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Smart Real Estate News & Commentary by Chris McLaughlin April 26, 2011

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New home sales up slightly

The Census Bureau reported an annual sales rate of 300,000 new homes in March. That was an 11% increase from February’s all-time low of 270,000, but new home sales remained near the lowest levels recorded since the government started tracking the data in 1963.  Compared to March of last year, the annual rate was down a 21.9%.  Still though, the monthly gain was a bit better than expected. Economists surveyed by Briefing.com had forecast a sales rate of 280,000 in March.  The report comes on the heels of slightly encouraging reports on existing home sales and new home construction and permits last week.

Economists cautioned that one decent month of data doesn’t mean the housing market has turned around.  Even though both home prices and mortgage rates are at attractive lows, demand for mortgages remains weak.  Economists at Barclays Capital predict home prices could fall another 2% through the end of the year, as foreclosures continue to weigh on the market. But at the same time, they expect home sales to slowly improve.  “We’re expecting a very gradual rebound in the housing market, related to ongoing, gradual improvement in the job market,” said Michael Gapen, senior US economist with Barclays Capital. “But I stress it’s gradual. There’s still a long tunnel in front of us.”

Ford has best quarter in a decade

Ford earned $2.6 billion, or 61 cents a share, up 22% from a year earlier, the company said Tuesday. The earnings not only topped the consensus forecast of 50 cents a share, they were better than the most bullish estimate of any analyst surveyed by earning tracker Thomson Reuters.  The last time Ford earned this much in the first quarter was in 1998, when the company sold part of its financial services unit. The past quarter’s performance underlined the continued turnaround at the company, which has now posted seven straight quarters of profit after years of losses.  Revenue rose 18% to $33.1 billion, which also easily topped the most optimistic forecasts, as the number of vehicles Ford sold worldwide climbed 12%. In March, Ford’s US sales topped those of rival General Motors for the first time since 1998.  Ford did not give a specific earnings target for the rest of the year, although it said it expects to continue to post improved results. But it warned that lower profit from its Ford Credit unit, higher commodity prices, seasonal factors and the need for increased investments and costs related to its longer-term plans will make it difficult to match the first quarter’s strong results later this year.  Still, Ford said it expects to continue to gain market share in both the US and European markets.

MBA – commercial originations up

Commercial and multifamily mortgage origination volumes increased 44% in 2010 over the previous year, with mortgage bankers reporting $118.8 billion of closed commercial and multifamily loans, according to the Mortgage Bankers Association’s 2010 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation.  “Coming off of the 2009 lows, commercial and multifamily originations increased by a strong 44% in 2010,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Low interest rates coupled with improving economic fundamentals have the potential to draw out even more borrowers in 2011.” 

Fannie Mae, Freddie Mac and FHA, collectively, were the largest investor group in 2010, responsible for $42.8 billion of the total, followed closely by life insurance companies and pension funds at $30.6 billion.  In terms of property types, multifamily properties saw the highest volume, $48.9 billion, followed by office properties with $22.6 billion of originations.  First liens accounted for 92% of the total dollar volume closed.  Lending for office properties had the largest percentage increase in originations by property type, followed closely by hotel/motel properties and retail.  Year-over-year changes are based on the changes in volume among “repeat reporters” that participated in both the 2009 and 2010 surveys.

Boehner looks at oil tax breaks

Congress should consider cutting multibillion-dollar subsidies to oil companies amid rising concern over skyrocketing gas prices, House Speaker John Boehner said yesterday.  “It’s certainly something we should be looking at,” Boehner said in an ABC News interview.  “We’re in a time when the federal government’s short on revenues. They ought to be paying their fair share.”  “Everybody wants to go after the oil companies and frankly, they’ve got some part of this to blame,” he said.  But Boehner, an Ohio Republican, said he also wanted to “see all the facts” first.  A New York Times-CBS News poll found that 70% of Americans believe the country is on the wrong track and analysts believe gas prices are a main reason for this. 

The Obama administration tried unsuccessfully during the last Congress to cut tax breaks and subsidies for fossil fuels.  The attempt to end the subsidies has been strongly condemned by oil and gas companies, which argue that abolishing the tax breaks would reduce domestic drilling, cost jobs and increase US reliance on foreign energy suppliers.  “This is a tired old argument we’ve been hearing for two years now. If the president were serious about job creation, he would be working with us to develop American oil and gas by American workers for American consumers,” the American Petroleum Institute’s chief economist John Felmy said.  Unrest in the Middle East has pushed crude oil prices above $110 a barrel.  US retail gasoline prices hit $3.88 a gallon over the last week, the highest level since the summer of 2008 when prices reached a record $4.11 a gallon, the Energy Department said Monday.  Asked who the American people should blame for high gas prices, Boehner pointed the finger at Obama and said the president won’t win re-election if gas prices are “$5 or $6″ a gallon.

