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New home sales will be up?

admin — Mon, 26 Jul 2010 16:27:58 +0000

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

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New home sales will be up?

According to outlook and commentary services firm Econoday, new home sales should total 310,000 units in June, up from May’s record-low 300,000. The Census Bureau is scheduled to release its monthly new home sales data later this morning. The error ratio, however, could swing the new home sales into negative territory, month-on-month, as the possible range is listed between 280,000 to 350,000 home sales. Months’ supply of new homes on the market surged to 8.5 months in May, from 5.8 months in April, due to the drop in sales, Econoday noted in commentary. But the actual number of new homes on the market was down 1,000 in the month to an adjusted 213,000 — to its lowest level in 40 years, since 1970, the firm said. Econoday noted that lower interest rates are likely to boost sales for the June data. Employment and income growth, however, also have an impact on the decision to buy housing.

More magic numbers from the WH

The numbers, projections, and estimates that come out of the White House under this administration are famous for their inaccuracy and fantasy-like quality, but even it is slowly coming around to reality, admitting that unemployment will stay at or above 9% until 2012. Of course, we can expect the truth to be varnished at least a little bit…well, maybe a lot: it now believes the 10-year deficit will be $58 billion less than projected in February when the budget blueprint was first released, and that the economy will grow by at least 4% in 2011 and 2012. Under the revised estimates, Uncle Sam will ring up $8.474 trillion in deficits between 2011 and 2020, down from the $8.532 trillion estimated in February. In the near-term, the administration expects the 2010 deficit to come in at $1.47 trillion — slightly lower than originally forecast and slightly above last year’s deficit of $1.41 trillion. Meanwhile, the 2011 and 2012 deficits will come in somewhat higher than the White House forecast in February.

“The economy is still weaker than we’d like, and [there is] a medium-term and long-term fiscal situation that requires attention,” outgoing White House Budget Director Peter Orszag said in a call with reporters. In terms of taxes, the administration now expects that the Treasury will take in $402 billion less over the next 10 years than originally expected, but at the same time will also spend $461 billion less than was forecast. The tax revenue collected will average 18.7% a year, slightly above the 40-year historical average. Federal spending, however, will average 23.2%, above the 20.7% historical average. When asked what accounted for the White House’s relatively optimistic growth estimates relative to other economists’ forecasts, Christina Romer, who chairs the president’s Council of Economic Advisers, said the administration believes rapid growth in business investment and an emphasis on U.S. exports is “what we think makes these numbers completely reasonable.” In other words she has no real basis for any of it…business as usual.

Freddie’s mortgage and issuance $179bn in H110

Mortgage purchase and issuance at Freddie Mac rose to $30.9 billion in June, from $25.1 billion in May, bringing the year-to-date total to $179 billion for the first half of 2010 (HI10), according to a monthly volume summary. Freddie’s total mortgage portfolio decreased at an annualized rate of 0.9% in June. Total guaranteed Participation Certificates (PCs) and structured securities issued fell at an annualized rate of 0.6%. The monthly contraction in the portfolio arrives after Freddie wrapped up an initiative announced in February to purchase essentially all the single-family mortgages delinquent by 120 or more days out of its PC pools. The single-family delinquency rate decreased to 3.96% in June from 4.06% in May, and the multifamily delinquency rate fell to 0.28% from 0.32%. Refinance-loan purchase and guarantee volume was $19.1 billion in June, up from $17.1 billion in May. Freddie reported 21,367 modifications in June, for a total 93,558 in the first six months of 2010. The aggregate unpaid principal balance of the mortgage-related investments portfolio slipped by $8.6 billion.

Soak the rich

Treasury Secretary Timothy Geithner said yesterday that the economy is not likely to slip back into recession, but letting tax cuts for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits. “We think that’s the responsible thing to do because we need to make sure we can show the world that (we’re) willing as a country now to start to make some progress bringing down our long-term deficits,” he said on ABC’s “This Week” program. In other words, pretend the economy is great, soak the people most likely to invest in private enterprise, and call it “responsible.” Geithner said only 2 to 3 percent of Americans — those making $250,000 or more a year — will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.

Republicans want to extend the tax cuts and Democrats are divided but Geithner said reductions for top earners should end. There’s another way to be responsible, of course, and that’s by not driving the country into the wall at exactly the wrong time with programs we can’t afford, but no one in the administration has stumbled on that idea yet. “I think the most likely thing is you’ll see an economy that gradually strengthens over the next year or two, you’ll see job growth start to come back, investments expanding … but we’ve got a long way to go still,” Geithner said. Indeed. In fact, for some reason this administration is intent upon making it as long as possible…

DSNews.com – GSEs next?

Now that the Obama administration is finished “fixing” financial regulatory reform, it’s setting its sights on restructuring the housing finance system, namely the GSEs. The White House says it will put forth a formal proposal by early next year, and some say its focus will be a departure from the age-old adage of homeownership as everyone’s “American Dream,” and shift support for the housing market from Fannie Mae and Freddie Mac to the private sector. There’s no doubt change is coming for the nation’s two largest mortgage companies. Many were disconcerted that the Dodd-Frank Wall Street Reform and Consumer Protections Act didn’t include a new blueprint, or at least new rules, for Fannie and Freddie.

Rep. Darrell Issa (R-California), ranking member of the House Oversight and Government Reform Committee, called the president’s signing of the Dodd-Frank bill a “charade” on true reform, particularly in light of Issa’s recent investigation that revealed former executives at both Fannie Mae and Freddie Mac accepted so-called sweetheart loans from subprime mortgage lender Countrywide before it imploded. Since the federal government took control of the GSEs in September 2008, the two companies have had to draw $146 billion in federal funding to stay afloat, giving taxpayers an 80 percent ownership stake in the mortgage financiers. Fannie and Freddie’s rescue has become the costliest of all the government bailouts, making the fact that the two companies were never mentioned in a bill that promises to end “too-big-to-fail” even that much more ironic. Recent estimates from the Congressional Budget Office (CBO) put the tab for subsidizing Fannie and Freddie at $389 billion, when all is said and done.

