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

admin — Mon, 17 May 2010 18:02:38 +0000

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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.

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

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

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Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
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About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin, May 14, 2010

admin — Fri, 14 May 2010 18:46:14 +0000

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Freddie and Fannie won’t pay down your mortgage

The two largest owners of mortgages will not lower the principal on the loans they back – that’s a clear message for all those troubled homeowners. Fannie Mae and Freddie Mac, which are controlled by the federal government, will not lower the principal on the loans they back, instead opting for interest rate reductions and term extensions when modifying loans. But their stance is out of synch with the Obama administration, which is seeking to expand the use of principal writedowns. In late March, it announced servicers will be required to consider lowering balances in loan modifications. Asked whether they will implement balance reductions, the companies and their regulator declined to comment.

The Treasury Department also declined to comment. What’s holding them back is the companies’ mandate to conserve their assets and limit their need for taxpayer-funded cash infusions, experts said. If Fannie and Freddie lower homeowners’ loan balances, they are locking in losses because they have to write down the value of those mortgages. Essentially, that means using tax dollars to pay people’s mortgages. Between them, they have received $127 billion — and recently requested another $19 billion — from the Treasury Department since they were placed into conservatorship in September 2008, at the height of the financial crisis. Treasury and the companies have already set aside $75 billion for foreclosure prevention, which can be spent on interest-rate reductions or principal write downs. Meanwhile, a growing number of loans backed by Fannie and Freddie are falling into default.

Shakeup for Credit Raters

Credit rating agencies such as Moody’s, Standard & Poor’s and Fitch Ratings would face big changes under separate measures adopted by the Senate. Under an amendment offered by Democratic Senator Al Franken, the government would set up a clearinghouse to match rating agencies on a semi-random basis with debt issuers. That could ease pressures the agencies face to assign rosy ratings to debt instruments issued by the firms that hire them, backers said. Franken’s amendment also would encourage greater competition from smaller ratings agencies. Another amendment offered by Republican Senator George LeMieux would require federal regulators to develop their own standards of credit-worthiness rather than rely solely on assessments from rating agencies. Both amendments could open the troubled credit-rating business to more competition, but it was not clear they would make ratings more accurate or timely, analysts said.

Shares of Moody’s closed down 2.6 percent after the votes, and Standard & Poor’s parent McGraw-Hill Cos fell 2.4 percent on broadly lower trading across the New York Stock Exchange. A Standard & Poor’s spokesman said the Franken amendment could lead to more homogenized rating opinions and cause investors to believe they were endorsed by the government. Franken’s amendment was approved in a 64 to 35 vote. LeMieux’s amendment passed by a 61 to 38 vote. Finally, large financial firms would have to set aside more capital to boost their stability during times of crisis under an amendment unanimously adopted by voice vote. It would direct regulators to increase capital requirements as firms grow in size or engage in riskier lending practices. The measure, sponsored by Republican Senator Susan Collins, aims to make sure that highly leveraged financial giants do not again threaten financial stability, as they did in the crisis.

Diana Olick – Banks Ignore Delinquent Borrowers

“Some encouraging signs on the foreclosure front may not be as rosy as some are reporting. RealtyTrac, the online foreclosure sale site, shows a 9 percent dip in the number of properties with foreclosure filings in April, month-to-month. The driver of that dip is a big drop in new notices of default. The final stage of foreclosure is bank repossessions (REO) shot up to a new record high, up 45 percent from a year ago. When I first read the report I thought, okay, we knew there was a big pipeline of loans that would not get modified and would have to come out the end at some point; now is that point. The fact that fewer loans are going into the pipeline should be our focus, and that’s a positive. That’s what I thought until I interviewed RealtyTrac’s Rick Sharga. “People are sitting in their houses not paying their mortgages, and the banks are letting those delinquencies extend longer and longer periods of time before they put them in foreclosure,” Sharga told me. That, he adds, is the main reason we’re seeing lower numbers of new defaults. The borrowers are in default, but the banks aren’t paying attention, so they don’t show up in the numbers.

“The fact that we have six to six and a half million loans that are either seriously delinquent or in foreclosure also suggests we are not nearly out of the woods. If we just started to absorb that inventory at the pace we’re currently seeing new foreclosure proceedings we have about a 50 to 55 month supply of loans that yet have yet to be processed, so we have a way to go before we are out of the mess,” he added. Sharga makes a compelling point. A lot of folks are either falling out of the trial modification period or not qualifying in the first place, and those loans are moving quickly to bank repossession. California-based mortgage analyst Mark Hanson adds perspective with a look at “cancelled foreclosures.” These are not tracked by RealtyTrac, but they “bite right out of Notices of Default and foreclosures, so to get a real idea of how ‘credit’ is doing, you have to add a certain percentage back.” That’s because Hanson believes the redefault rate on these modifications will be at the very least 50 percent 6-19 months out. “

Retailers poised for victory in debit card fee fight

Retailers are poised for a major victory in the Wall Street reform bill currently pending in Congress. The Senate adopted an amendment late Thursday that will slap sharp restrictions on the fees issuers levy every time a buyer pays with a debit card. Called “interchange” fees, the charges typically consume 1% to 3% of every transaction run through a debit or credit card. Network operators like Visa skim off a fraction of the fee, while the rest goes to the financial institution that issued the card. The new Senate amendment adds two major restrictions to the rules on interchange fees. First, it requires that the fee be “reasonable and proportional to the actual cost incurred” by the payment network or issuer for processing the transaction. The Federal Reserve will have leeway to determine what counts as a “reasonable” fee, but it’s likely to be a lot lower than the current rates. Second, it allows sellers to offer a discount to customers who pay with cards that carry lower transaction fees.

That’s a change merchants have sought for years. They’re currently contractually obligated to accept all cards on the same terms. If American Express — which has some of the industry’s highest interchange rates — costs a merchant to accept than a Visa card does, the merchant can’t offer buyers a discount for using Visa. The amendment is now part of the broader financial reform bill the Senate hopes to finalize next week. That the proposal has made it this far is a major victory for retailers, especially small ones, who have fought for years for regulatory curbs on what they view as the monopolistic practices of Visa, MasterCard (MA, Fortune 500) and other payment network operators. Durbin’s amendment isn’t a compete fix. Its most prominent limitation is that it only applies to debit cards. Credit cards, like those issued by American Express and Discover, are exempt from the fee caps. The amendment also excludes cards issued by community banks and credit unions with less than $10 billion in assets — those can continue to carry the same interchange rates they currently do. But in practice, that exemption will have little impact. The vast majority of all credit and debit transactions go through major issuers like Bank of America and JPMorgan Chase, and analysts suspect Visa and MasterCard will simply choose to levy the lower interchange rates across the board, on all debit purchases.

MBA Hails Risk Retention Fixes to Regulatory Reform Bill

Robert E. Story, Jr., CMB, Chairman of the Mortgage Bankers Association (MBA) issued a statement on 13/05/10, reacting to passage in the Senate of the Landrieu/Isakson and Crapo Amendments to S. 3217, the Restoring American Financial Stability Act of 2010. The Landrieu/Isakson Amendment requires regulators to establish a category of well‐underwritten single family loans that would be exempt from the bill’s risk retention requirements. The Crapo Amendment directs regulators to consider risk retention forms and requirements in order to ensure that regulators consider the unique nature of the Commercial Mortgage Backed Securities (CMBS) market.

“Mortgage originators already have significant ‘skin in the game’ in the form of representations and warranties that they make to their investors. Mandating additional one-size-fits-all risk retention would have only further destabilized the already fragile real estate markets. We applaud passage of the Crapo Amendment which appropriately recognizes the unique nature of the CMBS market, provides flexibility with regard to the various forms of retained risk, furthers the goal of aligning interests across transactional parties and is a significant step toward restoring the CMBS markets, ” said Robert E.Story Jr.

FICO Loses Battle in Credit Scores War

The use of credit scoring is vital to the mortgage underwriting process. However, behind the scenes, a war is raging over who can lay claim to that process, with one party recently losing ground in the courtroom. The Fair Isaac Corp. was denied a new trial regarding what it claims is clearly its trademark; that is, the act of rating an individual’s credit on a scale of 300 to 850. However, VantageScore Solutions, the credit rating provider created by America’s three major credit reporting companies — Equifax, Experian and TransUnion — successfully argued that its system that rates credit on a scale between 501 to 990, is not in violation of the FICO trademark. The presiding US district judge in Minnesota, Ann Montgomery, went a step further and called for FICO’s trademark to be invalidated in her verdict. In her decision, Montgomery addressed the jury’s finding stating that one cannot to by Fair Isaac’s central theory of the case — i.e., “that one can legitimately claim trademark protection in the numerical range for credit scores.”

VantageScore Solutions CEO Barrett Burns said that the court’s decision confirms its longstanding allegation that FICO’s claims are “meritless,” and “at every step, VantageScore has prevailed against Fair Isaac’s claims.” And FICO has the full intention of appealing, according to Craig Watts, a director of public affairs at Fair Issac. As to be expected, he said that FICO strongly disagrees with Montgomery’s verdict. Watts added that the basic tenants of the case surround fairness and consumer protection, not against the numerical methodology for presenting that value.

Now on to our real estate investing education section …

Friday File – Social Media & Short Sales Success

This week we have focused on mental modes ranging from procrastination to the adoption of social media marketing. New trends and attitudes alike both require a change in mindset as well as the adoption of new skills. Fortunately a bit of information is often more than enough to convince most people of the value to be derived from each. For this week’s 15 minute resolution, take time to check out these super convenient tools designed to measure your social media success and stay up to date on the rapidly changing world of virtual marketing trends.

Source- http://addthis.com/services/all

Find out which social sharing and networking sites are currently most popular then monitor which are trending up or down. For example, MySpace has been showing a decidedly sluggish pattern so switch your efforts to Facebook instead.

