foreclosure

Smart Real Estate News & Commentary by Chris McLaughlin August 30, 2010

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Foreclosure relief – great for banks; for consumers not so much

Mark Gimein of Daily Finance makes the following points about why HAMP actually hurts many borrowers while helping banks:

1.  Foreclosure relief in many cases simply stretches out borrowers’ slow bleed of resources. By keeping borrowers in limbo while letting lenders delay repossessing houses they can’t sell, foreclosure aid is now benefiting borrowers less than the lenders who created the mortgage mess. For lenders, mortgage modification is the waiting room in the mortuary, a convenient place to hold borrowers while the banks deal with the overflow of houses already repossessed.

2.  Most borrowers behind on their mortgages are already overburdened with other debts. After the mortgage reduction, the typical modification recipient, despite an average $513 drop in monthly payments, has to devote 63.5% of his or her income to mortgage payments, other debt, and taxes.

3.  Banks don’t have to kick people out quickly.  Banks have steadily slowed down the foreclosure process: The average homeowner in foreclosure now is an amazing 461 days behind in his payments. Barry Ritholtz of financial blog The Big Picture calls banks’ reluctance to take over houses “strategic non-foreclosure.” Taking a leisurely path to repossession lets lenders avoid the costs of maintaining properties they can’t sell in a market that remains in free fall in much of the country.

4.  The last insult added to this mess comes from Fannie Mae, which has promulgated new rules that lock those who don’t make the effort to modify their mortgages out of the Fannie-backed mortgage market for seven years.  So ultimately this comes full circle, and what started as an effort to help borrowers has become another cudgel in the hands of lenders.

Spending up more than income

Consumer spending is critical because it accounts for 70% of economic activity.  The Commerce Department says spending fell 0.1% in April, rose a tiny 0.1% in May, was flat in June, but rose 0.4% in July.  Personal incomes were up 0.2% in July, less than expected but at least an improvement over June when incomes had not risen at all.  With spending rising, the personal savings rate slowed to 5.9% of after-tax income. That’s down from 6.2% in June, the highest in nearly a year. Even with the July decline, the savings rate is nearly three times higher than it was before the recession began in December 2007. 

The July spending gain was the highest since a 0.5% rise in March. But the concern is that demand could taper off in the second half of this year if unemployment remains near double digits.  If Americans don’t have jobs, they don’t have the income to support spending. the economy is growing too slowly to support sustained job growth and some fear it could fall back into a recession. Economic growth slowed to 1.6% in the April-to-June quarter, the government reported Friday. That was revised down from the initial estimate of 2.4%.  A string of weak economic reports in recent weeks has prompted economists to trim their growth forecasts for the rest of the year and next.

Fannie Mae portfolio up 4.1%

Fannie Mae’s mortgage portfolio through July is up 4.1% from the year ago yet down somewhat from June, and the GSE issued nearly half the mortgage-backed securities during the month than in did last July.  Fannie ended July with gross holdings of nearly $812 billion. That figure stood at $770.4 billion last year and $817.8 billion in June.  The agency issued $42.7 billion of mortgage-backed securities during July, a nearly 48% decline from $79.7 billion a year earlier but up 6.4% from June. Fannie’s MBS issuances peaked in June 2009, when more than $130 billion was issued.  The serious delinquency rate in Fannie Mae’s portfolio fell to 4.99% in June, which is the latest month data is available, from 5.15% in May. For the year-ago July, the agency’s delinquency rate was 4.17%. The rate peaked at 5.59% in February and was as low as 3.42% in April 2009.  “Fannie Mae and FHLB are taking advantage of better funding from callables as bullet LOAS widens due to renewed corporate issuance and calmer short LIBOR levels,” said Jim Vogel of FTN Financial. “The gain can be as much as 10bp.  The obvious result is that both need less funding from bullets and floaters.  The superior funding stems primarily from the constant demand for new callables to replace those redeemed at close to a $100 billion monthly pace.”