Now for our real estate education section…

Bills, Bills, Bills – How Reform is Changing the Face of Real Estate

Whether you like him or not, one thing everyone can agree upon is that President Obama has indeed kept his promise to bring change to the nation. From healthcare reform to finance reform, some of the most radical changes in decades have come to pass with profound implications for the future of real estate.

Although superficially healthcare reform may not seem to have a direct impact on real estate, upon closer examination it becomes clear additional taxes (including the 3.8 percent premium on investment earnings for high net worth individuals, the upcoming requirement to send 1099’s to every company or service provider which you do more than $600 of business with annually and other upcoming changes) required to fund the measure will indeed directly affect investors. Finance reform presents a myriad of new taxes, decreased write-offs and stringent lending regulations likely to transform the mortgage and banking industry for decades.

But the worst may be yet to come in the form of the upcoming energy bill. “What energy bill?” you ask…the one that has been in the works since the Supreme Court ruled that carbon dioxide is a poison which must be cleaned up. As an environmental pollutant, the ruling gave the EPA (Environmental Protection Agency) oversight that directly affects business and industry throughout the nation with or without a new bill. However, experts and politicians alike expect an energy bill to be put through sooner rather than later.

What possible implications could this hold for the future of real estate?

Apparently a lot especially when “Carbon credits” are taxed into the equation of a new home, roads and other improvements. The cost of electricity and other fuel based services are also likely to increase…along with the cost of goods which use fuel or electricity.

What other areas should savvy short sale and real estate investors keep an eye on? How about VAT taxes, Cap & Trade modifications, Climate bill, Privacy bill and a new living wage bill just for starters. In fact, even proposed revisions to the “No Child Left Behind” law is expected to impact real estate since one of the major predictors of home value and neighborhood desirability is related to school performance. Under the proposed changes, a single federal formula will be used to calculate and report high school graduation rates and other statistics…including the federal funding and ability of parents to remove children from schools or obtain vouchers….all of which are likely to impact the desirability of any given home or neighborhood.

See you at the top!

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

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

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About the author:

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

    * 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
–

Existing homes sales fall

admin — Fri, 23 Jul 2010 20:08:49 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 23, 2010

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Existing homes sales fall

According to the National Association of Realtors (NAR), existing homes sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8% higher than the 4.89 million-unit pace in June 2009. Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.” AR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors® bring to buyers and sellers in this market.”

Most Americans think things will get worse

A nationwide survey from Citigroup shows that nearly two-thirds of Americans believe that the economy has yet to hit bottom, meaning a double-dip recession is expected. The quarterly report, conducted by Hart Research Associates, revealed that 62 percent of people asked were still not counting on a rebound, which is 3-point decline from the March reading and almost as bad as last September’s result of 63 percent. The survey also showed that Americans’ expectations for when the economy will stabilize for their households have been pushed further into the future. Nearly two thirds think that their households will not see a stable financial situation for at least two or three years, it said. On the positive side, Americans’ views on current economic conditions and the outlook for their own personal financial situations are improving or holding steady, the survey said. Twenty-four percent said that the local economy where they live is good or excellent, which is up from 19 percent in March, the report said. “The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?” he added.

Inventories up, sales down

A NAR practitioner survey shows that first-time buyers purchased 43% of homes in June, down from 46% in May. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers. All-cash sales were at 24% in June compared with 25% in May. Total housing inventory at the end of June rose 2.5% to 3.99 million existing homes available for sale, which represents an 8.9-month supplyat the current sales pace, up from an 8.3-month supply in May. Single-family home sales fell 5.6% to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5% above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3% from a year ago. Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged. Existing condominium and co-op sales slipped 1.5% to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5% higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June.

Bush did it … another perspective

In office 18 months, Obama is still running against the policies of George W. Bush and cites “nearly a decade of not paying for key policies and programs” such as the wars in Iraq and Afghanistan, big tax cuts and a costly Medicare prescription drug program. Bush came to office with a $236 billion budget surplus in 2001, says Obama. “The day I took office, eight years later, America faced a record $1.3 trillion deficit.” But blaming the country’s economic woes on Bush tax cuts and spending is a stretch. It ignores the fact that as recently as 2007, the budget deficit was just $162 billion — long after Bush’s tax cuts of 2001 and 2003 kicked in and spending on the two wars and on the Medicare program was in place. Furthermore, the projected surplus reflected a continuation of the bubble economy of the late 1990s, when the stock market was soaring, high-tech businesses were on a roll and corporate profits were surging. Those surpluses would have evaporated no matter who became president in 2001. The rise in the annual deficit from $162 billion in 2007 to over $1 trillion now is largely due to collapsing tax revenues from the recession that began in December 2007, and stimulus and bailout spending by both Bush and Obama, said Brian Riedl, a budget analyst at the Heritage Foundation. The Bush tax cuts and other policies are “a convenient scapegoat for past and future budget woes,” he said, but can’t be blamed for today’s trillion-dollar deficits — or future ones. “Over the next 10 years, virtually 100 percent of the rising deficits” will be driven by “entitlement” programs such as Social Security, Medicare and Medicaid and interest payments on the $13.2 trillion national debt, Riedl said.

Olick – don’t be fooled

“Don’t be fooled by the little uptick in home prices in today’s Existing Home Sales report from the National Association of Realtors. Even the always glass-is-half-full chief economist Lawrence Yun made clear several times in the briefing before the report’s release, that he expects home prices to come under significant pressure over the coming months, as inventories rise. The report today showed inventories up 2.5 percent to 3.99 million units. At the current sales pace, that represents an 8.9 month supply. The current sales pace ticked down 5 percent in June, even though those numbers are still under the sway of the home buyer tax credit (remember, EHS represent closings in June, so contracts likely signed in April before the credit expired). But more importantly, the Pending Home Sales Index, which represents contracts signed, fell off a cliff in May, down 30 percent, indicating that closings will be way off as well. Bottom line, experts who follow housing are having a hell of a time predicting just where home prices are headed nationally.”