Source- http://www.twellow.com

A third party search directory that monitors and discovers the latest and greatest trends and opportunities related to any topic or industry by performing an online search directory of Twitter.

Source- http://backtweets.com/

A third party Tweet tracking source that measures viral results! Determine the number of Re-Tweets any URL has received in order to track the popularity and effectiveness of a given message or topic. Find out how many times they have been viewed and who is Re-Tweeting what information. Follow-up with individualized attention for those “big fish” targets.

Source- http://www.tweetdeck.com

Manage multiple Twitter accounts and other social media platforms from one location. Not only does it save time and effort but it increases efficiency. Better yet, outsource it to someone and have them generate a summary report for your review!

See you at the top!

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

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

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

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

About the author:

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

    * 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, April 28, 2010

admin — Wed, 28 Apr 2010 17:48:05 +0000

Forward this e-mail to your friends!

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HUD on the hotseat

The US Department of Housing and Urban Development (HUD) finalized new regulations earlier in April that increase the net worth requirements of FHA-approved lenders and make these businesses liable for the oversight of mortgage brokers. Previously, since 1993, FHA had required approved lenders to hold a net worth of at least $250,000. Effective immediately, all new lender applicants must hold at least $1 million. According to the law firm K&L Gates, the new restrictions will “wreak havoc” on small business trying to provide Federal Housing Administration (FHA) loans. The new regulations would also remove approval from new loan correspondents, representatives who negotiate or service a loan, beginning May 20, 2010.

Current loan correspondents will maintain approval through December 31, 2010. Loan correspondents that do no seek FHA approval can continue to originate FHA-insured loans as third-party originators (TPOs) if they are sponsored by and work with an approved lender, according to K&L Gates. The law firm said the final regulation ignores the significant costs FHA participants will incur to meet the minimum net worth requirements. “The changes HUD is implementing in the final regulation will have an enormous impact on the delivery of FHA-insured loans to the public,” according to K&L Gates. “As we said when HUD first proposed the changes last November, fasten your seatbelts. It is going to be a bumpy ride.”

Purchase Applications Increase, Refinance Applications Decline

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 23, 2010, decreased 2.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.9% compared with the previous week. The Refinance Index decreased 8.8% from the previous week, while the seasonally adjusted Purchase Index increased 7.4% from one week earlier and reached its highest level since October 2009. The increase in the purchase index was driven largely by the government purchase index, which increased 11.9% from last week on a seasonally adjusted basis, while the conventional purchase index increased 3.5% from last week.

The unadjusted Purchase Index increased 8.5% compared with the previous week and was 2.4% higher than the same week one year ago. “Purchase activity continues to increase as we approach the end of the homebuyer tax credit program,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications were up almost 9% from a month ago, with a disproportionate share of the increase due to government purchase applications. Government applications for purchasing a home accounted for almost 49% of all purchase applications last week.” The four week moving average for the seasonally adjusted Market Index is down 3.1%. The four week moving average is up 1.6% for the seasonally adjusted Purchase Index, while this average is down 5.8% for the Refinance Index. The refinance share of mortgage activity decreased to 55.7% of total applications from 60.0% the previous week. The refinance share is at its lowest since August 2009. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.0% of total applications from the previous week.

Greek crisis deepens and spreads

Concerns about Greece have been plaguing international markets for months. Investors are worried that if Greece defaults on its loans, the repercussions could have a ripple effect on other countries and kill the chances for a global recovery. The yield on 10-year Greek bonds surged to 11.24% early today from 9.68% yesterday — the highest for the 10-year since the introduction of the euro in 2002. The jump in the yield on the Greek bond has led to an enormous spread of 8.22%age points compared with German bond yields. The yield on the German 10-year bond, considered the European benchmark, slipped to 3.02% early Wednesday. The European Union has pledged nearly $40 billion at a 5% rate to Greece to help the Greek government redeem bonds that mature on May 19.

The chief catalyst behind the market turmoil came from yesterday’s decision by S&P to slash the Greek bond rating to “BB+” with a negative outlook, knocking it down to junk status. This was its second rating cut in as many weeks. S&P cut its rating on Portugal by two notches to “A-,” raising worries that the crisis would spread to the so-called PIIGS. In addition to Greece, they include Portugal, Ireland, Italy and Spain.

Stocks plummet

The Dow Jones industrial average tumbled 213 points yesterday, or 1.9%, closing below 11,000, a key psychological level. The Dow had ended the previous session at its highest point in 19 months. The slide was the Dow’s biggest one-day point drop since July 15, 2009, when it lost 257 points. The S&P 500 index fell 28 points, or 2.3%, closing below 1,200, a psychological level traders look at. The Nasdaq composite slid 51 points, or 2%. Stocks were flat to lower in the morning as Goldman Sachs sought to defend itself on Capitol Hill against allegations it profited from the housing market collapse.

But news that ratings agency Standard & Poor’s had cut Greece and Portugal’s debt ratings overshadowed everything else, giving investors a reason to retreat on the back of an 8-week advance. “We’re seeing the fear factor kick in about Greece and Portugal,” said Peter Cardillo, chief market economist at Avalon Partners. “That’s rattling the market.” He said that fear was also reflected in the so-called flight to quality as investors poured money into bonds and the euro fell to a new low for the year. That was reflected by a jump in the CBOE Volatility index, Wall Street’s so-called “fear gauge.” It spiked 24%, hitting the highest point since February. Typically a surge in the VIX corresponds with a selloff in stocks.

DSNews.com – Home ownership falls to lowest level in 10 years

According to a report released Monday by the U.S. Census Bureau, the national homeownership rate fell to its lowest level since the first quarter of 2000 in the first quarter of 2010. The seasonally-adjusted homeownership rate of 67.2% in the first quarter of this year was 0.2% lower than the first quarter of 2009 and 0.1% below last quarter’s rate. The last time the homeownership rate was this low was exactly 10 years ago in the first quarter of 2000 when the rate was at 67.1%. Homeownership rates varied from region to region in the first quarter, with the highest rate in the Midwest, at 70.9%. The South wasn’t far behind with a rate of 69.2%, but the Northeast came in noticeably lower with a rate of 64.4%. Levels were the lowest in the West, where the homeownership rate was 61.9%. Also included in the Census Bureau’s report was data on national vacancy rates.

In the first quarter of 2010, the vacancy rate for homeowner housing was at 2.6%, coming in 0.1% lower than both the first quarter 2009 rate and the rate last quarter. The lowest regional homeowner vacancy rate in the first quarter of this year was in the Northeast, at 1.8%. Rates in all other regions were not statistically different from each other, ranging from 2.6% to 2.8%. While the vacany rate for homeonwer housing was fairly low, it was a different story for rental housing. The national vacancy rate for rental housing was 10.6%, 0.5% greater than the first quarter of 2009 but 0.1% lower than last quarter’s rate. Regionally, the rental vacancy rate was the highest in the South, at 13.2%, and it was lowest in the Northeast, at 7.5%. The Midwest and West filled in the gap between these extremes, at 11% and 9%, respectively. Taking into account both homeowner and rental vacancy rates, approximately 14.5% of housing units were vacant in the first quarter of 2010. Year-round vacant units comprised 11% of total housing units, while 3.5% were for seasonal use. Approximately 3.4% of the units were for rent, 1.5% were for sale only, and 0.6% were rented or sold but not yet occupied.

Now on to our real estate investing education section …

Essential Tools – Online Lesson #3

Necessity is the mother of invention…or so the saying goes. If you find yourself with more time than money when it comes to promoting your online real estate presence or short sale website, it is possible to do it yourself with a few essential tools. As we have already mentioned earlier in the week, obtaining top rankings on Google is an imperative but there are some “must have” software and other applications that can help even the most bewildered user compete. Today we will examine three “must have” tools that will turn your traffic from a back-road to information super highway.

1. Web CEO. WebCEO not only provides a full suite of marketing tools designed to find keywords, promote your website, check link popularity and analyze user trends but perhaps most important…it provides free training. With clients ranging from the guy next door to heavy-hitter like GE, IBM, PayPal and ADP you have the assurance of a product that works the way it was designed to right from the start. The training alone is well worth the effort to check this one out but the free basic version makes it a “must have”.

www.WebCEO.com

2. Google Keyword Tool. This is a timeless treasure to help you stay up to date with the latest and greatest keywords. Although you can spend a lot more time and money, this nifty little application is easy to use for even the most novice marketing newbie. To try it out for yourself, sign-up for a Google AdWords account (don’t worry…you don’t need to pay for anything) to access the Keyword Tool. Simply enter a few seed keywords or enter your web page address to allow Google to scan the content and make suggestions.

www.google.com/sktool

3. WordTracker. Perhaps one of the most popular keyword platforms, WordTracker has earned a reputation among marketing mavericks and novice users alike. Obtain access to the top 1,000 search reports, information on niche search options including commonly mispelled words and “long tail” options. There is a free and paid version available including a “try before you buy” option.

www.wordtracker.com

4. Google Sitemap Submission. Creating a sitemap for your website isn’t just smart but it makes updates to Google easier than ever; rather than individually submitting each new page, simply update the sitemap in one quick step. Sign-in to your Google account, select the “Webmaster Tools” option from the main menu, click on “Add Sitemap” tab then type in the url of your sitemap. Google will queue your website to update and index. It’s really that simple!

www.google.com/webmasters/tools/

See you at the top!