Olick – optimism in housing?

“Thanks to all the streaming feeds of constant news I’m subjected to, I just clicked on a CNBC story titled, Four Years Later, Housing Market Shows Signs of Life.’ I was curious, seeing as I write about housing for CNBC, and I didn’t write that. It’s a Reuters piece, and I don’t buy it.  But wait, what about this morning’s report of an 11% jump in sales of newly built homes and last week’s report of a 4% jump in sales of existing homes; March was a great month, right? A little perspective, please.  Yes, the numbers are going in the right direction, but only after big, albeit partially revised, drops in February. We’re working off a bottom here, and we’re still bumping around it. My concern, as it has been for years now, is distressed properties. Foreclosures and short sales (where the home is sold for less than the value of the mortgage) are ruling the roost, and that is not good news for home prices, which are still dropping, despite this one month of rising sales. Sales are all well and good, but prices are key in so many ways. 

For existing homes in March, the bulk of the market, 35% of all transactions were all-cash (that’s a new record), and 22% were sales to investors; investors don’t necessarily want to hold on to these properties for very long, so they may come back on the market again soon.  But back to the distressed properties. While the National Association of Realtors says 40% of March sales were distressed properties (up from 39% in February and 35% a year ago), another survey from Campbell/Inside Mortgage Finance finds nearly half of all homes on the market are distressed. Short sales are ‘booming’ according to the same report up to nearly 20% of sales. But short sales are a double-edged sword. Yes, they’re better for the banks and the sellers because there is less of a financial loss to the bank and less of a credit loss to the seller, but they make comps and appraisals even murkier than they already are.

From the Campbell/IMF report:  ‘Home values continue to decline, making normal sale homes worth much less than they should be. Appraisers continue to use distressed property sales to establish value on non-distressed listings. Further, these same appraisers will not make any adjustments for amenities, (pools, spas, solar, etc.), when compiling a normal sale vs. distressed comps. I have had at least one appraiser tell me that his firm has been given marching orders to calculate the current value based on all properties sold within the last 3 to 6 months and only use the average square footage minus 10% to establish neighborhood value comps. If this is indeed standard practice, it will take a mighty long time to realize any increases in property values,’ complained an agent in Arizona.  It’s not just in Arizona either.

Builders complain that tight credit, poor appraisals and lack of buyer confidence are still standing in the way of real recovery. Realtors complain the same, and both say home prices have further down to go. Home buyer traffic is still not where it should be right now, in the heat of the Spring market, and that’s primarily due to confidence. With gas prices over $4/gallon, and concern over rising interest rates and inflation, big ticket purchases are moving to the back burner.  Another survey out today from First Command Financial Behaviors in Ft. Worth, TX finds a big drop in Q1 in the percentage of middle-class Americans who feel financially secure. The survey of 1000 consumers found more than a third of respondents said they plan to focus on debt payment and 19% on savings.  Don’t get me wrong, I’m thrilled to see the sales numbers going in the right direction; I just question whether ‘optimism’ is the right word right now. I’m not even sure about ‘recovery.’ Tomorrow we get the latest home price report from the folks at S&P/Case Shiller. Let’s see how that goes. Oh, and that Reuters piece was all about sales gains on the high and low end of the market. Rich folks with cash and investors with cash.”

US economy losing steam

In 2010, the economy seemed to be on firmer footing, finishing out the year with a 3.1% growth rate in the final three months, compared to the same period last year.  Only three weeks ago, expectations were for 2.7%, while some forecasts ran as high as 4.3% just one month earlier.  Now expectations are lower.  The government is set to announce first-quarter gross domestic product — the broadest measure of the nation’s economic health — on Thursday.  But the good news is that economists don’t expect the sluggish quarter to drag down growth for the entire year.

They’re forecasting the economy to grow at a healthy 3.1% pace for all of 2011, just slightly below the 3.5% growth rate they were forecasting earlier in the year.  “We view the first quarter as being a pause in the pace of expansion,” said David Berson, chief economist for the PMI Group. “That won’t stand in the way of a modest expansion over the remainder of the year.”  The cause of this sudden wave of pessimism? Rising oil and gas prices. High pump prices act like a tax on consumers, forcing them to cut back spending on other items. In addition, the large amount of oil the United States imports means that higher prices cause the trade gap to widen, which also cuts into GDP.  Other factors include businesses holding back on increasing their inventories and less construction activity than previously expected.