“A new monthly report, Macro Markets Home Price Expectations, a venture by price guru Robert Shiller, found that the results for 2010 vary widely, anywhere from plus 4.9 percent to minus 12 percent. “In July 60 percent of the panelists projected negative home price growth for 2010,” writes Shiller in the report. The longer-term results, however, were less optimistic. “Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory,” writes Terry Loebs, MacroMarkets Managing Director. “This new consensus suggests a less robust housing recovery scenario – one that, all other things equal, would result in U.S. household wealth by year-end 2014 being about $500 billion less than the level implied by the average of panelist responses just two months ago.”

Now for our real estate education section…

Friday File – 15 Minute Short Sales Resolution…is Your LinkedIn Profile a Liability?

For this week’s 15 minute short sale resolution, it’s time to take a critical look at your LinkedIn profile…specifically, your professional headline.

Face it, if you are like most people, yours probably leaves a lot to be desired. In fact, it might just be a liability if you tend to use it like most people. Find out how you measure up and how to transform your LinkedIn profile from a lackluster liability to a lightning fast lead with this quick quiz:

Question: Do you have a professional headline?

Response: If not, it’s time to get one…NOW!

Actionable Item: Assuming you have a LinkedIn professional headline, continue to the following questions…

1. Did you include a title in your professional headline?

and/or

2. Did you include the name of your company?

Response: Your headline probably needs work!

Gotcha right? Yes, traditional wisdom holds that you should include your name or the name of your company in the headline but is this always true? Let’s examine the wisdom of this little gem for someone named “Joe Smith”. Great name, easy to remember…even easier to forget. Oh yeah, and shared by a zillion others of the same name.

Likewise, title is meaningless. Are you a big title in a little company or a little title in a big company. Perhaps you have some really odd title that tells the reader next to nothing. See the point? Plain and simple, titles and names don’t always mean a lot. So, what should you do to make a great professional title?

3. Explain what you do and why the reader will care. Use a bit of flair and keep it short and simple. Use the WIIFM approach to explain “What’s in it for me?” to the reader. Not sure how to write a great professional headline? Check out our free webinar or other social media marketing for real estate and short sales to learn more.

See you at the top!

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

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

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

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

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

HAMP still a failure

admin — Wed, 21 Jul 2010 19:49:28 +0000

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

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HAMP still a failure

An increase in foreclosures, combined with the recent drop in housing sales, could send home prices plummeting again. Some 91,118 people in trial modifications were canceled in June, bringing the total to 520,814 since the program began in the spring of 2009. More than 60% of those who dropped out last month had been in trials for at least half a year. Homeowners usually are kicked out of the mortgage modification program because they don’t make the required payments, meet the qualifications, or submit the needed paperwork. Once their trials are canceled, about 45% of homeowners receive alternate modifications, often one from their loan servicer.

Some 8.9% had foreclosure proceedings started against them and 1.3% lost their home in foreclosure. Only 364,077 troubled borrowers remain in the trial phase, some 38,728 of whom entered the program in June. Nearly 166,000 have been in trials for at least six months. 51,205 troubled homeowners received long-term mortgage modifications in June, bringing the total to 389,198. 8,823 homeowners had their permanent modifications canceled, 195 of whom paid off their loans. “I feel like a broken record, but HAMP continues to perform very poorly,” said John Taylor, head of the National Community Reinvestment Coalition, an advocacy group. “The permanent modification numbers are simply too low, while foreclosure filings continue above 300,000 for the 16th month in a row.”

Unemployment bill passes

A bill that pushes back the deadline to file for extended unemployment benefits until the end of November passed a key procedural hurdle in the Senate yesterday. The vote was 60-40, the minimum margin needed to end debate on the measure. Sens. Olympia Snowe and Susan Collins, Republicans of Maine, switched sides to support the bill. Carte Goodwin, the newly appointed Democratic senator from West Virginia who replaced the late Robert Byrd, gave his party the 60th vote. Democrats had stripped the unemployment insurance measure down to the bare essentials for Tuesday’s vote, a do-over of a tally taken late last month. The Senate could put its final stamp of approval on the bill on Wednesday, after which it would go back to the House. It is expected to pass both chambers and be sent to President Obama for his signature. Final passage in the Senate requires just 51 votes.

Democrats tout the economy-boosting effect of unemployment checks since most beneficiaries spend them immediately. But the numbers amount to less than one-quarter of 1% of the size of the $14.6 trillion economy, and are far smaller than last year’s $862 billion stimulus legislation, which appears to have done little good for the economy. Republicans say they do favor the benefits but insist they be paid for with spending cuts elsewhere in the government’s $3.7 trillion budget. As Senate Minority Leader Mitch McConnell puts it, “What we do not support—and we make no apologies for—is borrowing tens of billions of dollars to pass this bill at a time when the national debt is spinning completely out of control.”

Loan demand up

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 16, 2010, increased 7.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 19.5% compared with the previous week, which included the Independence Day holiday. The Refinance Index increased 8.6% from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The increase in total refinance applications was driven by a 10.7% increase in conventional refinance applications, while government refinance applications decreased by 4.2%.

The seasonally adjusted Purchase Index increased 3.4% from one week earlier, driven by an 8.0% increase in government purchase applications. Conventional purchase applications were essentially flat, increasing just 0.3% from last week. The unadjusted Purchase Index increased 15.3% compared with the previous week and was 35.7% lower than the same week one year ago. “As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey, refinance activity increased last week. The refinance index is up almost 30% over the past 4 weeks, but is still well below the peak seen last spring,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans. The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower downpayment requirements.”

Michael Boskin – Obama’s economic fish stories

“President Obama says “every economist who’s looked at it says that the Recovery Act has done its job”—i.e., the stimulus bill has turned the economy around. That’s nonsense. Opinions differ widely and many leading economists believe that its impact has been small. Why? The expectation of future spending and future tax hikes to pay for the stimulus and Mr. Obama’s vast expansion of government are offsetting the direct short-run expansionary effect. That is standard in all macroeconomic theories. So, as I and others warned in 2008, the permanent government expansion and higher tax rate agenda is a classic example of what not to do during bad economic times. Worse yet, all the subsidies, bailouts, regulations and mandates are forcing noncommercial decisions on the economy, which now awaits literally thousands of new diktats as a result of things like ObamaCare and the financial reform bill. The uncertainty is impeding investment and hiring.