NABE – economists mixed on what to do

The National Association of Business Economists (NABE) said Monday that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to an August survey of the nation’s economic policy.  However, nearly the same number of NABE economists said they do not think another stimulus package is necessary to halt the economic slowdown and get the economy back on track. At the same time, a majority believe that policymakers should do more to boost job growth.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, comes as economic growth in the United States has slowed significantly after rebounding from a deep recession.

The NABE survey showed that just under half of those polled see deflation as the main threat facing the economy in the short term, but respondents were less certain about whether inflation or deflation is the biggest threat over the next three years.  In a sign of the challenges currently facing Fed policy makers, there was little consensus among the NABE economists on when the central bank will raise interest rates and begin selling off assets it bought during the financial crisis.  After cutting rates to historic lows near 0% in December 2008, the Fed has been without its main tool for supporting economic activity for nearly two years. It has since bought billions worth of Treasury bonds in an effort to bring down rates for home and other consumer loans. But some central bankers are worried about adding to the $2 trillion worth of assets the Fed has acquired over the last few years.  A clear majority of economists said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire.

DSNews.com – Homebuyer’s tax credit coming back?

After a worse than expected falloff in home sales during the month of July, buzz about a possible revival of the federal homebuyer tax credit has begun to surface.  The National Association of Realtors (NAR) reported last week that sales of previously owned homes plummeted 27 percent in July, hitting their lowest mark in 15 years. New home sales also took a dive, dropping nearly 13 percent from June to July.  Both reports were clear indications of the frailty of the housing market post-stimulus. Although, the steep declines were actually considered a by-product of the tax credits themselves, which expired on April 30 – payback for the incentives that pulled sales forward into the spring months. 

HUD Secretary Shaun Donovan said on CNN’s “State of the Union” program this weekend, “The July numbers were worse than we expected, worse than the general market expected, and we are concerned. That’s why we are taking additional steps to move forward.  Donovan said it was too early to say for sure, after only one month’s numbers, whether the administration would revive its popular homebuyer tax credits to give the housing markets another much-needed boost, but he didn’t wholly rule it out as an option.  “All I can tell you is that we are watching very carefully,” Donovan told CNN. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”  Two U.S. Senate candidates from Florida, one of the hardest hit states by the housing downturn, spoke out in favor of bringing back the federal tax credits for homebuyers on the CNN program.

Now for our real estate education section…

Take the Mystery Out of Time Mastery

One of the most frequently cited reasons for not actively pursuing short sale investments is a lack of time; work schedules, family obligations and other day-to-day activities simply seem to take every available moment. So, where does everyone else find the time to invest? Surely they all can’t be retirees with nothing else to do all day. You are right – they aren’t. Research shows that busy people are more likely to remain busy and get even more done because they have mastered the mystery of time management.

For those of you who have read (and failed) at the 4-Hour Workweek or the 7 Habits of Highly Effective People and other popular time management books, the first step is to determine why you are out of control in the first place. Are you overwhelmed with work, home or other obligations? Chances are you may not even realize the extent of the problem but instead spend your days going from one urgent task to the next.  Although urgency is a great motivator, it can go too far. When the daily “to-do” list tends to pile up into a never-ending series of activities without an end in sight, you can be sure it has gone too far.

Rather than trying to figure out how to schedule enough time to attend a time-management course or sit down and re-prioritize the entire week or work through the weekend in yet another vain attempt to “get organized” try this instead; get control. Sounds simple doesn’t it? Well in some respects it really is simple. Today is Monday…give this a try for five days and see how it works for the remainder of the week:

1. Begin by asking yourself what really constitutes the most important actions for the day…the ones you would stay late in order to finalize…then work on those first. Be careful not to confuse “important” items with “urgent” items.