Home prices near double dip

Well, here’s the report Olick was waiting for:  According to the S&P/Case-Shiller index of home prices in 20 cities, home values are down 32% from their peak set in May of 2006,.  “There is very little, if any, good news about housing,” said David Blitzer, spokesman for S&P. “Prices continue to weaken, trends in sales and construction are disappointing.”  The drop has come in two stages. First, the index recorded 36 months of nearly uninterrupted declines after reaching the spring 2006 peak.

Then came a 13-month upswing during which the index recorded a 5% gain. That rebound ended last June.  Since then, the index has recorded losses every month and it has now edged closer to a new bottom — the dreaded double-dip.  The index now stands at 139.27, just a whisker above the first low, which came in April of 2009, when the index was at 139.26.  All of the major areas saw prices decline from a month earlier, with Minneapolis seeing the biggest drop at 3.1%, followed by San Francisco at 2.6%.

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

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin January 11, 2011

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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Most undervalued and overvalued cities

According to Local Market Monitor, most markets are fairly priced, eight markets are overpriced, and 15 are underpriced. That contrasts with the boom years: In mid-2006, 37 of the biggest markets were overpriced, six underpriced and 57 fairly valued.  Las Vegas received a paltry rating even though median home prices there are less $145,000, which is more than half of what they cost at the peak of the bubble and nearly 30% less than what Local Market Monitor calculates would be an “equilibrium price,” or fair market value.  The equilibrium price is based on economic and population growth, construction costs, vacancies, household income and interest rates with an “X Factor” thrown in. The X Factor is a mathematical constant, unique for each metro area, that represents the premium or discount that buyers have paid for local homes in the past. It captures the tendency for buyers to pay more for homes in what they consider more desirable locations.

A city like San Diego, for example, with its enviable weather and ocean-side location, commands more of a buyer’s premium than does, say, Buffalo, N.Y.  Both Las Vegas and Orlando have a glut of homes for sale, thanks to years of overbuilding during the housing bubble. They’re also two of the hardest hit foreclosure cities and have suffered outsized price declines, with Vegas values down 52% from their peak and Orlando 39%.  Most crucially, the economies of both cities have a heavy reliance on development, which has taken a huge hit in both places.  The most overvalued area right now is the Long Island, N.Y., counties of Nassau and Suffolk, which are suburbs of New York City. The current average home value there of about $418,000 is 26% higher than the equilibrium value of $318,000.  Even so, Local Market Monitor still gives it a “Typical Risks/Rewards,” rating, an average score. One particular positive factor there is a bright economic picture with unemployment at only 6.9% and some job growth expected this year.  Other overpriced markets include Los Angeles and Portland, Ore., both overvalued by 24%, and Santa Ana, Calif., 23%.  Akron, Ohio, is the second most undervalued market at -22% followed by Cleveland and Warren, Mich., at -21%.

Ford to hire 7000 by 2012

Ford Motor announced yesterday that it will add 7,000 new hourly and salaried jobs in the United States by the end of 2012.  The announcement, made on the opening day of the Detroit auto show, said Ford is adding nearly 4,000 hourly jobs at several of its U.S. plants this year, including 1,800 at the Louisville Assembly Plant, where it plans to start building the new design of the Ford Escape crossover SUV later in the year.  And the company plans to add another 2,500 factory jobs next year.  Ford also will add 750 salaried engineering jobs in product development and manufacturing. The engineers will specialize in batteries, system controls, software and energy storage to work on electric vehicles in Detroit and eight other cities: Boston; Chicago; Cincinnati; Columbus, Ohio; Milwaukee; Raleigh and Durham, N.C.; and San Jose, Calif. 

The company has cut staff substantially since 2001. And the new workers will only replace a fraction of the employees lost to the recession. Ford had 61,000 U.S. employees at the end of 2010, according to a company spokeswoman. That’s down from 76,000 at the end of 2007, and 163,000 employees 10 years ago.  But Ford has been posting improved sales and U.S. market share in the last two years. Its U.S. sales were up 20% in 2010, enough to add 1.2 percentage points to its market share, according to Autodata.  A survey of 200 top auto executives from around the globe, by accounting firm KPMG, is expecting Ford to add additional global market share over the next five years.

Judges berate lawyers in foreclosure crisis

With judges looking ever more critically at home foreclosures, they are accusing lawyers of processing shoddy or even fabricated paperwork in foreclosure actions when representing the banks.  Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.”  But New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”  More broadly, the courts in New York State, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present, which prompted a protest from the New York bar. The requirement, which is being considered by courts in other states, could open lawyers to disciplinary actions that could harm or even end careers. 

