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Home prices rise in July

by admin on September 28, 2010

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

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Home prices rise in July

According to the S&P Case-Shiller home-price indexes, prices began rising in April, boosted by the expiration of the first-time home-buyer tax credit that had new homeowners flocking to buy homes. Before that, they had fallen sequentially for six straight months.  Still, the housing sector faces challenges, with unemployment remaining high and the tax credit’s benefits wearing off. S&P warned last month that home-price returns could slow down, noting that housing and mortgage data pointed to fewer gains in the future.  Compared with a year earlier, unadjusted July prices rose 4.1% for the index of 10 metro areas, while the 20-city index climbed 3.2%.

The Case-Shiller index of 10 major metropolitan areas rose 0.8% from June, while the 20-city index climbed 0.6%.  David M. Blitzer, chairman of S&P’s index committee, said that going forward, prices could “still see some residual support” from the home-buyer tax credit, which covers purchases made before the credit’s expiration that close no later than Thursday. But “judging from the recent behavior of the housing market, stable prices seem more likely.”  Month-to-month gainers were headlined by Detroit — a city that has been walloped by the recession — which saw a 1.6% gain, as well as New York, which saw a 1.3% rise. Las Vegas again led decliners, posting a 0.8% drop.

No more tax mail?

Electronic filing of tax returns has become so popular that the Internal Revenue Service will no longer automatically mail a traditional paper form.  “We’re finding that more and more people are choosing to e-file, and the number of paper returns is going down,” said IRS spokesman Anthony Burke. He told CNN Tuesday that the agency last year mailed the old-style set of paper forms, tables and instructions to just eight percent of the nation’s taxpayers.  Burke said 96 million taxpayers this year have filed electronically, with another 20 million filing through professional tax preparers. The IRS hopes to save $10 million a year by not automatically mailing the materials.  Those who prefer hardcopy documents can still find them at libraries, post offices and walk-in IRS offices around the country.

After Jan. 1, they can request a mailing through the IRS toll-free number, 800-829-3676 .  The materials will also be available to download and print out from the IRS website: www.irs.gov.  Burke said the IRS “won’t produce the package any more,” as the agency transitions to providing software and other support for electronic filing.  Instead, in the next few weeks, those who filed traditional paperwork last year will get a simple postcard from the IRS, with instructions on how to obtain the documents needed to file a tax return.

29% of borrowers can’t afford mortgage

According to research by Zillow Mortgage Marketplace, any potential borrower with a credit score less than 620 is unlikely to receive a 30-year fixed-mortgage, even if they offer a relatively high down payment. Yet, according to myFICO.com, 29.3% of Americans have a credit score below that number.  This means that nearly one-third of Americans would likely be turned down for the nation’s most popular mortgage product.  Zillow tracked over 25,000 loan quotes and purchase requests in the first half of September. Potential borrowers credit scores 720 or higher received the lowest interest rates on Zillow.com, an average annual percentage rate of 4.3% for a 30-year FRM. Midrange credit scores, between 620 and 719, received APRs from 4.44% to 4.73%. 

Those with credit scores below 620 received too few loan quotes to calculate the average APR, Zillow said.  Zillow’s chief economist Stan Humphries attributes the trend to a tightening of credit standards, which he sees as a good thing.  “Four years ago, in the era of easy-to-get subprime loans, many borrowers with low scores did buy homes, which in turn helped contribute to a housing bubble,” said Humphries. “Today’s tighter credit is a predictable response by banks after the foreclosure crisis, but also keeps a cap on housing demand, which is important for the greater housing market recovery.”  Zillow entered into a partnership with Mint.com today, an online personal finance service from Intuit Inc. Now registered Mint users will receive a valuation quote, also known as a Zestimate, for their house as part of their online portfolio.

Banks failing

279 banks have collapsed since Sept. 25, 2008, when Washington Mutual Inc. became the biggest bank failure on record. That dwarfed the 1984 demise of Continental Illinois, which had only one-seventh of WaMu’s assets. The failures of the past two years shattered the pace of the prior six-year period, when only three dozen banks died.  Between failures and consolidation, the number of U.S. banks could fall to 5,000 over the next decade from the current 7,932, according to the top executive of investment-banking firm Keefe, Bruyette & Woods Inc.  The upside of failures is that they can represent a healthy cleansing of a sector that grew too fast, with bank assets more than doubling to $13.8 trillion in the decade that ended in 2008. Many banks that failed were opportunistic latecomers. Of the failed banks since February 2007, 75 were formed after 1999, according to SNL Financial. 