2. Next on the list are those “opportunity” items. These are tasks which are either time sensitive or require some level of consistent work in order to bring about.  If you find the opportunity list growing too large, it’s time to step back and get a reality check. Keep the list small and only add items once the original ones are accomplished. If an item is no longer a priority then delete it; don’t leave it on the list waiting for another day.

3.  Delegate. Learning how and when to delegate takes a bit of patience and persistence. Contrary to popular belief, hiring someone else to handle the mundane tasks in life isn’t always as simple as it seems. Finding the right person can be time consuming and fraught with frustration especially for those that have a tendency to micro-manage. Let go and let others do their job so you can do yours!

4. Appointments versus Tasks. Understand the difference. Appointments are traditionally the last thing you can delegate but many of the tasks required in the process of an appointment can easily be delegated. Create a list of significant outcomes that can be tracked and put into effect immediately.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin August 25, 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

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You asked for it. You get it: Part 2 of

“Demystifying Fraud in the Short Sale Fog.”

https://www2.gotomeeting.com/register/862050594

Chris McLaughlin, Florida attorney and short sale expert,

and Ron Ballard, best known as The California Short Sale

Lawyer, return to continue clearing the fog surrounding

issues of legality and fraud in short sales TODAY at

2 PM ET, 11 AM PT in a LIVE webinar.

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

MBA – refinances increase

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 4.9% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 4.5% compared with the previous week.  The Refinance Index increased 5.7% from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 0.6% from one week earlier. The unadjusted Purchase Index decreased 1.1% compared with the previous week and was 38.8% lower than the same week one year ago.  “The volume of refi applications last week was up 26% over their level four weeks ago.  Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“We are at a new 15 month high for the Refinance index.  With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.”  The four week moving average for the seasonally adjusted Market Index is up 5.0%.  The four week moving average is down 0.3% for the seasonally adjusted Purchase Index, while this average is up 6.2% for the Refinance Index.  The refinance share of mortgage activity increased to 82.4% of total applications from 81.4% the previous week, which is the highest share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% from 5.7% of total applications from the previous week.

10 year yield sets new low

The yield on the benchmark 10-year note was 2.49% at 4:30 p.m. yesterday in New York. That’s down from 2.6% late Monday and is the lowest level since the 10-year yield closed at 2.4% on January 20, 2009, according to data from the Federal Reserve.  The yield on the 2-year note dropped to 0.48%, holding near an all time-low, while the 5-year yield slid to 1.33%. The yield on the 30-year bond was 3.56%, down from 3.66%.  The flight to safety boosted demand for the $37 billion worth of 2-year notes that the government sold Tuesday, with investors submitting bids totaling $115 billion for the notes. 

The bid-to-cover ratio, a measure of demand, was a relatively strong 3.12. But the ratio was higher at the last 2-year sale in July, and has averaged 3.17 so far this year.  It was the first of three auctions this week totaling $102 billion in U.S. debt. On Wednesday, the U.S. will offer $36-billion in 5-year notes and will offer $29 billion in 7-year notes on Thursday.  Treasuries are widely considered one of the most secure assets available. As a result, prices often rise when investors are nervous about the economic outlook. Stocks, however, fell sharply after the housing report came out.

Low home sales could sink the recovery

With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the recovery.  Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Two months after the end of the tax credit, sales are 34% below April’s tax incentive-induced peak.  “Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics. “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.” 

The sales pace of all homes — single-family homes, town homes, condominiums, and co-ops — is at the lowest since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.  Inventory has also continued to climb, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.  The housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.  “Falling housing prices strain the overall confidence in the economy and discourage Americans from spending,” Dales said. “They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.