The role of lawyers is under scrutiny in the 23 states where foreclosures must be reviewed by a court. The situation has become especially heated for high-volume firms whose practices mirror the so-called robo-signing of some financial institutions; in these cases, documents were signed without sufficient examination or proper notarization.  In the most publicized example, David J. Stern, a lawyer whose Florida firm has been part of an estimated 20% of the foreclosure actions in the state, has been accused of filing sloppy and even fraudulent mortgage paperwork. Major institutions have dropped the firm, which has been the subject of several lawsuits, and 1,200 of the 1,400 people once at the firm are out of work.  The Florida attorney general’s office is conducting a civil investigation of Mr. Stern’s firm and two others.

Goldman Sachs – more disclosure

Goldman Sachs plans to start disclosing more financial information to investors, including how much of its revenue comes from trading and investing its own money, a person familiar with the matter said.  The change comes after years of complaints from investors, analysts and others that the bank does not disclose enough information about exactly how it makes money.  Goldman has prepared a 63-page report after a more than eight-month internal review, the person said. The results of the review are set to be released publicly on Tuesday, he added.  Many investors have complained that Goldman Sachs is a “black box” and that forecasting how its earnings will change over time is extremely difficult.  The bank’s willingness to change is the latest sign of how financial reform and investor pressure are spurring banks to change the way they do business. Morgan Stanley said earlier on Monday it was planning to spin off a unit that trades the firm’s own money.  The bank’s chief executive, Lloyd Blankfein, reported the results of the report to about 470 of Goldman’s senior employees on Monday, the source said.   Goldman Sachs plans to release fourth quarter 2010 results on Jan. 19. Those results will include the extra detail that the bank plans to start reporting regularly.  The story was originally reported by the Wall Street Journal.

Olick – pension funds threaten foreclosures

“Mortgage, housing and banking analysts took the weekend to pontificate on the ramifications of last Friday’s decision by Massachusetts’ highest court to void two foreclosures due to improper paperwork.  A coalition of state pension funds took a different tack: They fired a shot across the bow of the big banks.  Under the leadership of New York City Comptroller John Liu, funds from New York, Connecticut, North Carolina, Oregon and Illinois sent a letter to Bank of America, JP Morgan Chase, Citibank and Wells Fargo, demanding that the big banks ‘conduct an independent review of Company’s internal controls related to loan modifications, foreclosures and securitizations and to include a report to shareholders with findings and recommendations in the Company’s 2011 proxy statement.’  The pension funds hold a collective $5.7 billion worth of stock in the four banks, and the letter makes that point very clear. Of course that’s really just a small pittance given that the banks are collectively worth well over $600 billion.

Yes, if the funds sold their interests, the banks would take a hit, but in the new world of big bank losses, that’s just a tap.  And the banks don’t seem all too concerned about Liu’s coalition, and this isn’t the first time he has made demands. In November he tried to get a shareholder vote on an audit of the same thing. That didn’t work.  With a new Republican House on their side, the big banks are unlikely to be afraid of a few pension funds, unless of course this becomes the tip of the iceberg. Bank of America already got a pretty sweet deal on loan put-backs from Fannie and Freddie.  As for the Massachusetts ruling, most of the analysts over the weekend agreed that it would not set the standard for voiding all of the nation’s many foreclosures; it would, however, engender many many more lawsuits that will slow the process considerably.”

Oversight Committee investigates housing finance

Three of six major upcoming investigations by the House Oversight and Government Reform Committee involve housing finance issues.  New House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said recently that he’ll lead six major investigations over the next three months, according to news reports and Patton Boggs’ “This Week in Washington” report. They include the role of Fannie Mae and Freddie Mac in the foreclosure crisis, the effect of business regulations such as the new Dodd-Frank Act on the economy and the Financial Crisis Inquiry Commission’s failure to identify the origins of the  meltdown.  Issa wants the government to acknowledge its contributions to the housing slide and end taxpayer support for Fannie and Freddie. He supports ending federal subsidies to the two entities, which have been under federal conservatorship since September 2008, transitioning them to private firms that compete on a level playing field with other firms. The Treasury is to issue a report in February, giving the administration’s guidance on what it thinks should be done with the government-sponsored enterprises.  In a Jan. 7 letter to the ranking Democrat on the House Oversight and Government Reform Committee, Elijah Cummings (D-Md.), Issa also suggested that he might look into the Home Affordable Modification

Program known as HAMP. HAMP was expected to help 3 million to 4 million homeowners but has fallen woefully short. The letter was in response to Cummings’ request that Issa hold a hearing on the foreclosure crisis.  Issa has also been critical of the government’s role in federal bailouts during the financial crisis. Issa and incoming Republicans have pledged to run a more transparent Congress, according to a report in The Hill. Last year, he earned an award from the Project of Government Oversight for publicly releasing hundreds of thousands of documents related to the American International Group (AIG) investigation, detailing the government’s decision to pay billions of dollars to AIG counterparties.