The president does not say that economists agree that the high future taxes to finance the stimulus will hurt the economy. (The University of Chicago’s Harald Uhlig estimates $3.40 of lost output for every dollar of government spending.) Either the president is not being told of serious alternative viewpoints, or serious viewpoints are defined as only those that support his position. In either case, he is being ill-served by his staff. Mr. Obama’s economic statements are increasingly divorced not only from competing viewpoints but from those of his own economic advisers. It is surprising how many numerically challenged pronouncements come from this most scripted and political of White Houses. One slip is eventually forgiven, but when a pattern emerges, no one believes it is an accident. For example, on the anniversary of the stimulus bill, Mr. Obama declared, “It is largely thanks to the Recovery Act that a second Depression is no longer a possibility.” Yet his Council of Economic Advisers just estimated the stimulus bill’s effect on GDP at its trough was 1%-2%. On his recent “Recovery Tour,” Mr. Obama boasted, “The stimulus bill prevented the unemployment rate from “getting up to . . . 15%.” But the president’s own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%. So Mr. Obama claims that the stimulus bill was several times more potent than his chief economic adviser estimates. The president badly needs to make more realistic pronouncements. No one expects him to say his policies have failed (although most have delivered far less than claimed at large cost). A little candor about the results of experimentation in uncharted waters would go a long way. But at the very least, his staff needs to avoid putting these exaggerations on the teleprompter. It undermines confidence and raises concerns about competence. It’s doing nobody any good—not the economy and certainly not Mr. Obama.”

Wall Street Journal – reasons for a flat housing market

Even falling interest rates aren’t enough to whet consumer appetites for housing. Last week, the average rate on a 30-year fixed-rate mortgage was quoted at 4.57%, according to Freddie Mac, the lowest since its survey began in 1971. But demand for home-purchase mortgages sits near 14-year lows, according to the Mortgage Bankers Association, down 44% over the past two months. Economists aren’t singling out one reason for the stalling housing market. A variety of factors have led to flagging confidence, they say, including sluggish labor markets, global economic turmoil and falling stock prices. While the housing downturn dragged the economy into a recession nearly three years ago, now it is the economy that is pulling down housing, says economist Patrick Newport at IHS Global Insight.

Without sustained job growth, the housing market likely won’t improve. That in turn will ricochet across manufacturing, retail and other trades heavily dependent on home building and consumer spending. The government last fall extended tax credits worth up to $8,000 to home buyers who signed contracts by April 30, causing sales to surge early this year. Those buyers had until June 30 to close their sales until Congress, concerned that the backlog of sales wouldn’t close in time, extended the deadline through September. Analysts long expected the withdrawal of a federal tax credit, which had juiced sales, to lead to a slower-than-usual summer. “It’s the magnitude that’s been the issue,” says Douglas Duncan, chief economist at Fannie Mae. “The drop-off in activity has surpassed expectations.” Affordability gains have been offset for many buyers by tighter lending standards, particularly for “jumbo” loans that are too large for government backing. Banks are requiring down payments of 20% and more and strong credit scores because they must hold jumbo loans in their portfolios.

More broadly, the housing market faces two big problems: too many homes and falling demand. More than seven million borrowers are 30 days or more past due on their mortgage payments or in some stage of foreclosure. Rising foreclosures will keep pressure on prices as banks put more homes on the market. Last month, nearly 39,000 borrowers received government-backed loan modifications, but more than 90,000 borrowers fell out of the program, the Obama administration said on Tuesday. Moreover, the pool of potential buyers remains constrained by the unprecedented number of homeowners who are underwater, or who owe more than their homes are worth. To add to it all, mortgage-finance giants Fannie Mae and Freddie Mac are starting to push more repossessed homes onto the market. The companies owned 164,000 homes at the end of March, up 80% from a year ago. Finally, unrealistic sellers have flooded the market” after reports of bidding wars and home-price increases earlier in the year.

Tenant Act extended to 2014

The financial reform bill passed by Congress will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014. PTFA, originally enacted in May 2009, allows renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease. Without the new extension in the financial reform bill, the law would have expired at the end of 2012. The new law also clarifies the date of a notice of foreclosure as the date of a completed title transfer: “The date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.’’

When the PTFA was enacted last year, it completely changed the way REO evictions are conducted, said Robert Jackson, president and managing attorney at the Irvine, Calif.-based Jackson and Associates law firm, while speaking last month at REO Expo 2010. Under the Dodd-Frank bill, any lease or tenancy created prior to the change of title as a result of foreclosure is protected by PTFA, according to The National Low Income Housing Coalition (NLIHC), a tenant-advocacy group that supports the changes. Whether the PTFA has caused tenants to sign long-term leases immediately before a foreclosure — tying up disposition of a property — is a subject of concern for the default servicing industry.

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

By the time you are reading this, the new 2300 page financial reform bill is likely to be making the headlines. The Senate has already approved the new bill and President Obama is expected to sign it into law this week ..despite the fact that many of the provision related to specific regulations have yet to even be written. If that sounds faintly disturbing, don’t worry…your concern is noted and shared by many experts through the nation. However, there are sweeping changes that are already apparent despite the lack of specific details.

Although broad in scope, home buyers and sellers are likely to be among the first impacted by the new provisions. They represent one of the most comprehensive – top to bottom changes to the finance, valuation, types of mortgage products offered and how lenders are compensated to take place in decades. In fact, there are even new rules for investors that provide capital for the purchase of mortgages.

A few of the most important points likely to make immense impact to buyers, sellers and investors is the language dealing with any type of mortgage outside of the “traditional” or “plain vanilla” category. Unfortunately, regulators have yet to fully define what will constitute a “traditional” mortgage under the new plan but it is clear that the line will be drawn to reduce the number of sub-prime borrowers as well as offerings of owner finance and other alternative forms of finance. Experts predict an immediate severe impact on many minority and low income borrowers; many who have already been impacted by far less severe measures. For example, according to FHA, rejection rates for African American and Latino borrowers have substantially increased among non-FHA loans.