Durable goods fall more than expected

The Commerce Department reports that new orders for long-lasting U.S. manufactured goods, excluding transportation equipment, posted their largest decline in 1.5 years in July, while overall booking rose far less than expected.  The report was the latest to indicate subdued U.S. economic growth and an increased risk of a slide back into recession, though most analysts still do not believe a double-dip recession is imminent.  The Commerce Department said durable goods orders excluding transportation dropped 3.8%—the biggest fall since January 2009—after rising 0.2% in June. Overall orders rose 0.3% following a revised 0.1% fall in June.  Analysts polled by Reuters had forecast orders increasing 2.8% last month from June’s previously reported 1.2% fall.

Orders excluding transportation had been forecast to increase 0.5% from a previously reported 0.9% fall.  Defense aircraft orders dropped 8.3 after rising 5.7% in June, while motor vehicle orders rose 5.3% after June’s 4.0% rise.  Orders outside transportation were depressed by weak bookings for machinery, electrical equipment and computers and related products and Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 8.0% last month after a 3.6% increase in June. Markets had expected a 0.4% rise last month.  Durable goods inventories rose 0.6% after increasing 1.3% in June. It was the seventh straight month of gains in inventories.  Shipments, which go into the calculation of gross domestic product, last month rose 2.2%, adding to June’s 0.2% gain.  Unfilled orders slipped 0.1% after rising for three straight months.

DsNews.com – 2/3s of mortgages untouched

According to a new report from state attorneys general and bank supervisors from across the country, more than 60% of homeowners with seriously delinquent loans are still not involved in any form of loss mitigation with their servicer.  The ratio is disconcerting considering the group also found that one of servicers’ primary loss mitigation options today, loan modifications, are resulting in significant payment reductions with fewer redefaults.  The State Foreclosure Prevention Working Group says loans modified in 2009 are 40 to 50% less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008.  “This improvement in loan modification performance suggests that dire predictions of high redefault rates may not come true,” the group said in a paper released Tuesday. “This positive trend suggests that increased use of modifications resulting in significant payment reduction has succeeded in creating more sustainable loan modifications.” 

The consortium of state regulators and chief attorneys also found that recent modifications that significantly reduce  the principal balance of the loan have a lower rate of redefault compared to loan modifications overall, suggesting that servicers should strategically increase their use of principal reduction modifications to maximize prospects for success.  Principal writedowns, though, have been slow in finding their way into the mod equation. The group’s study shows that only one in five modifications reduce the loan principal, and in fact, some 70% actually increase the loan amount by adding servicing charges and late payments to the loan balance.

Credit card debt lowest in 8 years

The average combined debt for bank-issued credit cards — like those with a MasterCard or Visa logo — fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year ago, according to TransUnion.  The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.  More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.  That’s the first time the delinquency rate has been below 1 percent since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in TransUnion’s financial services unit.

The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing.  Becker said the foreclosure crisis could be helping to improve the timeliness of credit card payments and lower balances. When people don’t make mortgage payments, he suggested, they have a short-term cash boost.  “That can provide extra money to pay down credit cards,” he said.  Besides paying down debt, consumers are getting fewer new cards. Nationwide, the number of new accounts opened dropped almost 6.5 percent from last year.

Now for our real estate education section…

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin August 20, 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

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

FR*EE Report on Bulk REOs … check it out here:

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Standard & Poor’s expects delinquencies to remain high

S&P expects declining mortgage applications, high unemployment, the number of distressed sales, and a backlog of foreclosed properties not yet for sale to keep home prices down.  Agency loans backed by bond resolutions rated by S&P and at least 60 days delinquent or in foreclosure rose to 6.05% in the first quarter from 4.48% a year ago, but fell from 6.57% for the fourth quarter of 2009, according to analysts.  Without a decrease in unemployment – S&P chief economist David Wyss projects the figure hovering around 10% for the rest of this year – and tangible economic improvement, the ratings service expects agency delinquencies rates to remain high.  Wyss also sees difficulties with loan restructuring and delays in the foreclosure process keeping foreclosure inventory high for the next 18 months. And “additional foreclosures could put more pressure on home prices, possibly affecting loans” in agency portfolios, which could increase delinquency rates, according to the credit rating agency.  Still, analysts “don’t expect fluctuations in delinquency rates alone to cause ratings action at this time.”