WSJ – help with down payments back in style

A growing number of state and local governments are now offering what are called “down payment assistance programs,” grants or low- and no-interest loans to first-time buyers or those who haven’t owned a house in a few years. The number of programs, now somewhere around 1,000 nationally, has increased 3% to 5% in the last six months alone, estimates Marc Savitt, president of the National Association of Independent Housing Professionals, an advocacy group.  And, in a stark reversal, some banks are now far more willing to work with borrowers who need down payment assistance, buyers who were considered too risky 18 months ago. State housing agencies say they’re seeing the biggest spike in lender interest since before the housing downturn. Florida’s down payment assistance agency now works with 65 lenders, up 12% from a year ago, says a spokeswoman; in North Carolina, the number of participating lenders has grown 22%.

For would-be buyers who qualify, this is a boon. Even with prices depressed, in and around expensive cities like New York and San Francisco, a 20% down payment is out of reach, yet that’s what many banks require.  These programs are targeted at low- and middle-income buyers who have either never owned a home, or haven’t owned one in a few years. And then the benefits are substantial: Typically, the programs offer up to $80,000 in loans with interest rates from 0% to 2% to people with little or no money to put down. And then, because participants often have to get their mortgage through the programs’ preferred lenders, the primary mortgage rates are also low, often 0.75% to 1% lower than average rates. That can be a better deal than Federal Housing Administration-insured mortgages, which require annual mortgage insurance and an upfront fee, and may have higher interest rates.  Even for cash-strapped states like California, these programs are apparently worth the cost. This is a way to boost homeownership, something they say leads to more jobs and higher home prices. “It promotes affordability, gets people into homes and improves the economy,” says a spokesman at the California Housing Finance Agency. To fund the programs, many states and municipalities are using money raised by selling municipal bonds. Also helping: A program funded by the Department of Housing and Urban Development increased its support to local down payment assistance programs by 16% in its last fiscal year to $44 million. 

Not everyone is convinced of the wisdom of these programs, particularly for the lenders. “Borrowers who don’t put any of their skin in the game – or very little of it – are more risky,” says Keith Gumbinger, a vice president at HSH.com, which tracks mortgage data. Such borrowers tend to have higher incidents of default—even if they have prime credit. Not so, says Scott Stern, CEO of Lenders One, a mortgage banker cooperative. Assisted buyers are a lower-risk proposition these days, mostly because banks are still lending to borrowers with high credit scores and detailed income documentation.

Now for our real estate education section…

It’s a Bird, It’s a Plane – It’s a Super Phone! (Or is it?)

Pssst- wanna know a secret? Your mild mannered cell phone is about to get a whole lot smarter thanks to super-fast 4G…or is it?

Despite the recent rash of media hype, the first round of new smart-phones (aka super phones) may not live up to expectations of an adoring public. Here’s the down and dirty on the new super phones to help you sort out the fact from fiction about your favorite phones.

Secret #1 – Smart phones have been available for ages…elsewhere. For those of you that travel overseas to tech savvy nations like Japan, Korea, Dubai, Taiwain, the idea of a smart phone is old news. In fact, chances are you have been nothing short of flabbergasted by the relative antiquity of domestic cell phones after using the overseas equivalent.

Bottom line for the tech savvy agent or investor – Don’t get excited yet! The new smart phones are not yet ready to go head-to-head with their foreign counterparts although they are a major improvement on the dinosaurs currently in use. Chalk it up to progressive upgrades and planned obsolescence.

Secret #2 – Differing definitions. According to industry insiders, there is a great deal of variation in what exactly constitutes a 4G Network. In fact, according to a recent report by the Wall Street Journal, the failure of the International Telecommunications Union to establish a set standard and/or working definition for 4G allowed AT&T to begin calling their 3G network a 4G network instead. Angered by this perceived breech, T-Mobile decided to follow suite and then go on an anti-AT&T campaign. Not surprisingly, AT&T has launched a counter-campaign claiming T-Mobile has the “wrong numbers” for their own 4G speeds.

 Bottom line for the tech savvy real estate agent or investor – don’t believe the hype or rush out to purchase a new phone only to later encounter 3G speeds. Verizon and Sprint were the primary carriers involved in building the newly emerging 4G platform with AT&T and others anticipated to follow suite soon.

Secret #3 – All the hype might be displaced. Experts predict a rapid transfer from netbook, laptop and cell phones to tablets…especially once they are 4G enabled. Currently only a few tablets have full access but that is also expected to change as early as the 2nd half of 2011. For those that aren’t in a major rush, it may be worth the wait to have full access to all your computing, calling and other needs in one portable product.