The new FDIC and other regulatory oversight standards contained in the bill are expected to provide safer mortgage(s) instruments but at a higher cost and more stringent requirements for both banks and individuals. It is estimated that only five banks currently control more than 65% of the current mortgage market; the new bill is expected to further consolidate this trend by favoring big banks over small. In part, this is due to the belief that big banks are easier to regulate. However, at the same time, new controls and rules regulating private investors are also expected to take another two to three years to fully define…leading many to believe the bulk of mortgages will still be backed by the United States government for the foreseeable future.

See you at the top!

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

http://www.shortsalesriches.com
http://www.shortsalescoach.com
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About the author:

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Real Estate Attorney and Investment Consultant.

Housing starts down

admin — Tue, 20 Jul 2010 19:46:41 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 20, 2010

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Housing starts down

The Commerce Department says housing starts dropped 5.0% to a seasonally adjusted annual rate of 549,000 units, the lowest level since October. It was the second straight month of decline in activity and was well below market expectations for a 580,000-unit rate. May’s housing starts were previously reported as a 10.0% drop, but are now revised down to show a 14.9% decline. Compared to June last year, starts were down 5.8%, the biggest decline since November. Driving the June decline was a more than 20% drop in the volatile condominium and apartment market. Construction of single-family homes, the biggest part of the market, was down slightly by 0.7%. The only positive sign in the report was an unexpected 2.1% rise in applications for building permits to a 586,000-unit pace in June.

That followed a 5.9% drop in May and compared to analysts’ expectations for a slip to 570,000 units. Still, the slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after tax credits that spurred sales expired at the end of April. “Despite record low mortgage rates, housing is at risk of a double dip unless job growth strengthens soon,” said Sal Guatieri, senior economist at BMO Capital Markets. Economists had had predicted that construction would fall to a rate of 580,000 and had projected that building permits would sink to a rate of 570,000, according to Thomson Reuters. In a typical economic recovery, the construction sector provides much of the fuel. But not this time. While developers have cut back on construction and the number of new homes on the market has fallen dramatically, they still must compete against foreclosed homes selling at deep discounts.

Consumers will pay for new rules

Up until recently, bankers have remained mum on particular reform measures, saying that regulators will first need to write specific rules. But Bank of America broke ranks on Friday, detailing the impact of several provisions, including the so-called Durbin amendment, named after sponsor Sen. Richard Durbin, D-Ill., which will limit the fees banks collect from debit card swipes. Bank of America executives said the new rule would reduce fees earned from debit cards anywhere between 60% and 80% starting in the second half of 2011. This year, the company said it expects to produce $2.9 billion in revenue from that business. “We now fear that the Durbin bill could have a great negative impact on bank revenue than we had originally estimated,” BMO analyst Lana Chan wrote in a note to clients Monday.

Even though BoA is hit hard, , the biggest hit was expected to fall on major regional players such as Regions Financial, KeyBank and Fifth Third. Each institution generated over 3% of their overall revenue from interchange fees last year, compared to Bank of America’s 2%, according to Chan. Analysts suggested that perhaps the company most exposed to the new measure was the Minnesota-based lender TCF Financial. In 2009, more than 10% of its revenue came from interchange. FBR’s Paul Miller projected Monday that TCF’s earnings could fall by as much as 40 cents a share as a result. Banks have not been sitting idly by. A number of major financial institutions have reportedly started to eliminate free checking accounts, as well as imposing new or higher fees, ultimately putting the cost of the forthcoming new laws on the consumer. “That is probably what is going to happen here,” said TCF Financial CEO Bill Cooper said during a conference call with investors last week. The bad news is that the Durbin rule is just one small piece of an ongoing effort to rewrite the rules of the road for the financial services by this administration and congress.

Olick – Jumbo loans are back

“After several years of stagnation in high-end housing, thanks to the disappearance of the jumbo market, things are moving yet again. A quick check on Bankrate.com shows the 30-year fixed jumbo at around 5.50%, and Citibank last week reported applications for jumbos up 30% just over the last 60 days. “It is the overall weak economy driving the 10 year lower, which is the proxy for most mortgage loans,” says FBR’s Paul Miller. “This is still probably the best of the best getting loans at these low rates, but Jumbo activity is still very, very low.” Miller says it’s good for the market, but only “marginally better,” as banks are desperate to find good loans to put on their books. But how long will it last? Probably only as long as investors remain nervous about the economy. “Preliminary signs of life in the secondary market are a good indication that the narrower spread between jumbo and conforming loans will stick around,” says Bankrate.com’s Greg McBride. “However, the level of mortgage rates will hinge more than anything on the demand for Treasuries.” Bank of America tells me that applications and fundings for jumbo loans rose over 10% from May to June. They say they’ve always been the leader in jumbos, which could be why Citi is getting more aggressive.”

Home Builder Confidence Plummets

Builders have been feeling increasingly pessimistic of late. The National Association of Home Builders (NAHB) said yesterday that its monthly reading of builders’ sentiment about the housing market sank to 14 — the lowest level since March 2009. Readings below 50 indicate negative sentiment about the market. “We continue to see a lull in home buying activity following the expiration of the federal home buyer tax credit program, as many of the sales that would have occurred this summer were likely pulled forward to meet that program’s deadline,” said NAHB chairman Bob Jones, a homebuilder in Bloomfield Hills, Mich., in a press statement. “In addition, builders are reporting continuing consumer hesitancy regarding home purchases due to uncertainty in the overall economy and job markets.”

Paul Dales, a US economist at the Toronto-based Capitol Economics concurred that the tax credit’s expiration is impacting the housing market. “It is becoming increasing clear that without the government’s artificial support, the US housing market is struggling to stand on its own two feet,” Dales wrote in commentary Monday. ” The fall in the NAHB housing index…shows that demand for new homes has weakened further.” Specific factors contributing to the negative view include hesitation on the part of homebuyers, tight consumer credit and continuing competition from foreclosed and distressed properties, according to NAHB chief economist David Crowe.

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

See you at the top!

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

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About the author:

Chris McLaughlin is widely known as America’s top
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Diana Olick – Home prices being slashed, more coming?

admin — Fri, 16 Jul 2010 16:48:42 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

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Diana Olick – Home prices being slashed, more coming?