State taxes

A Tax Foundation report says that Tennessee has the highest combined state and average local sales tax rate of any U.S. state, at 9.44%, while two Alabama cities are tied for the highest combined state, county and city sales taxes. Birmingham and Montgomery both levy an average of 10% on purchases.  Chicago used to hold the title of highest metro area sales tax, but lost it after Cook County lowered its rate by 0.5% in July, leaving it with the sixth highest rate at 9.75%.  Among the nation’s other metro areas with at least 200,000 inhabitants, there are five California cities with sales tax rates above 9%: Long Beach, Los Angeles, Oakland, Fremont and San Francisco. Glendale, Ariz., and Seattle also ranked high on the list.  the state with the second highest combined sales tax rate after Tennessee is California, at 9.08%, while Arizona came in third, at 9.01%. Other states with particularly high rates are Louisiana, Washington, New York, Oklahoma, Illinois, Arkansas and Alabama.  There are 34 states that allow local governments to charge a local option sales tax on top of the state sales tax, while 16 states have no local sales tax. There are five states that have no statewide tax at all: Alaska, Delaware, Montana, New Hampshire and Oregon.  Sales taxes are levied by state, county and city governments. As a result, rates vary widely across the nation, making it difficult to measure and compare sales tax trends, said Kail Padgitt, a Tax Foundation economist.

Olick – not just the tax credit

“There’s no question that the home buyer tax credit, which expired at the end of April, pulled home buying demand forward and thus created an inevitable drop-off afterward.  It would be wrong, however, to blame the current lull in home buying/selling entirely on the tax credit hangover.  You need only look at a report today from California-based MDA Data Quick, headlined, ‘Bay Area July Home Sales Down Sharply.’  Sales in San Francisco in July fell to the lowest level in 15 years, down 19 percent from June and down nearly 23 percent from July of 2009.  It was also one of the largest monthly drops recorded.  ‘There’s been a pause in the market. Some potential buyers – including those who held off until the tax credits expired – will take their time to assess market conditions, searching for signs of renewed price cuts,’ says DataQuick President John Walsh in the release. 

“Depending on the economy and other factors, that might be what some of them find, especially in areas with a growing number of homes for sale – particularly distressed properties.”  There’s even more to it than that, specifically a startling lack of confidence. Yesterday the chief economist for the National Association of Realtors, less than a week before the release of its monthly existing home sales report, warned that this lack of confidence, grounded or not, could pose a bigger risk to recovery than expected.  ‘As long as people hold back, whether realistically or irrationally, or rationally,’ Lawrence Yun says, ‘then naturally there will be too much supply in relation to the demand, and that could lead to some over-correction in home prices in some markets.’  And we didn’t even bring up foreclosures in the conversation.  Add this to a new report from Zillow.com that one third of all homeowners in the U.S. still think the housing market has yet to hit bottom and nearly the same amount think the worst is yet to come.  And another report from Trulia.com (and mind you these are real estate sale Websites) that finds fewer renters than ever now intend to buy and fewer Americans than ever think owning a home is part of the American dream, and dare I say, ‘Case closed.’”

Faith in government low

Steen Jakobsen, Chief Investment Officer at Litmus Capital Partners, says a big risk for markets is the fact that faith in the US government’s ability to fight the economic markets, as well as in central banks’ monetary policy tools, is eroding.  “The fact of the matter is that people have a huge disbelief in government,” he said.  “The real crisis 2.0 is not about the new normal or whatever term is being used, the new crisis is a crisis of faith in the US system. We’re far away from that point now but that is a clear risk,” Jakobsen said. 