Bottom line for the tech savvy real estate agent or investor – compare the pros and cons of a second generation tablet versus yet another cell phone before making a final decision.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin October 26, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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

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

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

LAST CHANCE: Our Orlando Foreclosure Investing Summit is nearly

SOLD OUT.  Click here to claim one of the last seats:

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Mortgage mods slow

There were 28,000 permanent mortgage modifications reported in September under the Home Affordable Modification Program, known as HAMP. That’s down from more than 33,000 in August.  A total of 495,898 borrowers have received permanent loan modifications since HAMP was launched in 2009. Of that half-million homeowners, 11% redefaulted on their new lower-cost loans after nine months. After six months, less than 10% of modified loans were delinquent.  Banks start by offering trial modifications to see if homeowners qualify for the program and can afford the new payments. Nearly 1.4 million trials have been started thus far, with 35,297 of them happening in September.  Raphael Bostic, assistant secretary of the U.S. Department of Housing and Urban Development, said the Obama administration’s efforts have helped “millions of families” stay in their homes, though no one else seems to agree with him. 

“With many unavoidable foreclosures still in the pipeline, it’s clear that we have a hard road ahead,” Bostic said in a statement.  Indeed. Meanwhile, according to the Special Inspector General for TARP, a congressionally mandated watchdog for the program The Troubled Asset Relief Program has so far “fallen woefully short” of preserving homeownership through the Obama administration’s modification efforts.  “For example, as SIGTARP has noted in past quarterly reports, increased moral hazard and concentration in the financial industry continue to be a TARP legacy,” according to the report. “The biggest banks are bigger than ever, fueled by government support and taxpayer-assisted mergers and acquisitions.”

Ford makes record profit

Dearborn, Mich.-based Ford posted net income of $1.7 billion, or 43 cents per share, up from $997 million, or 29 cents a share, a year earlier. Analysts surveyed by Thomson Reuters expected Ford to report a 38-cent-a-share profit.  Ford’s previous best third-quarter net income was $1.1 billion reported in 1997.  The automaker cited a strong product line, momentum in North America and continued success at Ford Credit as areas of growth.  “It’s been the same story all year long,” said David Whiston, an automotive analyst at Morningstar. “Better pricing in North America, and that offsets the small losses in Europe. The North American market is a real earnings driver.”   Ford also announced plans to further strengthen its balance sheet by paying down its revolving credit line by $2 billion and prepay the remaining $3.6 billion in debt owed to a retiree health care trust.  “Ford sales continue to surge due to a stronger product lineup and improved consumer image,” said Jesse Toprak, vice president of auto trends at TrueCar.com, in a statement. “Their retail sales are strong and transaction prices have been increasing this year, contributing to an improved bottom-line for the automaker.”

Home prices drop

Home prices fell 0.2% from July after five consecutive months of gains, according to the S&P/Case-Shiller composite index of 20 metro areas. However, prices rose a modest 1.7% compared with a year earlier, the housing group reported today.  It was, said David Blitzer, spokesman, “a disappointing report … indicating that the housing market continues to bounce along the recent lows.”  The year-over-year rise fell short of expert expectations as put together by Briefing.com, who predicted a 2% year-over-year rise.  One city that bucked the trend was Las Vegas, where prices inched up 0.1% month-over-month. However, it continued to be the worst performer compared to last year, with prices down 4.5%. Prices in Sin City are down 57% from their peak, which was reached in August, 2006.  Detroit scored the best monthly gain, up 0.5%; San Francisco was up 7.8% year-over-year, the most of any city.  Prices fell 1.1% in Dallas – the worst month of any of the 20 metro areas.

Volcker – no short term inflation

Paul Volcker, former chairman of the Federal Reserve, says the United States will face neither a problem of rising inflation for several years nor a damaging spell of falling prices.  “Inflation is not a problem right now. It won’t be a problem next year, it won’t be a problem for several years,” said Volcker, who is now chairman of the Obama administration’s Economic Recovery Board.  “I see no possibility, frankly, that a deflation will take place,” Volcker said during a panel discussion on financial reform at Boston College.  “Over a period of time, price stability will be conducive to a strong economy,” he added.  The Fed, under Chairman Ben Bernanke, is widely expected to go ahead with efforts to spur inflation, which the central bank sees as its best chance to lift an economy that some see as being on the verge of falling back into recession and a downward spiral in business activity.  The United States, facing massive budget deficits, is caught in a tough situation where a big new spending program is probably unfeasible, but draconian budget cuts like those now being enacted in the UK are also unlikely, he said.  However, according to Mohamed A. El-Erian, chief executive officer at Pacific Investment Management Co, Federal Reserve Treasury purchases will likely spur global inflation while failing to lower U.S. unemployment.