“As of July 1st, 24 percent of sellers on the market had cut their asking prices at least once, according to Trulia.com. That’s up 9 percent from the previous month and represents about $27 billion worth of vanished national home equity (or home equity hopes). “The market is going to maintain a relatively flat trajectory, if not more like a saw tooth trajectory, for the near future, and meaningful recovery may not happen until some time in 2011, 2012,” says Trulia’s Heather Fernandez. We knew the price stabilization was largely due to increased buying activity on the low end from the home buyer tax credit. The issue now, front and center, is foreclosures. We’ve already seen a few reports, and I expect we’ll see more, that show new foreclosures “stabilizing,” while bank repossessions are increasing.

Let’s face it, banks don’t want to be homeowners, and they certainly don’t want to shell out even more of their dwindling cash on lawn services and handymen. Whatever incentives there are out there to turn these properties over to homeowners who can actually afford them are certainly welcome. The trouble is that there appears to be a dangerous disconnect in the housing market right now: Housing stats are at an all-time low and yet the home vacancy rate is rising. The only way that can happen is if the number of households is shrinking more than we know. Add bank repossessed homes to that mix, and I’m guessing home prices will dip more than some are expecting.”

Foreclosures fall as bank repossessions quicken

According to RealtyTrac, the number of foreclosure filings of all types — including notices of delinquency, auction notices and repossessions — fell during the first six months of 2010. There were 1,654,634 properties with foreclosure filings during that time, a 5% decline compared with the previous six months. That equates to 1 out of every 78 homes. However, the pace of bank repossessions quickened, creating nearly 270,000 homes lost to foreclosure during April, May and June, a 5% increase over the three winter months. James Saccacio, CEO of RealtyTrac, called the report a “tale of two trends.” He pointed out that the filings data showed improvement because fewer properties were entering the foreclosure process. Part of that is because lenders are now more committed to modifying defaulting mortgages or allowing homeowners to sell their homes for less than they owe.

However, there is still much inventory to move through the system and experts aren’t sure how big it will be. “While the foreclosure problem is being managed on the surface,” Saccacio said, “a massive number of distressed properties and underwater loans continue to sit just below the surface, threatening the fragile stability of the housing market.” One in 17 Nevada households, or 64,429, received a filing. That’s the highest rate of any state. The number of California homes with filings came to more than 340,000, the highest total of any state. Florida had more than 277,000 filings, or 1 for every 32 households; Arizona had more than 91,000, or 1 in 30 homes. Lenders repossessed 45,000 Calif. homes during the three months ended June 30, more than in any other state. Nevada, with a much smaller population, had nearly 11,000 repossessions, about twice the rate of the Golden State.

Business vs Obama

A letter posted to the US Chamber of Commerce’s site slammed President Obama’s economic policies yesterday, saying administration officials “took their eyes off the ball” and “neglected” to focus on job creation. The letter further pointed out that the administration “vilified industries while embarking on an ill-advised course of government expansion, major tax increases, massive deficits and job-destroying regulations.” The letter also included “some different approaches to unlock frozen capital and jolt our economy back to life.” The six suggestions are: create a growth and jobs tax policy; restore fiscal health; expand trade and export-driven jobs; rebuild and expand infrastructure; ease regulatory burdens; and eliminate uncertainty for business owners. In a speech at a jobs summit of 500 business leaders, Chamber president Tom Donohue focused on what he considers a glut of recent legislation, including financial reform and health reform. “We must address the cumulative job-killing impact of over-regulation,” Donohue said, stressing the uncertainty he considers rampant in U.S. businesses. Donohue also said lawmakers were “spending at astronomical levels — we’re setting ourselves up to be the next Greece.”

Lost decade coming?

Disappointing job reports, weakness in housing and consumer spending, and problems in world financial markets have raised concerns about the U.S. economy stalling out later this year. Now some economists are starting to talk about an even worse fate: a prolonged period of very weak growth, a so-called “lost decade.” “The probability of a lost decade is significantly greater than a double dip,” said Sung Won Sohn, economics professor at Cal State University Channel Islands.

“We don’t have too many engines of growth functioning right now — housing, consumer spending, exports are all sputtering. I have a hard time seeing where we can get 3% economic growth back.” A lost decade, or something like it, could feel like a never-ending recession to many Americans, as the economy does not grow fast enough to recoup lost jobs, and investments like homes and stocks continue to lose value. The most famous lost decade occurred in Japan in the 1990s. From 1992 through 1999, the Japanese economy grew by less than 1% a year. It has yet to fully recover from the economic weakness and falling prices it suffered during that period.

1 in 200 mortgages may be fraudulent?

According to projections in the July 2010 edition of the CoreLogic, one in 200 conforming loan applications could still contain misrepresentations in the file that could lead to default. Overall mortgage fraud peaked in Q306, CoreLogic said. But when subprime mortgages were removed from the equation, the peaked shifted to Q309. CoreLogic said its data shows mortgage fraud in prime lending was still on the rise through the peak in Q307, even when many of the largest subprime lenders were going out of business. Since that time, non-subprime mortgage fraud is down 25% at the end of 2009.

The timeline below tracks non-subprime mortgage fraud, along with various milestones in the industry. “Lenders’ aggressive stance against fraud is having an impact. Our 2010 Fraud Index indicates that mortgage fraud risk is on the decline. But with an estimated $14bn in fraud losses experienced in 2009 alone, fraud is still a major issue for the mortgage industry,” said Tim Grace, CoreLogic senior vice president of Fraud Analytics, said in a press statement. “While the industry has done good work there is evidence that fraud patterns are changing and becoming increasingly better hidden,” Grace added. “By sharing fraud patterns with each other through CoreLogic fraud consortium members’ meetings and by statistical pattern recognition fraud scoring, lenders can help stay on top of these new trends and keep risk down.” CoreLogic said its research finds a correlation between fraud risk and subsequent default rates. Of the 12 states with the highest instances of mortgage fraud in 2007, nine were among the top 12 states with the highest mortgage default rates in 2009. Florida, South Carolina, North Carolina, California and Georgia are the highest-ranking states for mortgage fraud, CoreLogic said.

Jobless claims and wholesale prices drop

The Labor Department said Thursday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008. But much of that was the result of seasonal factors. General Motors and other manufacturers skipped their usual summer shutdowns. It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week.

