with 30 year fixed interest loans below 5% and relatively low down payment, houses remain even more affordable today than at almost any time in the past 4 decades. Combined with a higher minimum wage, it’s possible for two minimum wage earners with decent credit to purchase an affordable starter home for roughly the cost of a car payment…and lock in that great monthly payment for a full 30 years. It’s one of the most simple yet effective ways to storm-proof a portfolio for years to come. Young people have an especially great reason to turn to short-sales to purchase their first home or begin investing early; great prices, great rates and plenty of time on your side. It’s a win-win proposition. Not sure it can be done…take the time to tune-in and see the short sale kid in action. Young or old this is an equal opportunity venture you can’t afford to miss.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

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

Smart Real Estate News & Commentary by Chris McLaughlin August 10, 2010 

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris 

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

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

Free Planning Session:  Make Money With This Proven Short Sale Strategy… In As Little As One Week!

Discover why there’s been so much excitement about the cash investors that are raking it in with The Short Sale Tsunami… but this free offer is available for a limited time only.  (Which is about all it takes to start making cash with this easy-to-use system.)

Even with no cash, credit, or experience… 

Join us Wednesday night at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/991860034

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

Olick – no new bailout

“It all started with a Reuters article titled, “An August Surprise from Obama?” It suggests that a forced principal writedown program would be funneled either through the existing Home Affordable Refinance Program—which allows borrowers with current Fannie and Freddie loans who owe up to 25% more on their loans than their homes are worth, to refinance to lower interest rates—or through the Bush-era Hope for Homeowners program.  The article suggests that this new bailout would be forced by political pressure, “less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses.”  The trouble is it doesn’t make a whole lot of sense. First of all, Fannie and Freddie don’t own all the loans they guarantee, and forgive me for not being a lawyer, but I’m not exactly sure that the government can just force investors to write down principal on loans those investors own.  “It’s hogwash,” writes mortgage consultant Mark Hanson, who rightly points out that the government is just now releasing guidance to lenders on its FHA short refi program (which includes principal writedown) and its largely GSE 3-year earned principal balance reduction program— both of which were announced last March and both of which are voluntary and require the consent of all lien holders.

Next Tuesday the Administration will be holding a “conference on the future of housing finance”, which, “will help provide critical public input as the Administration continues its work developing a comprehensive housing finance reform proposal for delivery to Congress by January 2011.”  I have been told over and over by Administration officials that there will be no big news announcement at the summit. No mandate that the government will suddenly infuse every troubled borrower’s home with palatable equity. Now I’m not saying something new couldn’t happen, but as HUD and Treasury now launch the new principal writedown phase of the housing bailout, I’m just not sure it makes sense, politically or otherwise, to turn all that on its head.”

Economy slowing

According to a Labor Department report, U.S. non-farm productivity declined by an annual rate of 0.9 percent after rising at a revised 3.9 percent rate in the first quarter, the first time since the fourth quarter of 2008 that output per worker fell.  Analysts surveyed by Reuters had forecast that productivity, a measure of hourly output per worker that is taken as an indicator of the economy’s vitality or lack of it, would expand at a 0.2 percent annual rate in the second quarter and that unit labor costs would rise 1.3 percent. 

Unit labor costs, a gauge of potential inflation pressures closely watched by the Federal Reserve, edged up at a 0.2 percent annual rate after shrinking at a revised 3.7 percent rate in the first three months this year.  The weak productivity figure is in line with other broad signs that the economic recovery is losing momentum. The overall economy grew at only a 2.4 percent annual rate in the second quarter, down from a 3.7 percent rate in the first quarter.  Fed policymakers were holding a one-day meeting on Tuesday to consider interest-rate policy, but with rates already near zero the speculation was that the U.S. central bank may be mulling other fresh steps to stimulate the economy amid signs that inflation poses little or no current risk.