Because people are losing faith in the governments’ ability to bring the economy back on track, the impact of various policies is smaller, while keeping interest rates at record lows has altered investors’ perception about what this actually means for the market, Jakobsen warned.  Investors no longer perceive low rates as good for stock markets because they create liquidity, but as a sign that a slowdown in economic growth is coming, he said.  Jakobsen predicts zero or even negative growth for the US economy for the third and fourth quarters.

DSNews.com – Modifications pick up, but not from HAMP

The industry has completed about 975,000 permanent loan modifications so far in 2010, according to estimates released this week by the Hope Now Alliance.  Of those, just over 331,000 have been processed under the umbrella of the federal government’s Home Affordable Modification Program (HAMP), while nearly 644,000 have been restructured using servicers’ own proprietary mod programs.  The latest data from the Treasury provides details on what happens to borrowers that are not accepted into HAMP. 

Based on information from the eight largest HAMP participants, 45% of those that don’t make it into a preliminary HAMP trial receive an alternative modification from the servicer; 2.4% lose their home through a pre-foreclosure short sale; just over 10% are pushed through to foreclosure; and nearly 3% file for bankruptcy.  According to Hope Now’s report, servicers have initiated more than 1.2 million foreclosures so far this year, and completed foreclosure sales on 583,000 homes.  The Alliance’s data, though, shows that servicers slowed the pace of foreclosures in June. Foreclosure starts dropped 7% compared to the previous month, and foreclosure sales were down 9%. 

Economy to get worse?

We’ve all anticipated a gradual gain in US employment, but what seems to be happening is a surprising deterioration, and that has economists worried about the increasing threat to the economic recovery.  Yesterday’s jobs report was just the latest confirmation that things are getting worse instead of better.  The monthly Labor Department report for July showed 71,000 private jobs were created even as total non-farm payrolls fell 131,000, and that trend is confounding economists, who say the net job creation in the private sector ought to start having some effect on the weekly number.  “There’s got to be an awful lot of job-churning going on if we can have positive private sector employment growth for seven months out of the year and this (weekly claims) thing is drifting up,” says Kurt Karl, chief US economist at Swiss Re in New York. “Businesses have got to be laying off a lot of people and hiring a lot of people, and the net is slightly positive.” 

Besides the sharp drop in government payrolls and the dynamics of the benefits program, small business remains a major concern, since recent surveys have shown waning confidence among small business leaders.  The multiplicity of factors lining up against the labor market is sure to stoke up talk about a double-dip in the economy, or at the very least little chance of meaningful gains for quite some time.  “It’s not good, it just isn’t, particularly when you piece it together with all of the other data we’re getting,” says Paul Ashworth, senior economist at Capital Economics in Toronto. “This isn’t just rising claims and nothing else is going on. We’re seeing activity rates going down, we’re seeing confidence weaken—a lot of not very encouraging signs.”

Now for our real estate education section…

Friday File – 15 Minute Resolution

Ever dream of buying a beautiful investment property in a far-away place like Brazil or perhaps something a little closer to home like the lovely island of Jamaica is more to your liking…Well, whatever your taste, chances are your good old Uncle Sam has already bought some land in the same area and with the economy being what it is, he’s ready to wheel and deal.

This week’s 15 minute resolution is a quick way to find – and potentially fund – the investment property of a lifetime. Luxurious locations and even some attractive funding make these worth the time to take a second look.

Bureau of Overseas Building Operations – Now this is a resource you hardly ever run across! This little known gem lists property owned (and listed for sale) by the federal government in exotic locations around the world. Pick up a beautiful 7,000 square foot home in La Paz Bolivia, a downtown condo in Santiago Chile or even an unbelievably beautiful executive residence on four acres in Kingston Jamaica. Other areas of interest include Haiti, Pretoria South Africa, and even Prague…just this week alone! Sign-up to receive instant notification of newly listed properties at http://www.state.gov/obo/c20736.htm.