Still, economists say, the contraction represents an enduring threat to capital, lending and the economy.  “When we step back and look at this financial disaster 10 years from now, the destruction of capital in our economy as a result of what we’ve endured will be the single greatest lasting impact on recovery and how the economy performs in the future,” says Howard Headlee, president of the Utah Bankers Association.  Since 2008, the industry’s assets have shrunk by 4.5%.  “If you reduce the amount of assets at a bank, it means they make fewer loans, and that has a negative impact on the economy,” says Richard Bove, a bank analyst at Rochdale Securities in Lutz, Fla.  From small towns like Rockford, Ill., to Miami, the banks’ disappearance means not only cutbacks in lending but fewer banking choices, lower interest rates on savings accounts, and lost jobs. The recession and collapse of the housing bubble have cut bank-industry employment by 188,000 jobs, or 8.5%, since 2007, according to FDIC data. Failures alone have cost 11,210 jobs, or 32% of the employees at failed banks, according to FIG Partners, an Atlanta investment firm that specializes in the banking industry.

CNBC’s Olick – 30 year fixed makes recovery harder

“Let me just preface that the study I’m about to discuss was funded by the Mortgage Bankers Association, the folks who represent mortgage bankers of course, so keep that in mind; this is not to say they don’t bring up a valid argument.  ‘Mortgage features that are restricted in the Dodd-Frank Bill such as longer terms, interest-only periods and flexible payment designs are quite common in other countries and are not associated with higher rates of default.’  There’s your headline.  That headline is of course meant to argue that perhaps some of the new restrictions recently passed by Congress to protect borrowers are going to hamstring lending going forward and slow the housing recovery.  Interesting that this study comes out the same day that another industry player, online real estate sale site Zillow.com, puts out a survey showing that 1/3 of Americans today can’t qualify for a mortgage and half of Americans would not be eligible to get those low low rates on the 30-year fixed that we’re always talking about. 

Zillow.com looked at 25,000 loan quotes and purchase requests during the first half of September and found that folks with a FICO score of 620 or lower looking for a 30-year fixed got no offers.  That’s even when they offered 15-25 percent down on the home.  1/3 of Americans fall into this category, and that number is growing, as millions of troubled borrowers short sell their homes or go into foreclosure.  Their credit scores drop and their ability to re-enter the housing market is gone.  Am I advocating going back to the hey-days of wild and reckless lending?  Of course not.  But how are we supposed to get the housing market back up and running again if so many potential buyers can’t get a loan they can afford, and the only loans out there offer borrowers very little flexibility for investing not to mention little return for the non-government investors we need to fund the mortgage market?”

Now for our real estate education section…

Servicer Status Woes

A recent court case that took place in Duval Florida has potentially far reaching implications for the short sale and foreclosure market. A case filed by JP Morgage/WaMu claimed that WaMu submitted an assignment of mortgage in a foreclosure case despite the fact that WaMu never owned the mortgage; it was actually held by Fannie Mae.

Common Complaint

If this story sounds family it is probably because a similar situation has taken place thousands and tens of thousands of times across America; however, this time it’s different. Rather than ignore the “clerical errors”, the Court found WaMu “by clear and convincing evidence….committed fraud on this Court” and that these acts constituted a “knowing deception…”.  Ouch!

Fraud by Any Other Name         

In this situation, WaMu was only a servicer and did not actually own the loans; Fannie Mae did. Because WaMu claimed to be the “owner and holder of the note and mortgage” in order to file for foreclosure on the property, it was then necessary to prove that the course of ownership in the property was properly traced.  In recent years it has become almost routine for servicers to take it upon themselves to file foreclosure proceedings when in fact, they have no legal ground to do so.

The implications for foreclosures, REO’s and other real estate transactions is immense; not only may banks be required to fully expose their levels of excess inventory but determining the actual owner of record is becoming more important than ever.

Little Help for Homeowners

Homeowners are likely to find little recourse other than a few months reprieve since it is expected that Fannie or Freddie will begin their own foreclosure proceedings “sooner or later” but it is expected to slow down an already flooded system as lenders and servicers scramble to get records in order.