Senator calls for investigation into Fannie Mae

As we reported yesterday, last week Fannie Mae denied allegations made by Caroline Herron, a former employee at the government-sponsored enterprise (GSE). Herron said the company, which was allegedly hired by the Treasury Department for $113 million to run the Home Affordable Modification Program (HAMP) runs the program to better its own balance sheet, not to help homeowners. Herron is suing Fannie Mae for firing her for requesting reform in the program. Now Sen. Spencer Bachus (R-Ala.), the ranking Republican on the Financial Services Committee, sent a letter to committee chairman Barney Frank (D-Mass.) requesting an investigation into the recent allegations against Fannie Mae.  Bachus requested that the committee hold a hearing this month to “examine whether Fannie Mae executives mishandled and mismanaged Federal foreclosure mitigation programs, including the Home Affordable Modification Program (HAMP).” 

Bachus requested testimony from Herron, and he wrote if her allegations were true, it would “help explain why HAMP has been such a failure.”  A spokesperson at Fannie Mae said the investigation found “no merit,” and Herron did not participate in it.  Lynne Bernabei, Herron’s attorney in the case, said they told Fannie they would participate, but Fannie said they would not be allowed to respond to the findings or view the report.  But a source familiar with the situation says that Herron and her attorney received one oral request to participate in the investigation and three written ones.  Frank’s office said the senator was traveling, and it was not immediately known if the letter was under consideration.

Small business still pessimistic

The National Federation of Independent Business (NFIB) said its optimism index fell 0.9 point to 88.1 in July. “We don’t have any confidence that the economy is going to get fixed, that it’s going to improve,” William Dunkleberg, the group’s chief economist, told CNBC. “We really crashed when it came to expectations for business conditions. Not good.”  Only 2 percent of respondents said they had plans to create new jobs. That actually represented an improvement from June’s 1 percent reading. 

Just 12 percent of small business owners reported raising average selling prices, while 24 percent said they were cutting prices.  “With no pricing power and real sales volume weak, profits are not able to recover,” the report said. “Inflation is clearly not a problem.”  Respondents said they are fearful of the political climate in terms of taxation issues as well as increased costs for national health care and financial reform.  “The index is pretty much full of forward-looking components, and looking forward—not too good,” Dunkleberg said.

Housing not at the bottom yet?

According the US Housing Market Monthly report by Capital Economics released yesterday, home sales have yet to hit the trough of the recession.  Further, the economics firm states that pending home sales will do little to push home sale numbers higher. In fact, the number of pending home sales is so diminished, down 32% in the wake of the tax credit expiration, that existing sales will only dip in the coming months as these mortgage agreements are finalized.  Analysts at Moody’s Investors Service agree, stating that the odds of a near-term double-dip recession increased to one in four from one in five predicted this spring. If this double-dip happens, Moody’s estimates home prices will fall along with sales — an estimated 20% before stabilizing in early 2012.  However, mortgage tech company Fiserv predicted only a 4.9% decrease in housing prices over the next 12 months. 

Pending home sales fell another 2.6% in June from May after deteriorating 29.9% in May from April. According to Capital Economics, this will be reflected in existing home sales in the months to come. Existing home sales in June fell by 5.1%.  The housing market is currently experiencing an excess of inventory as Capital Economics reported an 11% homeowner and rental vacancy rate in the second quarter of 2010, a new record high. Capital Economics states, “relative to the rising trend of the last 30 years, that suggests around 0.6m [or 600,000] properties than normal are currently sitting empty.”  Capital Economics also suggested that builders are adding to the excess supply, noting a 28% annualized jump in residential investment in Q210 alongside a 19% decline in housing starts from April to June (down 14.9% in May and 5% in June). All of these statistics in addition to macroeconomic conditions is what economists at Moody’s believe are hindering economic recovery.  “We expect real GDP to advance nearly 3% this year, monthly payroll employment gains to average close to 125,000, and the unemployment rate to end the year back over 10%,” Moody’s reported. “With the economy slowly recovering, we expect home sales and residential construction to end up slightly stronger this year than last year while house prices will depreciate a bit more.”