How about tax-free living on an enchanted Island? If the idea of zero federal incomes taxes without the need for a Visa sounds interesting, be sure to check out all the great properties for sale in by the federal government in Puerto Rico. As a commonwealth, Puerto Rico is part of the United States but doesn’t pay federal income taxes. Great year-round weather, easy access to the mainland and more tropic fruit than you can consume in a lifetime make this an increasingly popular destination. Best of all, buyers are still able to use HUD/FHA and even VA vendee loan programs to purchase an island property with little money down!

Search all the properties at once by visiting http://www.homesales.gov/homesales/mainAction.do?pageAction=GetCounties&state=PR&stateName=Puerto%20Rico

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

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

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

Forward this e-mail to your friends! 

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

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

Fix A Flip Re-Opens … all new content, all new case studies.  This is

one webinar that you don’t want to miss!

When: Thursday, August 19th at 8:30 PM ET, 5:30 PM PST

Where: https://www2.gotomeeting.com/register/618365627

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

Homeowners pessimistic

According to the Zillow Second Quarter Homeowner Confidence Survey, U.S. homeowners were less confident about the value of their homes in the second quarter, with one-third believing home prices had not yet reached a bottom.  Homeowners were more pessimistic about the short-term future of home values in their local market than they had been in the previous three quarters, with 33% believing home values in their local housing market had not yet reached a bottom, while 38% believed they had already reached a bottom.  Nationally, 28% of homeowners said home values in their local real estate market would decrease in the next six months, up from 20% in the first quarter.  Additionally, less than one-third, or 30%, believed home values in their local market would increase, down from 42% in the first quarter. 

Zillow said less than a quarter, or 24%, of homeowners said their home had increased in value in the past year, compared with 27% in the first quarter. In reality, 34% of homes increased in value in the second quarter, according to the Zillow Q2 Real Estate Market Reports.  27% of homeowners believed their own homes’ values would increase in the next 12 months, 35% believed they will stay the same, 12% expected a decrease and 26% did not know.  Of those who expected their homes’ values to increase, the median expectation was a rise of 6%, although that varied by geography.   Despite the increasing pessimism, a large number of homeowners were anxiously awaiting the opportunity to sell. Indeed, 5% of U.S. homeowners said they were very likely to put their home on the market in the next six months if they saw signs of a real estate market turnaround.  Zillow said this translated into 3.8 million homes with the potential to come into the market. By comparison, 5.2 million existing homes were sold in all of 2009.  “As these homeowners hear news of stabilization in home values, they put their homes on the market, driving up inventory and keeping a cap on home value appreciation,” Humphries said.

Jobless claims jump

The Labor Department says that initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended Aug. 14, the highest since mid-November.  Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.  The four-week average of new jobless claims, considered a better measure of underlying labor market trends as it irons out week-to-week volatility, rose 8,000 to 482,500, the highest since early December.  The number of people still receiving benefits after an initial week of aid fell 13,000 to 4.48 million in the week ended August 7 from an upwardly revised 4.49 million the prior week. Analysts polled by Reuters had forecast so-called continuing claims rising to 4.50 million from a previously reported 4.45 million.  The insured unemployment rate, which measures the%age of the insured labor force that is jobless, was unchanged at 3.5% during that period.  The number of people on emergency benefits increased 260,105 to 4.75 million in the week ended July 31.

Olick – Refi boom could break smaller banks

” To summarize, refinance applications are way up, up 17%, while purchase applications are on life support, down 3.4% from the previous week and down nearly 39% from a year ago. Refis now make up a full 81.4% of all mortgage applications, up from 78.1% the previous week, and at their highest level since January of 2009.  With home prices way down and mortgage interest rates hovering near record lows, you would think more buyers would get off the fence and sign a contract, but continued weak consumer sentiment is hold them back. You would also think that the bright side to all this is that all this refinancing is putting more money in the average, struggling American’s pocket. 