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

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

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About the author:

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

Smart Real Estate News & Commentary by Chris McLaughlin, April 21, 2010

admin — Wed, 21 Apr 2010 16:59:55 +0000

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Olick – The lipsticked pig

As usual, Olick takes a contrarian view of the market, this time citing Ivy Zelman, the former Credit Suisse analyst who called the housing crash, even before the boom had peaked. “Zelman did a simple exercise of adding shadow inventory to the seemingly improving inventory numbers. In DC for example, she cites a 5.1 month supply of homes for sale, well below the nation’s 8 month supply. But add the shadow inventory of foreclosures, and you get a 13.2 month supply. She claims builders “underwriting ground are unaware of these headwinds.” The Administration, she notes, is pushing the limits of the FHA for low-income borrowers, touting historically positive affordability. On the low end of the market, that is homes priced below $150,000, investors comprise 2/3 of the purchasers, according to Zelman. Another study out today from Campbell Surveys also found that 50% of sales in March were of distressed properties (foreclosures or short sales). Rental yields are pretty strong: 6-12 percent, says Zelman.

So the market is good for investors and they’re eating up distressed inventory, which is a net positive for the housing market and the economy, and perhaps more beneficial than pushing more low-income Americans into home ownership. The trouble of course is the higher end, over $400,000 where investors can’t buy with all cash and the mortgage market is closed. Zelman cites a 45 month supply of homes between $400-600,000. Unfortunately, the government is ignoring the higher end of the market, and ignoring higher end borrowers who may be in trouble due to unemployment. Jumbo loans are excluded from the federal mortgage bailout. So where does recovery shake out under all this analysis?? Zelman says it will not be a “V” or a “W” but a canoe. Slowly floating sideways, I imagine.”

Mortgage applications increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 16, 2010 increased 13.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 13.9 percent compared with the previous week. “Treasury rates fell last week causing a decline in mortgage rates. As a result, refinance applications picked up over the week, as some borrowers took advantage of this recent rate volatility to lock in a low fixed-rate loan,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the homebuyer tax credit, and are up modestly over last month.”

The Refinance Index increased 15.8 percent from the previous week and the seasonally adjusted Purchase Index increased 10.1 percent from one week earlier. The unadjusted Purchase Index increased 11.0 percent compared with the previous week and was 5.2 percent lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 3.1 percent. The four week moving average is up 2.0 percent for the seasonally adjusted Purchase Index, while this average is down 5.9 percent for the Refinance Index. The refinance share of mortgage activity increased to 60.0 percent of total applications from 58.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.0 percent from 6.3 percent of total applications from the previous week.

Eye of the storm

Jim Bianco, President of Bianco Research in Chicago, thinks we might be in the eye of the financial storm rather than the dawn of a new day. “My fear is, history shows, we might have a second leg to the financial crisis in [the form of] a sovereign debt crisis.” The crisis is of course already visible in Greece where yields on their 10-year government bonds just hit a record high as Europe works out a bailout package for the heavily indebted nation. Meanwhile, in Portugal – another one of Europe’s so-called PIIGS – bond yields are also spiking, fueling suspicion the debt crisis may spread. With huge federal deficits, this something the U.S. also needs to worry about. “I’m not suggesting the U.S. is on the verge of defaulting,” Bianco says, but the market is already signaling it’s hesitation to lend to the government.

Two-year notes sold by Berkshire Hathaway Inc. in February yielded less than U.S. Treasuries of similar maturity; the same is true of paper issued by Procter & Gamble, Johnson & Johnson and Lowe’s. As growing budget crises in states and municipalities from California to New York come to a head, Bianco fears it will be too much for the Treasury to bear. “If one of these municipalities has to borrow from [the federal government] they’re all going to have to borrow from them, pretty much on the same day,” he speculates. If that happens, Bianco is confident you can bet on “very high, punishingly high interest rates for the economy.” And that storm may cause even more damage than the first.

Wells Fargo originates fewer mortgages

Wells Fargo & Co’s first-quarter profit dropped slightly as it originated fewer mortgages. The fourth-largest U.S. bank, whose shares dipped nearly 2 percent, said profit for common shareholders fell to $2.37 billion (1.54 billion pounds), or 45 cents a share, from $2.38 billion, or 56 cents a share, a year earlier. Analysts on average expected earnings of 42 cents a share, according to Thomson Reuters I/B/E/S. The bank reported a 25 percent decline in mortgage originations, largely due to a dip in refinancing activity. Like other U.S. banks that reported earlier this month, Wells Fargo said that while demand for new loans was weak, losses on existing loans were easing. “Our company earned $2.5 billion in the quarter, a great example of how Wells Fargo’s business model produces solid results in different stages of the economic cycle,” says Chief Financial Officer Howard Atkins. “While loan demand remained soft in the quarter and net mortgage hedging results declined to levels of a year ago, businesses as diverse as asset-based lending, debit card, insurance, merchant services, student lending and retirement services all showed solid gains.” Credit losses fell $83 million in the first quarter to $5.3 billion, the bank said. Revenue increased 2 percent to $21.5 billion from $21.0 billion. The company’s shares were down 1.9 percent at $33.05 in premarket trading. At Tuesday’s close, the stock had climbed almost 30 percent since the start of the year.

First time buyers up

According to the latest Campbell Surveys poll of more than 1,500 real estate agents nationwide, first-time homebuyers made up a record high share of sales in March. Of all home purchases in the month, first-time homebuyers accounted for 48.2%. The new monthly record eclipsed the previous peak of 46.9% last October when the expected November expiration of the original homebuyer tax credit drove up the share of first-time homebuyers. The March uptick comes ahead of the extended tax credit deadline. “The strong participation of first-time homebuyers this spring is a welcome surprise,” said Thomas Popik, research director for Campbell Surveys. “Many observers had felt that the pool of first time homebuyers had been depleted last fall, but this is turning out not to be the case. Instead, the normal spring-summer buying season is combining with the tax credit to produce blow-out results for first-time homebuyers.”

The surge in first-time homebuyer activity in March came at the same time the volume of distressed properties in the housing market climbed to more than 50%, according to the survey. The latest survey found that short sales accounted for 18.6% of the housing market in March. “None of the survey results take into account the new Home Affordable Foreclosures Alternative (HAFA) program for short sales,” Popik said. “This government program took effect in early April, so we expect short sales to account for an even greater proportion of the real estate market in coming months.”

Now on to our real estate investing education section …

Top Trends for Real Estate in 2010

A lot has changed in real estate; those that fail to keep up with the most recent trends risk more than the title of “antiquated”…they risk missing out on the best deals. Find out what the top trends for 2010 are among real estate investors and buyers alike.

1. Buying in Bulk. Banks have a lot of non-performing properties to unload so it should come as no surprise that trying to sell foreclosures one at a time is not only time consuming but also expensive. One of the hottest trends emerging in 2010 is for well funded investors or investment groups to purchase steeply discounted properties by buying in bulk….often for as little as 30 to 50 cents on the dollar. It’s a win-win situation for all parties; investors obtain maximum discounts and heightened ROI while banks save time and money by rapidly disposing of properties all at once.

2. Social Media Marketing. With nearly 90 percent of all buyers starting their real estate search online, social media marketing is growing at a fast and furious pace. Photographs and virtual tours are not just expected, but failure to include extensive visual elements is akin to a death sentence for most agents. Tweets, blogs and information marketing is more than a way to get the word out about a property…it’s increasingly viewed as a prerequisite for obtaining the trust of future clients. Recent surveys found that over 80 percent of people read a blog, signed-up for email newsletters and read other online forms of communication provided by the agent before deciding to do business with them. Make your mark count by learning how to effectively use social media marketing, email newsletters, blogs and other forms of mass communication to market your services and homes.

3. Banking & Broker Blues. Although rates have remained low, banks have been sending signals that tougher lending standards are only the tip of the iceberg when it comes to financing. Brokers remain at risk for the loans they write resulting in increased vigilance and intense scrutiny. New Fannie/Freddie guidelines that go into effect this summer will further constrain already stretched consumers by increasing down payment requirements needed to obtain conventional financing after a pre-foreclosure event. Even top rated investors with perfect credit are finding it increasingly difficult to deal with number of loan limits and other constraints.

4. Going Green. From lead laws to EPA regulations, real estate is slowly but surely going green. Although tax incentives and other initiatives have failed to make the desired impact, escalating utility bills combined with tax credits and legislative restrictions are beginning to show in the market. Expect to shell out big bucks for energy efficient appliances including new air conditioning/heating, pay more for repairs thanks to lead law certification and reap larger returns for properties that already conform to environmentally friendly guidelines.

See you at the top!

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

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

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

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About the author:

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

Smart Real Estate News & Commentary by Chris McLaughlin, March 9, 2010

admin — Tue, 09 Mar 2010 16:02:12 +0000

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“Lazy Person’s Way to Pre-Foreclosure Riches”

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Now on to our real estate investing educational section…

Home supply rises 4.2%

According to data compiled by ZipRealty, inventory of homes — single-family homes, condominiums and town houses listed on local multiple-listing services — in 27 major metropolitan areas rose 4.2% in February from a month earlier. The inventory in February dropped 19% year-over-year. The figures compiled by ZipRealty may not present the exact level of supply since half of foreclosed homes are not included on multiple-listing services at any given time on account of such homes awaiting repairs or being subject to litigation. Ivy Zelman, chief executive of Zelman & Associates, a research firm, says the average increase in home inventory in February has been 3.4%, over the past 27 years. Analysts say the housing inventory could be much higher than what is reported, and a large supply of unsold homes could hit market recovery. David Moon, president of Moon Capital Management, says the housing inventory data does not account for “properties on which the loans are seriously delinquent and those that already are in the foreclosure process but not for sale. Banks often have houses in their real estate owned portfolios that aren’t yet on the market.”

Will foreign investment help commercial real estate?