Now for our real estate education section…

Six Biggest Blogging Mistakes & How to Correct Them

Real estate and investment pros alike are turning to blogging with good reason; over 80 percent of buyers and sellers indicate they enjoy the ability to get to know who they do business with by reading their blog first. Unfortunately, blogs are not all created equal. A poorly managed blog is worse than a waste of time…it can actually act like negative publicity. Learn how to spot the top six biggest blogging mistakes and find out how to correct them with these quick tips:

1. Publish or Perish. Anyone who ever went through graduate school is familiar with this old refrain but it holds true in the blogosphere as well. Publish on a regular basis or perish. A significant number of blogs are abandoned shortly after being started. Others seem to do fairly well then hit a plateau after a few months. Both are deadly sins in the blogging world. Readers (ie prospective clients) expect regular content that is updated frequently.

2. Findable. Even the best blog is worthless if people can’t find it! Search engines must index a blog by using keywords and search terms, author or subject. Be sure to include all relevant information so readers are able to locate your blog. For example, your name, city/state, business, topics/keywords.

3. Viral. Blogs are meant to be shared so make it easy for readers to include your content in other forms of social media. Periodically check your blog on different browsers, mobile applications and other methods of access to assure it is viewable by as many people as possible.

4. Social. Although there are pros and cons’ to allowing reader questions and/or interaction, the social aspect of blogging shouldn’t be ignored. Whether you opt to integrate every question/feedback or simply a representative sample, make sure readers feel they are appreciated and included.

5. Syndicated. RSS is one of the most important and frequently used features of most modern day blogs. Readers are automatically notified when the blog is updated and content is sent to their desired preference setting. Make sure your blog is set-up for syndication rather than rely on visitors to return over and over in the hope of finding the latest update.

6. Lost Links. Encourage people and other sites to link to your blog; not only does it help increase visibility but also provides important information to relevant ancillary sites and services that may benefit both parties.

Still getting up to speed on how to best integrate your blog into other social media methods? Why not attend one of our free webinars or other informational sessions designed to get you going in a fraction of the time typically required to master this every evolving field.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

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

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

 *** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

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

Every so often you come across the real deal.  The guy

behind the scenes that makes famous people obscenely

wealthy…along with himself.   And I’ve got just the

person for you this…he’s the real estate advisor to the

stars … and this is one webinar you gotta see!  RSVP here:

 

Webinar: Donald Trump’s and Robert Kiyosaki’s Secret Weapon

 

When: Tuesday, May 18, at 3 PM ET, NOON PST

 RSVP Link: https://www2.gotomeeting.com/register/519321851 

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

Housing market diagnosis: Bi-polar

Bi-polar is what comes to mind when diagnosing the post-homebuyer tax credit market. On one hand, sales and prices are rising, indicating recovery. On the other hand, so are interest rates and repossessions, which most certainly do not. And then there are the millions of foreclosures that need to be sold but haven’t yet been listed — so-called shadow inventory — that could derail a real recovery if they hit the market in floods. The result means, negative short-term but turning positive by the end of 2010.  “In the short run, I see a mini-collapse,” said Richard DeKaser, an independent housing market analyst and founder of Woodley Park Research who correctly predicted a downturn back in 2005 when he was chief economist for National City Corp. 