But then I read this note from FBR’s Bob Ramsey, who believes the rate on the 30-year fixed could go as low as 4%, with the following implications:  ‘If rates continue to fall, a refi boom could swamp banks and thrifts with cash flows with no obvious place to invest. With newly issued agency MBS yielding approximately 3.5%, banks and thrifts face considerable reinvestment risk.’  Thrifts, he says, are better positioned to handle the risk than regional banks, because, ‘better efficiency provides a significant buffer to weaker revenues.’  The less efficient regionals, he says, are most at risk and adds:  ‘Further, if rates remain low for an extended period, we would expect an increase in bank M&A activity as challenging prospects convince some to sell, and others choose to consolidate and grow earnings by cutting duplicative costs.’  I had thought that most borrowers who could had already refinanced by now, but he says that, for some unknown reason, is not the case.  “We believe approximately half of conforming borrowers have both the economic incentive and equity to refinance.”  It seems that in today’s housing finance market, for every upside, there is a downside.

GM tries to break away from the government

General Motors Co. filed registration papers Wednesday for an initial public stock offering, laying the groundwork for the car maker to begin cutting its ties to the U.S. government, its majority owner.  GM outlines a business plan that intends to leverage its massive global scale, strength in fast-growing emerging markets such as China and a balance sheet cleaned up by Chapter 11. At the same time, the company warns it faces many risks, such as continuing losses in Europe and a significant underfunding of its pension obligations.  GM’s plan to return to the public markets includes preferred stock, which the company will sell to raise funds, along with common shares, which will be sold exclusively by some of GM’s current shareholders, including the U.S. government. The company said no dividend is currently planned to be paid on the common shares. 

The IPO will allow the U.S. Treasury to begin selling the 61% stake it holds in GM after last year’s $50 billion U.S. government bailout of the company.  Another holder of GM shares, the United Auto Workers, also is expected to sell some of its stock during the IPO, according to people familiar with the situation.  The IPO, expected later this year, is anticipated to raise $10 billion to $15 billion but possibly more. An expected price range for the shares will be determined closer to the sale.  For the government to recoup its full investment GM must achieve a stock-market value of $70 billion—10 times GM’s market capitalization before the company headed into bankruptcy-court protection in June 2009, and at least $30 billion more than the market value of Ford Motor Co.

Now for our real estate education section…

Best Real Estate Resources You Never Knew Existed

By now everyone has heard of Zillow but when it comes to serious real estate related research, here’s how to find the best of  the best…the type of data the experts use to create those ground-breaking reports and hard hitting case studies. Whether you are working on your next commercial enterprise or simply want to stay abreast of the latest and greatest real estate related information, tap into sure-fire resources to access the best data available.

1. Put a Ph.D to work. Search thousands of doctoral dissertations to see who is working on relevant housing and commercial development related projects. Sponsored by the Office  of University Partnership and the US Dept of Housing and Urban Development, this is a goldmine of research:

http://www.oup.org/ddrg/ddrg_profilesearch.asp

2. Free Information resources. Need a few good resources but don’t have the time or money to hire a writer? Use these free foreclosure related resources to educate consumers and help them make informed decisions about the best course of action when it comes to keeping, selling or buying a home. Produced by the Making Home Affordable Program in conjunction with HUD, they are designed for maximum readability in both spanish and english.

http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure

3. Social Media & Uncle Sam – Your good old Uncle Sam has finally taken the plunge and is now available via Facebook and Twitter. Find out about the most recent research, grant and tax credit opportunities, new programs and much more with instant updates via your favorite social media site.

http://www.facebook.com/pages/Washington-DC/HUD-USER/183685747712?v=wall

http://twitter.com/HUDUSERNEWS

4. Taxing Tips – It’s a topic we would all rather avoid but make it as painless as possible by tuning in for great tips right from the source. IRS.gov has it’s very own real estate tax center…a topic of profound importance to every real estate investor.

http://www.irs.gov/businesses/small/industries/article/0,,id=185194,00.html

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
–