“A wave of commercial real estate loan failures could threaten America’s already-weakened financial system … and… trigger economic damage that could touch the lives of nearly every American,” according to a recent Congressional Oversight Panel report. As troubled loans running into billions of dollars come due in the next few years, the industry is facing the prospect of a huge wave of defaults. A recently proposed legislation seeks to attract foreign investment to the commercial real estate sector to provide the much needed liquidity for the sector. In January, Joseph Crowley, a Democratic congressman, introduced the Real Estate Revitalization Act of 2010 which seeks to eliminate certain taxes that were part of the Foreign Investment Real Estate Property Tax of 1980 (FIRPTA). FIRPTA requires foreign investors to pay as high as a 55% tax on capital gains from the sale of U.S. real estate or shares in real estate investment trusts. Supporters of the bill say that by repealing the tax, the country would attract significant foreign investment. “We’re talking about bringing in foreign investment to be on equal footing if they invest in real estate versus non real estate,” says Jeffrey DeBoer, chief executive of the Real Estate Roundtable, a real estate think tank. Many property owners are now facing debt calls on account of property prices having fallen about 40% from their peak, and the commercial mortgage-backed securities market has dried up. Real estate loans to the extent of $1.4 trillion will come due between 2010 and 2014, and about 50% of those loans are currently “underwater.” If the bill is passed, Real Estate Investment Trusts could benefit significantly.

Bair says consumers did not understand subprime mortgages

Sheila Bair, the chairman of the Federal Deposit Insurance Corp. (FDIC) has said there is “ample evidence that consumers did not understand the consequences of the subprime and nontraditional mortgages that were sold to them.” In a speech to the National Association of Business Economics, Bair has called for greater consumer protection in financial services and said the information flow among the different market participants should significantly improve. “Economists understand a great deal about the effects of asymmetric information, and how it can prevent markets from existing in the first place or from operating efficiently,” Bair said. “In this light, I think there is a strong case to be made that basic consumer protections help markets function better by reducing information gaps between lenders and borrowers.” Commenting on failures of large financial firms, Bair said the typical resolution should not be a bailout using public money, but should be a mechanism which would ensure that shareholders and creditors take the losses.

Small business optimism slips

According to a survey conducted by the National Federation of Independent Business (NFIB), its index measuring sentiment among small business owners dropped 1.3 points to a reading of 88.0 in February, from January. Incidentally, a value of 90 in the index indicates an expectation of positive growth. The index has remained at 90 for 17 straight months, and below 90 in all but 4 months since January 2008. The survey said small business owners cited weak sales as their biggest concern. The poor outlook on demand is driving small business owners to liquidate inventories and go slow on ordering new stocks. “Something is preventing owners from ‘pulling the trigger,’ said William Dunkelberg, chief economist for NFIB.”Very few owners felt that growth opportunities were solid enough to warrant expansion.” Only about 9% of the respondents said they were hampered by lack of credit. “Credit access is not a major factor holding up economic growth, at least the kind of growth we want,” said Dunkelberg.

Hiring outlook worsens

According to a quarterly survey by Manpower, a consultancy, employers in the U.S. are less willing to hire workers in the coming 3 months than they were 3 months ago. Some 17 million Americans are currently unemployed and the survey results do not indicate any optimism on employment. The survey is based on interviews with 18,000 managers responsible for hiring workers and measures the difference between those who say they will add to their workforce and those who plan cuts. About 73% reported no change in their hiring outlook, matching last quarter’s record. “There is some demand, so (employers) won’t let people go, but not enough confidence to do hiring,” Manpower Chief Executive Jeff Joerres said. According to Joerres, the U.S. economy is caught in a vicious cycle – companies will not add capacity and hire workers until demand improves, while consumers will not buy until unemployment falls and incomes improve. Joerres argued for continued government stimulus until the economic situation improves. “A snail’s pace recovery is (equivalent to) falling back,” Joerres said. “A very slow recovery is dangerous.”

See you at the top!

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

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

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

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About the author:

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

Real Estate News & Commentary by Chris McLaughlin, January 8, 2010

admin — Fri, 08 Jan 2010 16:17:40 +0000

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Bailout for speculation

Thanks to a handout from this spend crazy congress, dozens of serial money-losers will stake claims in a cash scramble that could cost us more than $50 billion. Thanks to months of lobbying by the homebuilders, the measure also gave companies the right to apply losses incurred in 2008 and 2009 to income earned in any five years through 2007. Previously, losses could be counted against profits over just two previous years. The change was good news for companies like Lennar, a Miami-based homebuilder that has been gushing red ink since its misguided bets on house prices went bad three years ago. All told, Lennar has lost $3.4 billion over the past three years, wiping out profits running back to 2003. But the company now is free to use $1.5 billion of losses over the past two years to offset previous income. It expects to get a $320 million tax refund check this year. Those funds will allow Lennar “to continue to capitalize on distressed land-buying opportunities, which will improve our operating results in 2010 and beyond,” Miller said. As CNN says, it is curious at a time of bulging national budget deficits that taxpayers should be funding Lennar’s land speculation efforts — particularly given the company’s poor record in that area. After gorging on land during the boom, the company lost $1.8 billion on land sales in 2007 and 2008. Regardless of what purpose the refunds might serve, Lennar won’t be the last homebuilder to claim one. Toll Brothers (TOL) said last month it expects to get a $162 million income tax refund when it files its 2009 taxes, thanks to losses the past two years it can now offset against 2007 income. A Wall Street analyst last month upgraded KB Home (KBH) shares, citing a large expected refund there. As has so often been the case during the last two bailout-soaked years, those funds will come out of taxpayers’ pockets.

So much for “job creation”

Labor Department data showed that US employers unexpectedly cut 85,000 jobs in December, even though analysts polled by Reuters had expected nonfarm payrolls to be unchanged last month and the unemployment rate to edge up to 10.1 percent. For the whole of 2009, the economy shed 4.2 million jobs, the department said. Still the job market continued to show broad improvements last month, with a number of sectors showing gains. Professional and business services added 50,000 positions, while education and health services increased payrolls by 35,000. Temporary help employment rose by 47,000. Manufacturing payrolls fell 27,000 after dropping 35,000 in November. The construction sector lost 53,000 jobs, while the service-providing sector shed only 4,000 workers. The average workweek was unchanged at 33.2 hours, while average hourly earnings increased by $18.80 from $18.77 in November. Unemployment remains the Achilles heel of the economic recovery that started in the third quarter of 2009 following the worst recession in 70 years. Creating jobs is critical to sustaining the economic recovery when government stimulus fades. It’s also critical to Democratic ambitions. Obama’s popularity has steadily fallen, knocking his approval ratings down to around 50 percent, and this could dim the election prospects for his Democratic Party in the November congressional elections. Obama is scheduled to make a statement on the economy at 2:40 p.m. EST.

DSNews.com – Unemployment Plagues 25% of Distressed Homeowners

An analysis by MortgageKeeper Referral Services of 400,000 homeowners in 2009 shows that nearly one in four needed access to employment services to help them keep their homes. The New York-based MortgageKeeper has found that of the 19 service categories its database offers, struggling homeowners most requested employment assistance. Based on this information, the company sees strong ties between job loss and foreclosure. “The results are not surprising, but they point to foreclosure as a symptom of much larger problems in our economy,” said Rochelle Nawrocki Gorey, president of MortgageKeeper Referral Services. “In almost all cases, something is forcing a family to miss their mortgage payments. If these underlying issues go unaddressed, loan modifications and other aids are only temporary fixes.” MortgageKeeper says its database is accessed more than 1,000 times every day, helping more than 30,000 families every month. Its resources include more than 4,000 nonprofit and government agencies in 75 metro areas in all 50 states-covering 90 percent of high foreclosure markets, the company said. “Our web-based applications-including our newest, MKDirect-dive to the root cause of missed mortgage payments,” said Gorey. “Offering a struggling homeowner help to find a job, feed their family, and pay their utility bills-this helps them steady their financial ship. And with their finances in order, homeowners will be much more likely to stay current on their mortgage.”

Holiday sales up

Total holiday-season sales grew 1.8% with a late surge before Christmas, according to an index of 33 retailers by the International Council of Shopping Centers. According to a Thomson Reuters index of 30 retailers, sales grew even more, with sales for the five weeks ended in early January rising 2.9% compared with the prior year, the best monthly showing since April 2008. Retail economists now predict solid growth for 2010. The International Council of Shopping Centers projects annual sales will increase 3% to 3.5%, the biggest jump since 2006. “It’s a story of the turning of the corner for the retail industry,” said Michael Niemira, the group’s chief economist. The improvement was seen broadly. From department stores to teen retailers to discount mass merchants, three-fourths of major store chains reporting December sales exceeded low analysts’ expectations. The 2009 Christmas totals remained far below those of just two years ago and only presented a partial portrait because they didn’t include retail behemoth Wal-Mart Stores Inc., which stopped disclosing monthly figures last year. The relatively strong performance signaled that most store chains protected profit margins by restricting inventories to match demand, avoiding the desperation clearance sales that ate into fourth-quarter earnings in 2008. Nordstrom Inc. posted a 7.4% rise in same-store sales and said annual earnings should exceed its prior estimate of $1.83 to $1.88 a share. The less-is-more strategy is expected to continue well into this year as merchants cautiously move forward in light of continuing high unemployment and a recent spike in energy prices that is reducing consumers’ disposable income.

Recovery Worries over Fed Plan to Stop Buying Mortgages

The Federal Reserve’s pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the fragile housing recovery off course. Rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates, near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy. The recent rise in mortgage rates could be a prelude to even bigger increases in coming months as the Fed steps away from support for the market. That prospect has some in the markets counting on the Fed to change course and keep buying past March, which many officials are reluctant to do. When such a big investor stops buying, “that could lead to material increases in [interest] rates across the board,” said Ronald Temple, portfolio manager at Lazard Asset Management. He sees mortgage rates rising by a percentage point when the Fed stops buying. A withdrawal of government support, combined with high unemployment and rising mortgage foreclosures, could push home prices down 20%, he said. The Fed now holds $909 billion of mortgage-backed securities. In the past year it has purchased 73% of the mortgages that government-backed Fannie Mae, Freddie Mac and Ginnie Mae have turned into securities. Purchases by the Treasury pushed total government purchases above $1 trillion. The Fed says it plans to top off its purchases at $1.25 trillion by the end of March, but must decide in the months ahead whether the economy is strong enough to stick with that plan.