Olick – sales worse than we think

Noise.  There’s an awful lot of it in the report on September existing home sales from the National Association of Realtors.  Yes, it was the biggest monthly gain in 28 years, but it was also the third worst sales month on record. This was thanks to the historic plunge in home sales in July, after what we first thought was the closing deadline for the home buyer tax credit.  September’s data still has government stimulus in it, as it’s showing the final closings from the tax credit. Thirty-two percent of home buyers in September were first timers and a whopping 29% paid in cash, which really gives you an idea of where the mortgage market is today. Sales were still 19 percent below September of 2009 levels, so that tempers the big gain as well. The median sales price also fell 2.4 percent year over year and is the lowest reading since March. 

If you take out the seasonal adjustments in September, there were actually 35,000 fewer home sales in September than August, or a 8.5 percent drop. We always use the seasonally adjusted numbers, because home selling is a very seasonal business, but you can’t ignore the raw stats on this one. The most important number in this report, however, is that 35 percent of all sales in September were of “distressed” properties, or foreclosures and short sales. We all know a huge chunk of that goes away in October, thanks to the foreclosure servicing issues and resulting moratoria.  In a speech today before a conference on the future of housing finance, Fed Chairman Ben Bernanke said the Fed “is evaluating potential effects of these [foreclosure servicing] problems on the real estate market and financial institutions.”  I think the answer to that is in today’s home sales report. The housing market is looking at a rough road.  “Bottom line, the data is an improvement off a very depressed level,” notes Peter Boockvar of Miller Tabak. “But with the robosigner, foreclosure moratorium taking center stage at the very end of September, which today’s figure didn’t capture and neither will Oct (this number measures closings), the figures towards year-end will look much different.”

Now for our real estate education section…

THE #1 Secret to Success

Chances are you have heard it all before; How to make a million before the age of 30. How to outsource everything and work only 4 hours each week. How to live the life you love without time or financial constraints. When confronted with these promises, there are two types of people; those that believe it wholeheartedly and those that reject it.

If you were to ask the average real estate investor why they either accept or reject each premise, chances are you wouldn’t be persuaded to change your own position from the resulting response. In most instances, the rationale boils down to little more than personal philosophy, hope or blind faith. However, ask an experienced and successful short sale investor whether or not they concur and chances are you would be surprised by the response.

The Top 20

The top 20 percent of professionals in nearly any industry represent the “cream of the crop”. They are not necessarily the “best of the best” (a title reserved for those in the top 2 to 5 percent) but rather substantially “better than average”. There is reason for optimism in this situation because there is plenty of room for newcomers, it doesn’t require all the advantages and it is attainable…IF you understand some basics of how and what matters most when generating business.

Common Ground

Does success boil down to the power of positive thinking or is it something else entirely? Well, studies have shown (repeatedly) that it’s a little bit of both. Positive people tend to be fun, engaging and successful because other people like to be around them. It’s not necessary to be the smartest (although intelligence and preparation certainly helps) nor the richest (there are plenty of ways to finance a property or find others to do it for you). No, the one shared trait that makes or breaks success is simply the ability to build a customer base. Think about this for one moment. Would you rather follow the trail of a relative newbie with a fanatically following of tens of thousands or the leadership of an expert who is all but unknown? Both have something to offer but the message is unlikely to meet critical density without the support of the masses. The same applies in a business or investment; without other people, all the hard work and acquisitions have no outlet. The flow of information…and finances…stops.

Key Points

By now you are probably thinking “terrific but what about some real tips”. Well, here they are. When researchers examined the practices of the “top 20″ real estate professionals they found some interesting facts that every short sale investor can use to their advantage. For example, nearly 90% of their business comes from referrals…90 percent! In order to capitalize on this trend, savvy real estate professionals create an aggressive program designed to make contact with past and present clients at least weekly. The result? Greater growth and a rising percentage of market share.

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
–

Real Estate News & Commentary by Chris McLaughlin, April 6, 2009
http://www.shortsalesriches.com/welcome.html

——–

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Mortgage refinances up

Fannie Mae said on Friday that its mortgage refinancing volume nearly doubled in March from the prior month to $77 billion.  Tom Lund, executive vice president of Fannie Mae’s single-family mortgage business, said “A majority of our business volume in March was in refinanced loans, and we anticipate that volumes will increase even more as millions of additional homeowners become eligible to refinance under the President’s Making Home Affordable plan.”  Under the program, Fannie Mae can refinance loans up to 105 percent of a home’s value, allowing borrowers, some of whom owe more than their home is worth, to refinance.

 

Treasury Department extends deadline for PPIP

The Treasury Department says it will extend the deadline by two weeks, until April 24, for private fund managers to participate in the administration’s Public-Private Investment Program (PPIP), to purchase distressed assets from banks.  Department officials also say fund managers will not have to satisfy all three criteria released last month to participate in the program, which provides government capital and guarantees to spur purchases of the toxic assets.