Quick Steps

How can real estate investors protect themselves? Use this quick tips:

1. Use the Fannie Look-up tool to determine if the property is owned by a GSE.

2. If a GSE property is being foreclosed by any other entity, bank or lender then the case could be suspect.

3. Visit http://www.fanniemae.com/loanlookup/ to perform a search on prospective properties of interest.

See you at the top! 

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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

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HUD wants a FICO of 500

by admin on July 19, 2010

Smart Real Estate News & Commentary by Chris McLaughlin July 19, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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HUD wants a FICO of 500

The Department of Housing and Urban Development (HUD) said that it intends to require borrowers to have scores of at least 500 to qualify for FHA-insured loans. The agency has not required a minimum score before.  “It really is just conforming FHA standards to what FHA lenders have already been doing,” said Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.  As a result, the practical impact of this move will be extremely limited; during the second quarter of 2010, no FHA-insured loans were issued to borrowers with sub-500 scores. And, in fact, less than 1% of borrowers were below 580; most loans went to borrowers with scores above 620. 

The initiative is part of an ongoing effort to reduce default risk to the FHA loan portfolio and to boost the reserves that back those loans, according to HUD Commissioner David Stevens.  “These are the latest in a series of changes to allow the FHA to manage its risk better while continuing to support the nation’s housing recovery,” he said. “By protecting FHA’s capital reserves, we can continue providing affordable, responsible mortgage products and will remain the nation’s largest source of home purchase financing for underserved communities.”  During May, 8.97% of all FHA loans were seriously delinquent (seasonably adjusted). That was up from 7.93% during May 2009. But defaults have turned downward since January, when they peaked at 9.16%.  The defaults have drained FHA reserve, which is funded by insurance payments, to below the 2% minimum mandated by Congress. Taxpayer money could be in jeopardy if the insurance funds are depleted any further.

Hiring up slightly

According to a survey by National Association for Business Economics (NABE), employers grew payrolls for a second consecutive quarter this year. The percentage of firms increasing staff levels grew to 31% in the quarter, versus only 6% in the same period a year ago, while at the same time, the percentage of employers cutting jobs continued to move lower.  Looking ahead, the survey showed that 39% of companies expect to add employees over the next six months, the highest level of planned hiring since January 2008.  “The labor market continued to improve, with increases in current hiring and a rise in the percentage of firms planning to add workers over the next six months,” William Strauss, an economist at the Federal Reserve Bank of Chicago, said in a statement.

The U.S. unemployment rate stands at 9.5% as of June. The jobless rate has averaged 9.7% over the first half of the year, and many economists expect it to remain elevated into 2011.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, also indicated that the pace of the economic recovery slowed in the second-quarter.  Industry demand grew at a slower pace in the quarter, the survey said. Corporate profits grew as price and cost pressures remained tame. About one out of four firms increased capital spending versus the previous quarter, and a growing number expect to continue investing over the next 12 months, according to NABE.  While economic activity is expected to remain positive this year, more economists lowered their expectations for 2010 gross domestic product. Only 20% of prognosticators expect GDP will grow more than 3% this year.

Asking prices up slightly

After increasing for the first time in nine months in May, asking prices for active home listings were virtually unchanged in the June reading of the Altos Research 10-city composite price index. In addition, inventory of existing homes for sale increased both in June and for Q210.  The June median listing sales price for single-family existing homes was $477,937 in June, down $146, about 0.03%, below the May 2010 median of $478,083 for homes in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington DC.  Altos Research said 13 of 26 markets it tracks reported increases in asking sales prices for homes during the month of June.

For Q210, asking prices were up in 14 markets. San Francisco led both categories with a 2% in June and an increase of 4.4% quarter-over-quarter.  Following San Francisco in asking price increases was San Jose (1.5% in June, 2.5% in Q210), Austin (1%, 1.7%), Dallas (0.9%, 2.2%) and Cleveland (0.8%, 1.5%).  The market with the biggest decrease was Phoenix, down 2.4% from June and 3.9% in Q210, followed by changes in Miami (-2.3%, -4%), Washington DC (-0.8%, 0.4%), Las Vegas (-0.6%, -0.9%) and Boston (-0.5%, 0.1%).  Listing inventory totaled 304,831 properties in the 10-city composite, up 2.8% and 5.4% for the quarter. Chicago was the only market where listing inventory decreased in June, but the area was still up 0.7% for the quarter. While Detroit posted a 1.6% increase in listing inventory during June, it was the only market with a decrease in listing inventory for the quarter, down 2.1%. San Francisco lead all markets in inventory volume, up 7.6% in June and 13.5% for the quarter.