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Try to Top These Tax Benefits!

There are many reasons to invest in real estate but undoubtedly, one of the most important is the undeniable tax benefits. From depreciation to deductions, just try to find another source of income able to top these tax benefits!

1. Passive Loss Deductions. High income individuals will be delighted by the ability to offset gains in other areas by taking passive loss deductions from real estate. All expenses associated with real estate investments qualify including management fees, taxes, insurance, repairs, homeowner association dues, legal and accounting fees and even small office expenses. Just be sure to keep receipts and set up a tracking method.

2. Depreciation. Few things are more tax friendly than real estate; while the property appreciates in value due to inflation, improvements and/or market forces, it simultaneously depreciates in value according to Uncle Sam. The average depreciation schedule for most single family residential homes is 27.5 years which means you deduct a percentage of the price of the building (not land) in addition to expenses or other fees each and every year.

3. Interest Deduction. If you are using other people’s money – including banks, hard money lenders or even personal loans – the interest is typically deductible. Since interest payments tend to be highest in the early stages of ownership, interest deductions are especially useful when building a real estate portfolio.

5. Income Tax Treatment. When you work for a living personal income taxes and FICA represent a significant tax burden. FICA alone equal 15 percent of wages for self employed individuals (employers match employee contributions for a total of 15% combined), however, rents collected from real estate are never subject to self employment taxes making them a favorable way to generate tax free profits for retirees and others.

6. 1031 Exchanges. There are very few investments that allow you to trade them in and purchase another without any tax consequences but real estate is one of the exceptions to the rule. Investors must follow specific criteria to qualify but it’s entirely possible to roll profits from one property into another without generating any tax bills whatsoever – be sure to understand the requirements well into advance in order to avoid unpleasant surprises later.

7. Totally Tax Free. Personal residential property can generate up to $250,000 of profit completely tax free! Many people have been able to fund a significant retirement benefit from buying their primary residence at the right price then downsizing later in life and pocketing the profits (tax free!). To qualify, you must live in the property for two out of five years immediately prior to selling. Imagine the additional income someone could generate simply by buying low and selling high every five years – with zero tax burden.

See you at the top!

Chris McLaughlin

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

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

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

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
–

Real Estate News & Commentary by Chris McLaughlin, January 7, 2010

admin — Thu, 07 Jan 2010 18:50:58 +0000

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

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

***********

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Housing sales fall, factory output increases

The National Association of Realtors said its seasonally adjusted index of sales agreements fell 16 percent from October to a November reading of 96. It was the first decline following nine straight months of gains and the lowest reading since June. The drop was far larger than the 2 percent expected from economists surveyed by Thomson Reuters, and analysts were surprised. “This was bound to happen at some point, although not by this much,” wrote a startled Jennifer Lee, senior economist with BMO Capital Markets. “Gulp,” she added. “It will be at least early spring before we see notable gains in sales activity as homebuyers respond to the recently extended and expanded tax credit,” Lawrence Yun, the Realtors’ chief economist, said in a statement.

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales. Pending sales were down 26 percent from October in the Northeast and Midwest, 15 percent in the South and 3 percent in the West. “This sudden drop risks the stability housing markets have enjoyed in recent months,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott. The good news is that orders to U.S. factory output posted a big gain in November, according to the Commerce Department. That data was the latest evidence of a strong turnaround in manufacturing as industries from China to Europe show signs of recovery. Orders rose by 1.1 percent in November, more than double the 0.5 percent increase economists had forecast. The increases were widespread with the exception of autos and aircraft, which posted declines. The Institute of Supply Management had reported Monday that its key gauge of U.S. factory activity showed manufacturing was expanding in December at the fastest pace in more than three years.

Olick on HAMP

Diana Olick from CNBC is back from vacation and is no fan of President Obama’s HAMP bailout: “Clearly the housing boom of the past decade was fueled far more by faulty mortgage products than low interest rates, and to find proof of that you need look no further than the government’s own mortgage bailout. The Home Affordable Modification Program (HAMP) is trying desperately to keep these faulty mortgages alive by changing their interest rates, but many many borrowers are unable to meet even the lower monthly payments. The underwriting, the lending, the products themselves are simply irreparable. And we’re about to find out how monetary policy affects the housing market, as the Fed winds up its $1.25 trillion program to buy Fannie and Freddie securities, thereby artificially keeping interest rates low by keeping demand high. The Fed claims its on track to pull out March 31st, as planned. Add that to current shenanigans in the bond market which are pushing mortgage interest rates up already, and you’ll get that monetary policy whether you like it or not. What’s interesting in all of this is that the action in the housing market right now is cash-only buyers/investors. They’re sidestepping the mortgage market entirely. But as I said, these are investors, by and large, and not real organic home buyers. The housing market, while it may have become a commodities market over the past decade, is inherently not one and therefore cannot recover with investors alone.”

Financial crisis not over

According to several top economists at the annual American Economic Association, America’s financial crisis is nowhere near over. That stands in sharp contrast to rising optimism in the banking sector, which analysts say has benefited disproportionately from government bailout efforts. “The recession is not over,” said Michael Intriligator, professor of economics at the University of California, Los Angeles. He predicted economic output would not return to pre-crisis levels until 2013, while the job market would not fully recover until 2016. U.S. gross domestic product expanded 2.2 percent in the third quarter, but the sustainability of the recovery remains the subject of fierce debate. Simon Johnson, an economist at MIT’s Sloan School of Business, said that by propping up the financial sector, government efforts to date are only delaying another inevitable crash. By giving large financial institutions the assurance that they are too big to fail, and thereby offering an implicit guarantee to excess risk-taking, Barack Obama has made the problem worse. “The crisis is just beginning,” Johnson said. “Have bankers won? In the short-term, absolutely. The immediate opportunity for change has already been missed.”

Bankers optimistic

As if to bolster what Simon Johnson said above, Jim O’Neill, head of global economic research at Goldman Sachs (a banker), is wildly optimistic, claiming that the global economic rebound is likely to be even stronger than many have anticipated and developed markets have the potential to outperform emerging markets. Goldman Sachs analysts estimate that the world economic growth will be 4.4 percent this year and 4.5 percent in 2011. Investors should be “really hopeful” about the US economy, after Monday’s ISM survey results, according to O’Neill. “It looks like you’ve got an environment with stronger than expected growth, with policy makers at least in the West still saying ‘we’re not doing anything guys, go ahead and party,’” said Clive McDonnell, a regional strategist at BNP Paribas Securities.

DS News.com – Mortgage-Related Failures Hit Record Level in 2009

According to MortgageDaily.com, a source of mortgage news for the mortgage industry, more than 200 mortgage-related firms ended operations or failed last year, the highest number since the site began tracking the data in 1998. The previous record was set in 2007, but 2009 now marks the worst year in the industry. Up from the revised 124 closings in 2008, the closings of 225 mortgage-related operations were tracked in 2009 at the mortgage graveyard – a journal of failed lenders maintained by MortgageDaily.com. As banks account for most of the country’s residential originations, MortgageDaily.com said the annual surge in mortgage-related failures was fueled by a 400 percent spike in bank failures. In addition, credit union failures, including corporate and state-regulated institutions, were up by more than a third. Ocala, Florida-based Taylor Bean & Whitaker Mortgage Corp. was among last year’s most notable failures. The company was forced into bankruptcy after it was suspended by the Federal Housing Administration (FHA) in August. Lend America, based in Melville, New York, lost FHA approval in November and suffered a similar fate. Tied to the failure of Taylor Bean, Montgomery, Alabama-based Colonial Bank was seized by the Alabama State Banking Department in August and sold to BB&T.

US auto sales hit 30 year low in 2009

US auto sales are expected to have hit a 30-year low of about 10 million when figures are released today, but analysts expect more than 1 million cars and light trucks to have been sold in December, the best monthly performance since Cash for Clunkers in August. Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months, Experian Automotive says. Fourth-quarter figures aren’t yet available, but Jesse Toprak, vice president of the auto pricing tracker TrueCar Inc., said December saw an uptick in auto-loan approvals for consumers with average or above-average credit. Today, a top-tier borrower can get a 36-month auto loan with an average monthly rate of 5.74 percent, down from 6.65 percent a year ago, according to Informa Research Services. But the cost has risen for people in the bottom tier: The average rate has climbed to 18.56 percent, from 16.47 percent a year ago.

CMBS Delinquencies May Grow 58% in Next Six Months

According to monthly research by credit-rating agency Realpoint, the delinquent unpaid balance for commercial mortgage-backed securities (CMBS) rose “substantially” in November – more than 16% – to $37.93bn from the previous month, and the rate of growth looks likely to continue. Multifamily loans surpassed retail loans in November as the largest contributor to overall CMBS delinquency, Realpoint said. The sector accounted for 1.23% of the CMBS universe, but 26% of total delinquency. The overall delinquent unpaid balance of CMBS rose “an astounding” 440% from one year earlier, when $7.03bn of unpaid balance was delinquent in November 2008. Realpoint indicates the rate of growth in delinquency looks unlikely to let up as the market heads into 2010. “Overall, following the delinquency reporting of the $4.1bn Extended Stay Hotel loan and the experienced average growth month-over-month, we now project the delinquent unpaid CMBS balance to continue along its current trend and grow to between $50bn and $60bn by mid 2010,” Realpoint researchers wrote in the December 2009 report. With these figures, Realpoint expects delinquent CMBS to grow as much as 31-58% by mid-2010. Realpoint researchers project the delinquency percentage to grow between 5% and 6% through Q110, potentially surpassing the 7-8% mark under heavy stress scenarios through mid-2010.