Separately, the Labor Department said that wholesale prices fell for a third consecutive month, pulled down by another drop in energy costs and the biggest plunge in food costs in eight years. But excluding those two volatile commodities, inflation was relatively flat. Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions. Another concern is that the latest drop may be the result of temporary seasonal factors. A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of year.

Now for our real estate education section…

Becoming an Angel Investor

Do you have what it takes to become an angel investor? Perhaps it’s time to take your own portfolio to the next level by multiplying the returns of both time and money while helping others realize their own dreams. Find out if you have what it takes to become an angel investor with this quick quiz:

1. I have a desire to give back to others. Research found that 15% of angel investors had a strong desire to simply give back to others; altruism is its own reward for those that have gained so much in life. The satisfaction of seeing others realize their dreams and make a difference in their lives…and the lives of their family…is integral to a significant number of angel investors.

2. I have the desire to remain involved in an industry I love…but at a different level. Retirement is a terrific way to enjoy life once you have made your mark on the world but that doesn’t mean you don’t miss the energy and vitality of wheeling and dealing. Angel investors often find the mentoring (and money) provides the perfect balance between involvement and independence.

3. I have the desire to network in a new industry. High net work individuals may benefit from becoming an angel investor by the ability to network in a new industry while still generating impressive returns for their own portfolio. Real estate is an exceptional area to try out since it appeals to such a wide spectrum of other professionals.

4. I have a desire to maximize profits while minimizing involvement. For those that are not satisfied by average returns (and who is these days?), becoming an angel investor is the perfect way to obtain the profits you seek without the excessive time and energy required to do it yourself.

5. I have the desire to make a difference in society. Many angel investors provide funding to entrepreneurs or investors that adhere to a specific societal function, outlook or other value near and dear to the heart of the angel investor. Whether it’s affordable housing for the elderly, eco-friendly sustainable living for the urbanite or something else in between, make the world a better place by supporting those on the cutting edge.

6. I am able to deal with risk and loss. Sometimes you win, sometimes you lose and sometimes you just break even…successful angel investors understand their personal level of risk and are able to emotionally and financially handle it.

7. I have a financial fitness plan in place and can stick to it. Finally, and perhaps most importantly, a successful angel investor has a personal plan in place for their own portfolio and the determination to stick with it. Don’t be swayed by every investment, instead, wait for those that meet your criteria. According to research, the most successful angel investors obtain more than just a return on their money…they enjoy and take personal satisfaction from the entire process.

See you at the top!

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

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

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

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About the author:

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

Wells Fargo leaves a gap in financing

admin — Tue, 13 Jul 2010 17:25:31 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 13, 2010

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Wells Fargo leaves a gap in financing

The closure of much of the Wells Fargo Financial consumer finance operations, which we reported on a few days ago, will result in a gap of funding that may never be fully replaced, according to a weekly credit outlook today by Moody’s Investors Service. “The contraction of the traditional consumer finance industry leaves a hole that will not be filled by regulated banks with tighter underwriting standards,” said Curt Beaudouin, a senior analyst at the firm in commentary. “A withdrawal of this form consumer lending is credit negative and suggests the prospect of slower economic growth and a stubbornly gradual decline in unemployment.” The housing and subprime mortgage crises also eliminated residential mortgages — particularly cash-out refinancing — and the ample supply of wholesale funding. Wells’ closure of the Wells Fargo Financial branch network is just the latest move in an industry-wide contraction of consumer finance.

And the gap it leaves, particularly in non-prime mortgage lending, may never be filled. Beaudouin did, however, note several means of meeting the consumer lending demand left by Wells’ restructuring. Traditional banking operations — like Wells’ newly expanded community banking network — will likely look to fill the gap. Retailers will similarly look to fill the gap by offering “creative financing” and other promotions like discounts on retail chain credit cards. Finally, the void left by the decline of traditional consumer lenders potentially leaves room for new non-bank participants, although Beaudouin noted funding will continue to constrain operations.

Small business loans drying up

According to bank financial reports submitted to the Federal Financial Institutions Examination Council, loans to small businesses dropped from more than $710 billion in the second quarter of 2008 to less than $670 billion in the first quarter of 2010. Ben Bernanke, chairman of the Federal Reserve, says there are several factors behind the contraction in small businesses lending. He cited weaker demand from Main Street businesses worried about taking on more debt during tough times, “deterioration in the financial condition of small businesses during the economic downturn,” and a lack of supply of available credit.

Throughout dozens of similar forums, a couple of issues came up repeatedly. In particular, banks noted they are stuck between a rock and a hard place. On the one hand, banks are being told to increase their small businesses lending, while on the other hand bank regulators are telling banks to tighten lending standards. For small business owners, the collapse in the real estate market has also created another roadblock to obtaining a loan, since many depend on the value of their real estate as collateral for loans. Additionally, many manufacturers also rely on the value of their equipment as collateral for loans — and those values have fallen off sometimes more than real estate.

More mortgage bureaucracy in LA

The city of Los Angeles passed a city ordinance last week allowing for fines up to $100,000 to lenders and servicers of properties under foreclosure for failing to adequately preserve properties. RealtyTrac, an online marketplace of foreclosure properties, reports new foreclosure filings in Los Angeles grew by nearly 3,000 properties in May. The state of California is listed as the highest ranked state for foreclosures, on the firm’s website. However, data compiled by RealtyTrac finds that of the 72,030 properties in default, 15,946 are in real-estate owned status – meaning ownership is now transferred back to the lender. The average sales price for a LA home in foreclosure is $400,000. “The LA ordinance is an example where lenders, servicers now have one more piece of paper to push around in what is becoming a compliance nightmare,” says Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

“The city is essentially asking firms to take responsibly for homes that they technically don’t own yet.” The passage of a California state law last year, Senate Bill 1137, slows down the foreclosure process by adding an additional 30 day window to satisfy “due diligence requirements” and “in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” One servicer said Monday that the additional time means the risk of damage to the property will increase as borrowers grow more disenchanted with the status of the property.

Businesses hire workers because of tax breaks?

According to the Treasury Department, businesses have added 4.5 million workers under a new program that provides tax breaks for hiring unemployed workers. The bill, which was passed in March, exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2% social Security payroll tax through December. Employers get an additional $1,000 credit if new workers stay on the job a full year.