Antidote to an anti-business agenda?

Because of the perception that Obama is anti-business and his policies are causing small and large businesses to hunker down and wait out the witch hunt, House GOP Leader John Boehner said he supports a ban on all new federal regulations, after meeting Friday with business lobbyists who complained about uncertain economic conditions.  “I think having a moratorium on new federal regulations is a great idea. It sends a wonderful signal to the private sector they may have some breathing room,” Boehner said.  He said any ban would include an exemption for “emergency regulations” for some agencies, and suggested it could last a year.  Boehner and Illinois Republicans Peter Roskam and Aaron Schock convened a group of nearly 20 Washington-based business leaders on Friday who represent various sectors — including homebuilders, retailers and manufacturers — as part of their “America Speaking Out” initiative to gather ideas for the GOP legislative agenda.  Roskam said those in the meeting reported that a significant obstacle to the economic recovery is “the down-talking of the private sector, the rhetoric.” 

“The anti-business rhetoric that they see coming out of Washington is more than just symbolic.” Roskam added. “It’s creating a great deal of uncertainty.”  The people in the meeting repeatedly criticized the approach to the economy taken by the Obama administration and congressional Democratic leaders, criticizing excessive federal spending and burdensome government regulations.  Jay Timmons from the National Association of Manufacturers maintained the United States is “becoming one of the most risky places in the world in which to do business.” But Timmons did make a pitch for both parties to come together, saying, “It takes a bipartisan effort to get this economy moving again.”  Naturally, Ryan Rudominer, spokesman for the Democratic Congressional Campaign Committee, seized on the GOP meeting Friday to argue it would result in “a Republican agenda written for lobbyists by lobbyists.”  Apparently it’s better to have a Democratic business agenda written by social activists?

BoA encourages short sales

Bank of America (BoA) reported $35.7 billion in nonperforming loans, leases and foreclosed properties in Q210 – which is 15% above levels measured in the same quarter of last year.  These loans and properties increased more than $5 billion in total aggregate balance since Q209. The total did drop by more than $200 million worth of these loans and properties from the $35.9 billion reported in Q110.  They represented 3.74% of all outstanding loans, leases and foreclosed properties at the end of Q210.  Since 2008, BofA and the acquired Countrywide completed nearly 650,000 loan modifications. During Q210 alone, BofA completed 80,000 modifications, including 38,000 trial modifications that were converted into permanent workouts under the Home Affordable Modification Program (HAMP).  If a modification does fail, BoA is putting an emphasis on selling the home through a short sale ahead of foreclosure. At REO Expo 2010, Matt Vernon, the short sale and REO executive at BoA said that the bank added 1,000 employees to the short sale staff and will “do everything possible to liquidate property prior to foreclosure.”

Now for our real estate education section…

The 15 Minute Resolution…How to Generate Free Leads with Craigslist

This week’s 15 minute resolution is a simple but super effective way to put the power of CraigsList to work generating free leads. No spam, no expensive software and best of all…hardly no time is involved!

Everyone in real estate has probably tried to use Craigslist to buy or sell real estate; it’s powerful, free and frequently used by people throughout the entire nation. Unfortunately, it’s also slow, behind the times and a major drain on time for those that try to sort through pages and pages of dull links and competitors advertisements.

Now it’s possible to change all that with just 15 minutes of time and these quick steps:

1. Visit Google keywords or any of your favorite keyword finder to create a list of real estate/short sale related keywords. Great examples might include “motivated seller”, “commercial property”, “investment income” or any other relevant words that signify the type of property you are seeking.

2. Visit www.Craigslist.com and select the state and city of your choice. Copy the url exactly as it appears in the url address bar.

3. Visit the Google Advanced Search page at http://www.google.com/advanced_search?hl=en

- In the second line of the advanced search (where is says “this exact wording or phrase”) type in the keywords previously outlined one at a time.

- Scroll down the advanced search page to the bottom where it says “Search within a site or domain” and put the Craigslist.com url exactly as it appears in the address bar.

- Indicate the number of listings, whether you would like to receive results via email (or forward to your phone) and other parameters such as price. Viola’…that’s it! Now you are ready to start receiving instant leads via Craigslist for free. Not only will this save time and money when working with Craigslist but it’s a simple way to begin building a contact list in your local area or across the nation.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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

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