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

Secrets to Phone Success for Foreclosure Investors

Much has been written about secrets to telephone success for all types of sales but rarely is it possible to obtain all the best possible tips in one convenient place. Here at the Short Sales blog we make a practice of providing information you can really use in your day to day investing techniques so without further ado, here are the top ten secrets to phone success for short sale investors.

1. UP the Ante. Buyers who call to inquire about homes listed in advertisements with a price listed can usually afford more. Research indicates most people responding to an ad with listed price tend to be more conservative and searching for bargains. Make a point of asking about upper limits then provide enticing alternatives whenever possible.

2. Downsize. Buyers calling about homes with signs in front are usually at – or above – their upper limit. Research indicates prospective buyers that respond to yard signs often have lower income or credit scores. Be sure to screen callers carefully and have other more affordable options available.

3. Ask questions. The person who asks the most questions tends to be “in charge” of the conversation. Be prepared to ask plenty of questions when responding to a call or inquiry; it’s a good way to begin building a list of potential prospects.

4. Follow-Up. Experts have found that buyers and sellers rarely tend to call back but will respond to information that meets their search criteria. Make it a priority to gather relevant information then follow-up whether via email, phone or standard mail.

5. Ask. Always ask buyers if they have a house or other property for sale. Even if you don’t make an offer, it could become an important part of the negotiation process. It’s also a quick way to generate a little extra cash or goodwill by making a referral to your favorite agent or broker.

6. Don’t Make Assumptions. Investors tend to have clearly defined goals so it can be difficult to realize that both buyers and sellers may have little idea what they really want. Don’t make assumptions – instead, realize that lack of information is a rampant problem among many Americans. Be prepared to provide information, examples and education to make the deal work.

7. Compare the Competition. Most of the time, both buyers and sellers will have other ads circled. From time to time savvy short sale investors should know the local competition both in terms of what is for sale and the amenities offers. Don’t shy away from comparing your property or service against others – just be sure to do it in a positive way that reflects information.

8. Sell a Service – Not a House! This is a common mistake among novice short sale investors. Remember, every contact is an opportunity for present or future clients so make the most of it. Rather than responding about a specific property, learn to develop a relationship instead. After all, once the caller has rejected the property they have typically rejected your service. Differentiate yourself by providing solutions to their problems rather than just information on a single property.

See you at the top!

Chris McLaughlin

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

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

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

About the author:

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

Real Estate News & Commentary by Chris McLaughlin, December 8, 2009

admin — Tue, 08 Dec 2009 16:44:28 +0000

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

* Join my fan page: http://www.mclaughlinchris.com

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

MBA – 3Q09 Commercial and Multifamily Mortgage Performance Falls

According to the Mortgage Bankers Association’s (MBA)

Commercial/Multifamily Delinquency Report, delinquency rates for most commercial/multifamily mortgage investor groups continued to increase in the third quarter. Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans.” Between the second and third quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.17 percentage points to 4.06 percent.

The 60+ day delinquency rate on loans held in life company portfolios rose 0.08 percentage points to 0.23 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.11 percentage points to 0.62 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac remained unchanged at 0.11 percent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.51 percentage points to 3.43 percent. Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows: CMBS: 4.06 percent (30+ days delinquent or in REO); Life company portfolios: 0.23 percent (60+days delinquent); Fannie Mae: 0.62 percent (60 or more days delinquent); Freddie Mac: 0.11 percent (90 or more days delinquent); Banks and thrifts: 3.43 percent (90 or more days delinquent or in non-accrual). Construction and development loans are not included in the numbers presented here.

Stop Spending, Washington

Several groups of citizens and experts across the country, part of the Concord Coalition’s Fiscal Stewardship Project, delivered a report to their lawmakers on Capitol Hill detailing their suggestions for how best to address the long-term fiscal storm facing the United States if lawmakers do nothing. To solve the country’s fiscal problems, the gross domestic product would need to increase by double digits on average for the next 75 years, on an inflation-adjusted basis, according to estimates from the Government Accountability Office, lawmakers are left with three unpopular choices: cut spending, raise taxes, or stop making promises the country can’t afford. Here are a few of the concrete suggestions made by one or more of the councils: Shore up Social Security’s long-term shortfalls: The range of suggestions included raising the retirement age, applying means testing to benefits, raising more revenue and ensuring by a “date certain” that projected revenue is sufficient to cover projected expenses; Simplify the tax code: The aim should be to reduce taxpayer aggravation, increase voluntary compliance and reduce enforcement costs; Raise taxes when necessary: The Atlanta council suggested a combination of an income tax and a federal consumption tax.

The Northern California council recommended that the additional tax burden “be spread in a way that ensures everyone will contribute at least something in return for the government services they receive”; Make everyone curb growth in health spending: That includes the government, medical providers, insurance companies, lawyers and consumers; Form a bipartisan fiscal commission: The goal is to have a commission willing to make tough recommendations about how to address long-term budgetary shortfalls and put those recommendations up for a yes-or-down vote in Congress; Think long-term: Lawmakers should consider the costs and effects of a bill beyond the 10-year window they usually use. And they should think about the consequences of their actions on younger generations; The Atlanta council put it this way: “If Americans don’t make the hard decisions now, it will have a devastating impact on the quality of life for our children a and grandchildren.”

Interest rates to stay low

Fed Chairman Ben Bernanke says the Federal Reserve is still looking at an “extended period” for low interest rates because the economic recovery remains tentative and inflation continues to be stable. “Right now we are still looking at the extended period, given that conditions remain, low rate utilization…and stable inflation expectations, that remains where we are now,” Bernanke said in response to a question at the Economic Club of Washington. “We continue to look at the economy, obviously there have been signs of strength recently.”

As is becoming a habit in Washington these days, he tagged on this: “We still have some way to go before we can be assured that the recovery will be self sustaining.” The Fed chief repeated his belief that the recovery will continue at least into next year. But he cautioned that the economy is confronting some “formidable headwinds” — including a weak job market, cautious consumers and still-tight credit. Those forces “seem likely to keep the pace of expansion moderate,” he said. Under one Fed forecast released last month, the jobless rate would remain stubbornly high next year — ranging from 9.3 to 9.7 percent. The Fed has warned that it could take five or six years for the job market to return to normal.

BOA – 2/3s of HAMP borrowers will lose homes

Mr. Schakett, Credit loss mitigation strategies executive at Bank of America (BOA) says that of the 65 thousand trial modifications set to expire Dec. 31st with (BOA), a full two thirds of the borrowers, while current on their payments, have not submitted the full documentation required to turn a trial mod permanent under the HAMP guidelines. “We don’t really know the major reason why the customers are not returning the documentation,” Schakett claims. Diana Olick says: “Well I can tell you why (and I’m sure he knows this too). The trial modification process only requires oral verification of income to begin, but to go permanent, you need to prove your income, submit your tax returns, and basically come clean with all your finances. I’m guessing a lot of folks who took out their initial loans with false or non-existent documentation aren’t eager to let the government know that.” Schakett says that Treasury is now considering upping the ante on the trial modifications, requiring much more documentation up front, so that banks won’t have all these trial mods going with borrowers who inevitably won’t reach permanent modification status. As Olick says: “…I get a lot of email from borrowers, telling me that the banks are holding up their paperwork, losing faxes, messing up modifications and leaving those borrowers in the lurch. I don’t dispute that, but I can’t fully dismiss the banks when they tell me that 2/3 of the borrowers won’t submit the paperwork. I also happen to know that a huge percentage of borrowers being offered modifications are rejecting them. They don’t want to pay. Many are already gone.”

Jobs outlook getting worse?

According to Mike “Mish” Shedlock, author of Mish’s Global Economic Trend Analysis and an investment advisor at SitkaPacific Capital Management, the November jobs report that got everyone excited was an “outlier” and “almost looked fabricated.” Looking beyond the November jobs data, Shedlock says the odds of the unemployment rate coming down anytime soon are remote. Even based on generous assumptions of 150,000 new jobs per month, no double-dip recession and a declining participation rate as Baby Boomers retire, “the best I can do is suggest the unemployment rate will be over 10% all the way through 2015 and never dip below 8% all the way out through the end of 2020,” Mish says. “In the absence of a war outbreak in the Middle East or Pakistan — and/or Congress going completely insane with more stimulus efforts — I think oil prices are likely to drop, the dollar will strengthen or at least hold its own, and the best opportunities are likely to be on the short side,” he writes. “2010 is highly likely to retrace most if not all of the ‘reflation’ efforts of 2009. If things play out as I suspect, 2010 will be the year of the great retrace as the economic recovery disappoints.”

Now on to our real estate investing educational arena …

How to Pick the Perfect Loan

A lot has been written about interest rates and credit scores but few people focus on how to pick the perfect loan. While it might not sound like the most exciting part of purchasing a short sale property, it is one of the most important decisions you are likely to make. As millions of Americans have already learned, obtaining the wrong loan can be a very costly decision. Fortunately, it’s relatively simple to secure a great loan that works well for your individual situation once you are aware of all your options. Follow these quick steps to help find your perfect loan:

1. Determine your down payment. The larger your down payment the more options you will have available but always leave a little additional cash for emergencies and other needs.

0-5 Percent Down Payment: VA loans for veterans or Vendee loans for foreclosures.
3.5 – 5 Percent Down: FHA or HUD loan for purchase of primary residence only.
5 to 10 Percent Down: Conventional Loan with strong credit score.
20 Percent Down: Conventional Loan without PMI or inferior credit score.
20 to 30 Percent Down: Investment loans, vacation or second homes.

2. Determine the term. Right now fixed rate loans are at or near historic lows so if you intend to hold the property for any length of time, it’s a good idea to take a serious look at 15 to 30 year terms. Interest only and ARM (Adjustable Rate Mortgages) remain a solid investment for those who understand the pros and cons.