 

Bailout goes surreal

Ok, this is getting weird.  Now several U.S. banks that have already been bailed out by the government because of toxic assets, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are thinking about buying more toxic assets — the assets about to be sold by rivals under the Treasury’s $1 trillion plan.  John Mack, Morgan Stanley’s chief executive, told staff his bank was considering how to become “one of the firms that can buy these assets and package them where your clients will have access to them,” according to the Financial Times.  Spencer Bachus, the top Republican on the House financial services committee, said it would mark “a new level of absurdity” if financial institutions were “colluding to swap assets at inflated prices using taxpayers’ dollars.”  For some reason the banks have declined to comment.

 

GM

Speaking of gaming the system, GM’s new CEO Fritz Henderson keeps changing his mind about bankruptcy, depending on the day of the week, or the weather, or whether he needs taxpayer money or not.  Last week it was bankruptcy, this week it’s not.  Henderson said on CNN’s State of the Union that there would be more job cuts and plant closings, but that bankruptcy was not inevitable.  GM has already received $13.4 billion and requested an additional $16 billion.  Says Henderson:  “We are planning to get the job done.  Our preference would be to do it outside of the bankruptcy process, [but] if it cannot be done outside a bankruptcy process, it will be done within it.”  Thanks Fritz — good to know you have a plan.

 

Chrysler and Ford

Chrysler has also asked for a new round of aid.  David Axelrod, a senior adviser to President Barack Obama, said, “We want these to be going concerns — not wards of the state.”  Is it just me or is decorating the nursery and offering billions of dollars worth of baby food NOT the best way to encourage independence in potential wards of the state?  The only bright spot in all of this is that Ford says it completed a tender offer and reduced its debt by $9.9 billion.  The auto maker says an offer to purchase notes from its financing arm produced $3.4 billion in securities tendered.  Ford Motor Credit will use $1.1 billion to purchase that debt.  But don’t start jumping up and down quite yet — U.S. auto sales fell by 37 percent in March, the 17th month in a row of declines.

 

Now on to our real estate investing education section…

 

Big Bank Losses & the Future of Short Sales

Recently released data by the Office of the Comptroller of the Currency (OCC) reports commercial banks lost well over $3.4 billion in interest rate derivatives during the last quarter. This is an especially unsettling number when you realize this is the first time in the history of the USA that bets on interest rates have failed.

 

To understand the significance of this it is important to first realize the CDO or credit default swaps represent less than 8 percent of the derivatives market…with over 80 percent of the remaining portion of the derivative market represented by interest. To date, most of the banking crisis has been concerned with bad mortgage loans and even a few credit default swaps…together they comprise only a small portion of the total derivative market which represents an estimated $200 Trillion (yes, trillion!).

 

So, how does this relate to short sales and other investments? In plain language…

 

Banks are losing money from betting on interest rates. If banks and other lenders can’t make money from current business practices what is the likely outcome? Change of course. Change is likely to come in the form of higher rates, tougher lending standards and more stringent down payment or other requirements…it won’t happen overnight so savvy short sale buyers will recognize the writing on the wall to take action now.

 

The current national (and even global) financial melt-down is likely to grow worse before getting better. Yes, the Federal Reserve was put into place to prevent a major banking crisis from wrecking havoc on the nation in a 1929 style run but keep in mind, despite the stabilizing efforts of the Fed, inherent differences also place the system at risk. For example, derivatives were all but non-existent. According to the Office of the Comptroller, the five biggest banks in America control 96 percent of the total derivatives. This means a new round of failure, bail-outs and banking crisis could hit the nation at any moment should even one of these banks be exposed to major losses. Remember, banks must “make good” on those losses but with only 10 percent or even less of the capital required to pay out a claim, banks are simply unable to do so; creating the risk of a domino like default scenario.

 

This is another reason banks are not lending – they are frantically attempting to hoard as much cash reserve as possible in order to hedge against the risk of a default looming in the future. Again, savvy short sale investors should recognize the ongoing threat of tighter lending standards far into the future –without government intervention (and even with it), purchasing a home for decades into the future may simply be out of reach for many Americans.

 

Make sure you are doing business with a solid bank. Short sales investors have two options; deal with small local banks that have strong bottom lines, didn’t engage in derivatives or other risky investments and are able to work with you personally…or, work with one of the A rated big banks. To find out how your bank is rated, visit www.TheStreet.com or www.MoneyandMarket.com with publishes a list of the best and worst banks across the nation.

 

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar Tuesday at 8:30 PM EST, 5:30 PM PST:

https://www2.gotomeeting.com/register/798281842

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

http://www.shortsalesriches.com/blog

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

About the author:

 

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

 

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

   * Long-time authority on real estate investing
      and rapid flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

—