There are some strong negatives dragging on the market. 1. Intermittently increasing interest rates 2. Bank repossessions surpass a million homes in 2010. 3. More than a quarter of borrowers are “underwater,” meaning they owe more than their homes are worth. 4. “Strategic defaults” close to 31% of all foreclosures in March — where underwater home owners walkway even when they can still afford to pay. And the scary truth: Right now, there could be more than 4.5 million homes that are ready to be sold but not on the market, also called “shadow inventory,” according to a recent report by Barclays Capital. This so-called shadow inventory is a recent phenomenon. In the past, inventory was either tight or it wasn’t. But now, with home prices so low and so many foreclosures on the market, both homeowners and banks have been waiting to put properties on the market.  But as more sellers put their homes up for sale, supplies increase, which will depress prices again. Rinse and repeat ad infinitum. That vicious cycle could cause prices to bounce up and down for years, low or no appreciation and more homeowners in negative equity.

Obama aide: U.S. economy still needs further boost

The U.S. economy has begun to climb out of the worst downturn since the 1930 Great Depression but still needs additional steps by the federal government to stem a crisis in the job market, a senior economic adviser to President Barack Obama said on Sunday. “What we need now is not the withdrawal of support, but further targeted actions that will help the private sector come back more strongly,” Christina Romer, chairwoman of the White House Council of Economic Advisers, said in prepared remarks for a commencement ceremony at the College of William and Mary in Williamsburg, Virginia.

Romer urged Congress to pass a series of measures Obama has proposed to jump-start growth, including the establishment of a lending fund to spur credit to small businesses and providing cash-strapped cities and states with aid to help them avoid layoffs of teachers and other local employees. With the U.S. unemployment rate just under 10 percent, the Obama administration is juggling the need to spur economic growth with pressure to rein in ballooning U.S. budget deficits. The latest government report on the job market showed that the jobless rate ticked up two tenths of a percentage point to 9.9 percent as discouraged workers began looking for work again. Romer, an expert on the Great Depression, used much of her speech to compare the current economic crisis to the long downturn of the 1930s.  Republicans have sharply criticized the stimulus package, calling it an example of overreach by the government and contending that it failed to do enough to spur jobs growth. 

Diana Olick – Home Mortgage Interest Deduction In Play

“The Administration isn’t officially considering it, maybe not “actively” considering it, not even taking a side on it per se. According to “staff” it was just a “musing.” At a small conclave of reporters, no cameras allowed, the Secretary of Housing and Urban Development was reportedly asked about the mortgage interest deduction, the importance of home ownership and the seeming shift of focus from owning to renting. That last bit is huge in itself, as pretty much every President dating back to Herbert Hoover and the Home-Loan Discount Banks pushed people to own own own.  Some argue that it was this push to the “ownership society” by President’s Clinton and Bush that caused at least some of the housing crisis, and at the very least pushed Fannie Mae and Freddie Mac to push the envelope of responsible lending.  Secretary Donovan reportedly offered that modifying the deduction could result in deficit reduction and, as the Wall Street Journal notes, “rebalancing federal housing policy.” 

The mortgage interest deduction, which appears on about 41 million U.S. tax returns, is a huge political hot button, and the more questions the Secretary got, the quicker he tried to get out of the conversation. No, there is “no official position” on the deduction. But the question didn’t come from the ether. A couple of economists from Harvard and Wharton suggested last week that the housing bubble was not caused entirely by faulty mortgage lending, but perhaps more by housing policy going back decades. Their conclusion was to focus on modifying the mortgage deduction.  According to the Congressional Joint Committee on Taxation, between 2009 and 2013, the federal government will lose roughly $600 billion from the home mortgage interest deduction.”

Threat of Shadow Inventory Diminishing: Barclays

Analysts at Barclays Capital say the industry’s ominous shadow inventory is close to topping out.  New research published by the firm says the supply of homes nearing REO status, defined as 90 or more days delinquent or in the process of foreclosure, will peak this summer and then begin falling gradually as the market becomes stable enough to absorb 130,000 distressed properties a month. “While we expect REO levels to remain elevated, the trickle of homes from foreclosure into REO implies moderate levels of inventory reaching market,” Barclays said in its report. 