30 Year Term: Select a 30 year term if you intend to remain in the property for many years, plan to turn it into a rental property at a later date, are on a limited fixed income or are expecting to be on a fixed income in the future and want minimum payments with maximum flexibility. Remember, you can always pay more on the loan should you desire.
15 Year Term: Select a 15 year term if you want to obtain the lowest possible interest rate with steady fixed payments, become debt-free as soon as possible, save tens of thousands of dollars over the life of the loan and you have ample yet steady income.
Interest Only: Select an interest only loan if you want to lock in a great price on a property, want to get started in real estate investments with a modest amount out of pocket, expect to have dramatically higher income within a few years (for example, you are in college, paying off significant debt or will have a spouse/other return to work) or are buying in an area experiencing rapid appreciation.
ARM/Option ARM’s: Select an adjustable rate mortgage if you plan to use the property for cash flow then sell, need the minimum payment for a short period of time then expect to have significantly more cash in the future and/or wish to use an alternative to a Jumbo Loan.

See you at the top!

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

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

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

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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
    * Join my Fan Page: http://www.mclaughlinchris.com
–

Real Estate News & Commentary by Chris McLaughlin, October 20, 2009

admin — Tue, 20 Oct 2009 18:40:59 +0000

http://www.shortsalesriches.com

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

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

Fix A Flip … Replay Comes Down Soon!

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Housing starts lower than expected

The Commerce Department announced today that Housing starts increased to a seasonally-adjusted annual rate of 590,000 last month, up 0.5% above a revised 587,000 in October, but down 28.2% from September 2008, and less than the 610,000 forecast by Briefing.com. New construction of single-family homes, the key sector of the housing market, increased 3.9% to an annual rate of 501,000 versus 482,000 in August. Starts fell by 1.7% in both the South and the West, and new home construction was flat in the Northeast at 62,000 units, and in the Midwest at 100,000 units. Multi-family homes increased despite the overall housing starts drop, and new construction of buildings with 5 or more units increased to an annual rate of 104,000, up 7.2% from 97,000 in August. Applications for building permits also missed predictions; permit applications fell 1.2% to a seasonally adjusted annual rate of 573,000. Economists had expected permits to rise to 595,000.

Wholesale prices down

The Labor Department announced that the U.S. Producer Price Index (PPI) dropped 0.6% more than expected in September. Prices paid at the farm and factory gate also fell 4.8% on the year, which was steeper than forecasts of a 4.2% drop, although excluding food and energy, prices declined by a much slimmer 0.1% in September. The PPI tracks the prices of goods before they reach store shelves and is considered an early read on price trends. It has been on a roller-coaster in recent months, reflecting wide swings in energy costs. The index fell 6.8 percent in the year ending in July, the largest decline on records dating to 1947. The decline is mainly because of a 2.4% decline in energy prices although rising unemployment, wary shoppers, and tight credit have all helped keep a lid on prices. The Federal Reserve has been able to keep the short-term rate it controls at its record low rate of nearly zero, where it is expected to remain until sometime next year.

More initiatives from the administration

The Obama administration announced another initiative to aid state and local housing finance agencies in providing mortgages to first-time and lower-income homebuyers and to assist in the development or rehabilitation of rental properties. Officials declined to put a price tag on the program, but said there would be no cost to taxpayers. If you’re finished laughing at that knee-slapper, let’s go on… Under the initiative, the Treasury Department, along with Fannie Mae and Freddie Mac will purchase housing bonds issued by the finance agencies. This will give the groups the funding needed to make new loans. The government will also provide a temporary credit program to allow the agencies to refinance their existing bonds to more favorable terms. Agencies will pay fees to participate in the program, which officials say will cover its cost. They are still working with the agencies to determine the extent of support needed. Earlier news reports said the initiative could cost as much as $35 billion. Treasury Secretary Tim Geithner explains: “This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times.”

Home price drop expected

Fiserv, a financial information and analysis firm, predicts that home values will drop in 342 out of 381 markets, with the national median home price dropping 11.3% by June 30, 2010, before stabilizing with prices rising 3.6% the year after that. Mark Zandi, chief economist with Moody’s Economy.com, agreed with Fiserv’s assessment. “I think more price declines are coming because the foreclosure crisis is not over,” he said. Those areas with high concentrations of foreclosure sales will experience the steepest drops, according to Fiserv. Home prices in Miami, for example, are expected to plunge 29.9% by next June — after having already fallen a whopping 48% during the past three years. If Fiserv’s forecast holds, Miami real median home price will tumble to $142,000 by June 2011. In Orlando, Fla., the second-worst performing market, Fiserv anticipates a 27% price collapse by June 2010, followed by a less severe drop the following year. In Hanford, Calif., prices are estimated to drop 26.9% and continue falling 9.5% in 2011; in Naples, Fla., they’re expected to fall 26.8% and then flatten out.

RBS says 2.7 million more distressed sales in pipeline

Royal Bank of Scotland (RBS) economists say that recent months of “nascent” housing recovery remain overshadowed by the delinquency pipeline that threatens to put as many as 2.7m distressed sales on the market in the US. “Given the lag time between a start and a completion, homebuilders and new home buyers probably had to act by July in order to feel confident that they would be able to claim the credit,” said RBS chief economist Stephen Stanley, explaining the surge in sales earlier this year. “So, a portion of the increase in both starts and sales in recent months likely reflected activity being pulled forward into the summer.” According to the report, resales are likely to be soft in coming months if the tax credit expires and is not extended as some industry groups are calling for Congress to do. The inventory of existing homes held at 3.622m in August, 21% below the 4.575m peak in July ‘08. The dip may be due to various foreclosure moratoria as well as a delay in the process of foreclosed properties to reaching the market, RBS said. The typical foreclosure timeline is doubled in some cases from 12 months to 24 months. “A housing market that is just beginning to climb from the ashes would be unable to handle influx of nearly 3 million additional homes for sale all at once,” RBS economists said.

Arrests on Wall Street

Meanwhile, back on Wall Street, U.S. federal investigators are poised to bring further “significant” cases against insider traders and assorted dirtbags in the wake of hedge fund founder Raj Rajaratnam’s arrest. The targets will include financial professionals also involved in insider trading, a CNBC source familiar with the matter said, but it’s not clear whether the new cases will be related to the one that caught hedge fund founder Raj Rajaratnam and executives from some of the largest U.S. companies. Rajaratnam, who established Galleon Group in 1997, was charged on Friday with having used a network of company insiders to tip him off to information that netted $20 million in illegal profits between 2006 and 2009. Galleon is fighting for its life and investors who once counted themselves as lucky for getting access to one of the industry’s finest technology hedge funds may be running for the exits, industry analysts and lawyers said.

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

More Short Sale Myths

Although we have covered many short sale myths in the past, the growing need for viable information combined with clear confusion surrounding short sales has made the need for a follow-up more important than ever. Here to help define fact from fiction in relation to short sales are the most common myths and the information you need to know to close the deal:

Myth #1- Delinquent amount determines the short sale.

Fact: While the lender understandably desires to minimize losses on any loan, the fact behind short sales is that the delinquent amount is not the sole – nor even the most important – factor used when determining price. Property condition, comparable sales, cost to hold the property, time on the market, original down payment(s) and even the performance of other properties within the same portfolio all play important roles in the lenders decisions on whether to accept or reject a short sale offer.

Myth #2 – Condominiums can’t close as short sales.

Fact: While condominiums always require specialized knowledge and insight from a reputable agent, it is entirely possible to close a short sale on a condominium; in fact, even if a condo association has taken title of a unit, many investors find it preferable to use a short sale contract when purchasing from the condo association rather than the bank. Often a condo association is able to close in less time and with fewer constraints due to greater flexibility in their own portfolio. On the other hand, expect to encounter or specialized considerations when working with condo associations as well as financing.

Myth #3 – Lender mediated programs are preferable to short sales.

Fact: Mortgage mediations have not lived up to the full potential nor do all homeowners desired to mediate an existing mortgage. Some homes simply cannot be saved and others simply do not want to save their homes. Job transfer, high maintenance costs, multiple homes and change of lifestyle such as retirement are just a few reasons some homeowner prefer to walk away. Still others simply want a fresh financial start after filing bankruptcy or facing shrinking 401k accounts and shrinking retirement savings; there is a new focus on frugal living rather. People would rather live in a more modest home that allows them to retire on time despite major drops in other investments. Short sales fill the gap where mediation programs falter.

Myth #4 – It takes too long to close a short sale deal.

Fact: While it can take months, the national average is 9.5 weeks; while this is up from the 4.5 week average just one year ago, it is certainly far from impossible to close a short sale deal in a decent period of time. Of course, this is just an average and includes the nightmare closures that drag on endlessly with those that close quickly because they have a proven process working on their behalf. Tune in to one our free shortsalesriches.com webinars to learn more about putting your short sale investment on automatic with a proven process designed to maximize profits and minimize workload.

See you at the top!

Chris McLaughlin

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
    properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting nearly
     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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
–

Real Estate News & Commentary by Chris McLaughlin, October 7, 2009

admin — Wed, 07 Oct 2009 15:18:27 +0000

http://www.shortsalesriches.com

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

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

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US Banks Slow to Absorb Commercial Property Losses

The Wall Street Journal says a U.S. Federal Reserve report found that banks in the country are slow to take losses on their commercial real estate loans that have been hit by slumping property values and rental payments. In a Sept 29 presentation to banking regulators, K.C. Conway, a senior real estate analyst at the Federal Reserve Bank of Atlanta, suggested that regulators were preparing for a rerun of housing-related losses that plagued many banks after the residential property bubble burst. Conway’s report predicted that commercial real-estate losses would reach roughly 45 percent next year, and that the most “toxic” loans on bank books were interest-only loans, which get no benefit from amortization, since it requires borrowers to repay interest but no principal. The report also stated that banks have been slow to absorb the losses on their loans, partly due to “capital preservation” concerns. The Journal said a Fed official had confirmed the authenticity of the document, but added it did not represent the central bank’s formal opinion.

MBA – Mortgage Applications Increase

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 16.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index also increased 16.4 percent compared with the previous week. The Refinance Index increased 18.2 percent from the previous week, the seasonally adjusted Purchase Index increased 13.2 percent from one week earlier, the unadjusted Purchase Index increased 12.9 percent compared with the previous week, and the seasonally adjusted Government Purchase index is at a record level in the survey after a 14.4 percent increase from the week before. The four week moving average for the seasonally adjusted Market Index is up 4.2 percent. The four week moving average is up 0.2 percent for the seasonally adjusted Purchase Index, while this average is up 6.7 percent for the Refinance Index. The refinance share of mortgage activity increased to 66.3 percent of total applications from 65.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.1 percent from 6.2 percent of total applications from the previous week.

The dollar who came in from the cold

An article in Britain’s “Independent” newspaper said that secret meetings were taking place between Arab states, China, Russia, Japan and France, to end dollar dealings for oil and moving instead to a basket of currencies. The reports were later denied, but the news helps explains the sudden surge in gold prices which would be included in the basket along with the Japanese yen and Chinese yuan, the euro, and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. It’s not the first time a story like this has been out and about. “I’ve heard the story many times,” explains strategic investor Dennis Gartman on Fast Money. “But what’s different this time is that the story came out in the Independent, which is a pretty well respected newspaper.” Also, the fact that France and Japan were supposedly part of the discussion makes it seem more credible. “Of course everybody denied being at the meeting, they have to,” says Gartman. “But do I doubt for a moment that those talks have taken place somewhere? That leaders have talked behind curtains about the fact the world needs to diversify away from the dollar? I don’t doubt that for a moment.” After all, China has broached the subject before too. In any event, it’s all just talk at this point.

Bill raises down payment requirements

FHA Taxpayer Protection Act of 2009 — HR 3706, a bill introduced in Congress Monday, would increase the minimum down payment for Federal Housing Administration (FHA)-insured mortgages from 3.5% to 5%, and prohibit financing initial service charges, appraisals, inspections, or other fees or closing costs with any part of an FHA mortgage. The bill’s author, Rep. Scott Garrett (R-NJ), said the current policy of allowing closing costs to be rolled into the mortgage effectively reduces FHA down payments to as low as 2.5% because borrowers don’t have to have as much cash on hand at closing. “[T]he benefits of promoting homeownership using government subsidies must be balanced against the potential risk of insuring less creditworthy borrowers and exposing the American taxpayer to that risk,” Garrett said in a statement on his Web site. “As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.” But Scott Stern, CEO of the Lenders One mortgage cooperative, a group of independent mortgage lenders, says the down payment requirement for FHA loans has been consistent for years before the mortgage crisis, and the FHA program worked well. Instead, he said, it was the layering of risk, including questionable product terms, prepayment penalties, and unsound adjustable-rate mortgages (ARMs) that led to the rise of foreclosures.

Credit debt down, scores up

Credit Karma, a consumer advocate, released its U.S. Credit Score Climate Report with trend data for September 2009. Consumer credit card debt decreased this month. In addition, from June to September credit card debt decreased by 4% nationally and four states experienced double digit decreases in credit card debt quarter over quarter. In September, the average consumer with an open account had:

– $6,641 in credit card debt

– $190,096 in home mortgage loan

– $50,812 in home equity

– $14,402 in auto loans

– $26,295 in student loans

In addition, credit scores are on the rise for many consumers. 39% of consumer credit scores have increased, 29% have decreased, and 32% remained the same. The current average U.S. consumer credit score is 672, which is down two points since June and four points since the beginning of the year.

Now on to our real estate educational section…

VAT – Value Added Taxes May Result in Dramatic Real Estate Rate Increase

Although others may not fully appreciate the complete impact of the recently proposed VAT (Value Added Tax) proposed at the recent G20 summit, here at the short sale blog we try to keep readers informed about issues with plenty of advance notification…after all, information is key to success in short sales as well as any other forms of investment.

The VAT or Value Added Tax has long been a bone of contention but growing budget deficits and increased spending has created a need for more tax revenues—and fast. One proposed “solution” is a European style value-added tax or VAT. If recent rumblings and ruminations are any indication, it could be a matter of time before the United States follows the examples of other nations around the world.

According to Jon Podesta, co-charimant of Obama’s transition team and White House advisor, a “value –added tax is more plausible today than ever…there’s going to have to be revenue in this budget”.

A recent speech at the Center for American Progress by Roger Altman, CAP President Podesta, Laura Tyson and others noted “$400 billion in new tax revenue is needed almost immediately to calm financial market fears, and a VAT would be a great way of doing it”. That’s $400 billion a year, by the way, not over ten years.

In an interview with Charlie Rose, former Federal Reserve Chairman Paul Volcker stated “if Washington can’t get spending under control, either a VAT or a carbon tax would be effective revenue raisers.”

So, what how would a VAT impact real estate? Let’s take a look at Greece for one possible example. The overall VAT in Greece stands at 19% with reduced rates for food, medicine and other necessities. Real Estate transfer taxes average 9% to 11% depending upon the value and location of the property and are paid by the buyer of the property not the seller. Additionally, real estate owners are taxed on the value of the real estate owned much like local property taxes are assed today; there is an exemption for properties below a specified values while those above the limit are assessed .35%-.94% annually.

Taking an average sales price of $160,000 USD and adding an additional 10% would cost the buyer $16,000 more for the exact same home with another $1,600 per year.

Lest you think Greece is an extraordinarily high example, consider Romania with their flat 19% VAT for all real estate or the newly implemented VAT for Cypress of 15% for applicable properties (older properties are grand-fathered in and not subject to the full VAT).

Bottom line…should a VAT be implemented in the United States it could increase the cost of new homes practically overnight while driving up the residual value of existing properties. Is this a sure bet? By no means but it certainly is one quick solution to a growing liquidity problem facing the federal government. Keep your eyes and ears open for both short and long term opportunities to profit from the current economic changes taking place.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com

P.S. : YOU MUST SEE THIS! The move celebrated real estate

investing movie of the year:

http://www.housewarsmovie.com

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting nearly
     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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
–

Short Sales Riches Blog » federal reserve

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

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

Housing market diagnosis: Bi-polar

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

Diana Olick – Home Mortgage Interest Deduction In Play

Threat of Shadow Inventory Diminishing: Barclays

Commercial Market Still Struggling

Now on to our real estate investing education section …

Huh? HUD Reform Could Create Chaos

Smart Real Estate News & Commentary by Chris McLaughlin, May 14, 2010

Short Sale Sherlock this Saturday 3:00 PM ET, NOON PST:

You need to know this info. Join us tomorrow at 3 PM, NOON PST:

Freddie and Fannie won’t pay down your mortgage

Shakeup for Credit Raters

Diana Olick – Banks Ignore Delinquent Borrowers

Retailers poised for victory in debit card fee fight

MBA Hails Risk Retention Fixes to Regulatory Reform Bill

FICO Loses Battle in Credit Scores War

Now on to our real estate investing education section …

Friday File – Social Media & Short Sales Success

Smart Real Estate News & Commentary by Chris McLaughlin, April 28, 2010

Short Sale Sherlock Returns Today at 3 PM ET, NOON PST:

*********************************************************** HUD on the hotseat

Purchase Applications Increase, Refinance Applications Decline

Greek crisis deepens and spreads

Stocks plummet

DSNews.com – Home ownership falls to lowest level in 10 years

Now on to our real estate investing education section …

Essential Tools – Online Lesson #3

Smart Real Estate News & Commentary by Chris McLaughlin, April 21, 2010

Forward this e-mail to your friends! Then they can subscribe directly at the following link: http://www.smartrealestatenews.com/

*********************************************************** We all know Jeff Watson from his legal expertise advising short sale investors …

Olick – The lipsticked pig

Mortgage applications increase

Eye of the storm

Wells Fargo originates fewer mortgages

First time buyers up

Now on to our real estate investing education section …

Top Trends for Real Estate in 2010

Smart Real Estate News & Commentary by Chris McLaughlin, March 9, 2010

“Lazy Person’s Way to Pre-Foreclosure Riches”

Now on to our real estate investing educational section…

Home supply rises 4.2%

Will foreign investment help commercial real estate?

Bair says consumers did not understand subprime mortgages

Small business optimism slips

Hiring outlook worsens

Real Estate News & Commentary by Chris McLaughlin, January 8, 2010

Sign up now for tonight’s fr*ee training session we’re

having about how to work less and make more money

in real estate using the Internet.

Bailout for speculation

So much for “job creation”

DSNews.com – Unemployment Plagues 25% of Distressed Homeowners

Holiday sales up

Recovery Worries over Fed Plan to Stop Buying Mortgages

Real Estate News & Commentary by Chris McLaughlin, January 7, 2010

Sign up now for tonight’s fr*ee training session we’re

having about how to work less and make more money

in real estate using the Internet.

Housing sales fall, factory output increases

Olick on HAMP

Financial crisis not over

Bankers optimistic

DS News.com – Mortgage-Related Failures Hit Record Level in 2009

US auto sales hit 30 year low in 2009

CMBS Delinquencies May Grow 58% in Next Six Months

Secrets to Phone Success for Foreclosure Investors

Real Estate News & Commentary by Chris McLaughlin, December 8, 2009

MBA – 3Q09 Commercial and Multifamily Mortgage Performance Falls

Stop Spending, Washington

Interest rates to stay low

BOA – 2/3s of HAMP borrowers will lose homes

Jobs outlook getting worse?

Now on to our real estate investing educational arena …

How to Pick the Perfect Loan

Real Estate News & Commentary by Chris McLaughlin, October 20, 2009

Fix A Flip … Replay Comes Down Soon!

Housing starts lower than expected

***********************************************************
HUD on the hotseat

***********************************************************
We all know Jeff Watson from his legal expertise advising short sale investors …