The company estimates the current REO supply to be 478,000 and expects it to rise to 536,000 by late 2011. Barclays’ delinquency pipeline snapshot shows that as of February, there were 2.4 million mortgages at least 90 days past due and 2.1 million more already winding through the foreclosure process, which combined makes up a shadow inventory of 4.5 million. It’s a daunting tally and could grow larger as foreclosure alternatives are exhausted, but Barclays’ model forecasts 4.7 million distressed sales over the next three years, with 1.6 million coming in 2010, 1.6 million in 2011, and 1.5 million in 2012. The research firm notes, however, that an orderly liquidation of shadow inventory will require both “more robust household formation and job growth.”  Barclays forecast that the industry is only a few months away from reaching peak levels of shadow inventory.

Commercial Market Still Struggling

While the commercial real estate market may not have fully recovered, National Association of Realtors® Chief Economist Lawrence Yun identified some developing, positive trends in the market that could eventually lead to recovery at the “Economics Issues and Commercial Business Trends Forum.”  Yun said jobs only began increasing a couple of months ago and are still below peak. The commercial market has seen a few improving trends in recent months. The market is experiencing an increase in transactions due to more distressed properties available, and prices are beginning to stabilize. Yun believes within the next year more lending will slowly become accessible to commercial property owners.

Two commercial sectors showing the most promise are manufacturing and multifamily. Manufacturing activity and employment have risen recently and because household formation is also rising, the multifamily sector will likely fare the best during this economy. Despite some of these promising trends, the commercial market is still experiencing high vacancy rates and rent concessions. “All real estate is local, but I expect to see vacancy rates bottoming out and rent rising by next year,” said Yun.  He also warned against some of the possible risks commercial practitioners may experience in the future such as high interest rates and inflation, as well as increased taxes for commercial real estate investors. During the session, Yun was joined by two leading economic experts, Diane Swonk, Mesirow Financial; and Brendan Reilly, Commercial Mortgage Securities Association. The panelists agreed that an improving economy and job creation continue to be the two main factors when it comes to restoring the commercial real estate market.

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

Now on to our real estate investing education section …

Huh? HUD Reform Could Create Chaos

It probably comes as no surprise that the lending industry has…and will continue…to undergo dramatic changes in response to the financial strain and economic meltdown however, one recent proposal is putting a lot of lenders up in arms. Specifically the “Strengthening Risk Management through Responsible FHA Approved Lenders” report published on April 20,2010 which essentially lays out the new plans designed to help FHA lenders and brokers comply with upcoming regulatory changes.

While that all sounds straightforward enough, the devil is in the details. According to industry experts, after December 31,2010, the FHA broker approval process will be eliminated from HUD responsibility and oversight. Savvy brokers might wonder who will now be in charge of the approximately 8,000 current FHA brokers that will be left without direct supervision under HUD. According to the same report, beginning in 2011, FHA approved lenders will be responsible for approving brokers…and held accountable for the brokers FHA originations.

Hmmm…let’s take a moment to break this down into plain language terms.

By eliminating roughly 8,000 brokers from HUD’s direct responsibility without reducing HUD’s audit staff, the remaining 3,000 FHA lenders are likely to be exposed to greater scrutiny and oversight. If that wasn’t enough, here are few more highlights coming soon to an office near you.

May 20,2010 – Yes, this week marks the first step in the reform process. Beginning 05/20/10, lenders will be directly responsible for the approval and oversight of new brokers (12/31/10 for current FHA approved brokers). There does seem to be a decided lack of clarity. Confused yet?

You aren’t alone. To date, HUD has not provided lenders any specific guidance on how to oversee a brokers activity.

December 31,2010 – This is the final date where Quality Control audits will be required for broker approval. After that date, the broker will require FHA lender approval to participate. Lenders are expected to pass the QC requirements to the broker in an effort to reduce regulatory requirements.

To learn more or to view the document for yourself visit:

http://edocket.access.gpo.gov/2010/pdf/2010-8837.pdf 

See you at the top!

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

 

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com