The administration released the report, which looked at the period from February through mid-May, in hopes, it says, of raising awareness about the credit – and of course not because it sounds good before November’s congressional election. Unsurprisingly, the report does not estimate how many of those jobs would have been added without the tax break, since businesses run by anyone who has mastered 2nd grade math are not going to hire people just to get a fraction of their wages back through a tax break. Alan Krueger, the Treasury Department’s chief economist, says, “”I would be cautious about attributing [additional hiring] to the HIRE Act.” Indeed.

DSNews.com – Mortgage firms close

During the first half of 2010, the number of mortgage-related firms to close or fail jumped by more than a quarter from the same time last year, according to industry data released week. The increase was driven by financial institution failures as the number of non-bank lenders to close has dwindled. Based on information tracked by the online industry resource Mortgage.com, the period between January 1 and June 30 of this year saw 109 mortgage-related failures and closings. The figure represents a 27% increase from the 86 closings reported during the first half of 2009.

Bank and credit union failures have both doubled when compared to the first six months of last year, with the number of banks to go under tallying 86 over the last two quarters and credit union collapses at 11. Non-bank closings, on the other hand, fell by more than two-thirds during the same period to 12. An analysis by MortgageDaily.com of bank failures and regulatory orders suggests this year’s bank failures will end up between 175 and 200. FDIC Chairman Sheila Barr has indicated that bank closings will likely pick up pace and peak during the latter half of this year.

NFIB – Business optimism down

The National Federal of Independent Businesses’ (NFIB) says that the small business optimism index fell by 3.2 points in June, dipping to 89, after posting several months of gains. The report is based on 805 responses to a random survey of NFIB members. “70% of the decline this month resulted from a deterioration in the outlook for business conditions and real sales gains,” the NFIB survey concluded. The survey showed that only 10% of firms plan new hiring, down 4 points from May, and about 8% of firms plan to reduce their workforce, up one point from the previous month. Small businesses account for a major share of jobs in the U.S. economy. The number of business owners planning to make capital expenditures over the next few months fell a point to 19%, 3 points above the 35-year record low, the NFIB said. “This indicates that the ‘inventory’ stimulus in this cycle is likely fading,” the report concluded.

Now for our real estate education section…

When to Seek Outside Investors

Novice short sale investors typically rely upon traditional mortgage products to fund their short sales; combined with personal loans, hard money lending and savings this strategy is more than sufficient to build a strong portfolio. However, there comes a time when outside investors may be the wisest choice. Learn when to seek outside investors and when to go it alone with these quick tips:

1. Seek outside investors when your growth strategy requires capital beyond your ability to self-fund. Sounds simple enough but a surprising number of short sale investors continue to struggle with traditional mortgage loans and slow self-funding mechanisms rather than turn to outside investors. This is primarily due to the following fallacies:

The belief that finding investors is hard work and will take longer than planned. The reality is a large number of people are searching for ways to obtain better than average returns without the headache and hassle of timing the market or dealing directly with real estate. Show them the money and you will be surprised at the number of investors able and willing to fund your next purchase.

The belief that you will be at the beck and call of the investor. While it’s only natural that an investor take an active interest in how their funds are performing, the reality is they do not want to be bothered with the minutia and mundane tasks involved in the investment. Most investors simply want a return with the least amount of time and effort required. The last thing they want to do is micro-manage every detail of your daily life.

2. Seek outside investors when the level of input equals or exceeds the anticipated output. What this means is that the deal needs to be big enough to attract the interest of an investor that is seeking higher than average rates of return.

3. Seek outside investors when the investors experience or contacts can accelerate your growth. This is the essence of “smart money” and a critical component to growing from a small-time investor to a major player. In fact, this is such an essential criteria that many novice investors deliberately seek out deals just to attract the interest of highly qualified investors with good contacts or experience. Remember, “dumb money” only brings money to the table whereas “smart money” bring experience, contacts and otherwise fills a much needed void in your long term investment strategy.

Think of short sale investing like any other small business start-up; who you bring to the management team and/or board of directors is just as important (perhaps even more important) than the actual product or service. With the right people, nearly any endeavor can become a raging success. To learn more about finding and working with outside investors as well as other information you can use to grow your real estate portfolio, attend one of our free webinars.

See you at the top!

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

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

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

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

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

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

Foreclosures to persist

admin — Mon, 12 Jul 2010 19:20:00 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

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**********************************************************
Foreclosures to persist

According to authors at the Federal Reserve Bank of Cleveland, the nation’s high foreclosure rate is likely to persist. The Fed article looks at the changes in foreclosure and unemployment rates across states, noting the differences in the timing of the movements. The conjecture that the high foreclosure rate will persist is based in part on the observation that states that experienced boom-bust housing cycles in the past (Texas, Oklahoma, Massachusetts and California) had elevated foreclosure starts for years after the peak in foreclosure starts and inventory. These previous boom-bust cycles “were small in comparison to the current cycle,” the article said. While the recession has left deep scars in the housing and labor markets — with the unemployment rate doubling and the foreclosure start rate roughly tripling — the timing of the movements differs over the cycle, according to the abstract, written by Timothy Dunne, a vice president at the Federal Reserve Bank of Cleveland, and Kyle Fee, a research assistant.

Credit scores down

According to FICO Inc., 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. With scores like that it’s unlikely they’ll be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. FICO’s latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO’s 300-to-850 scale weren’t as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis.

Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com. On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9 percent, which is notably above the historical average of 13 percent, though down from 18.7 percent in April 2008 before the market meltdown. There’s also been a notable shift in the important range of people with moderate credit, those with scores between 650 and 699. The new data shows that this group comprised 11.9 percent of scores. This is down only marginally from 12 percent in 2008, but reflects a drop of roughly 5.3 million people from its historical average of 15 percent.

Olick – NYT caught with its pants down

The other way we posted an article claiming the rich were the worst defaulters. Diana Olick says it ain’t so: “The data show that while one in 12 mortgages under a million dollars are delinquent, “more than one in seven homeowners with loans in excess of a million dollars are seriously delinquent.” Shall I wax on about how the rich care less about their credit ratings than the not-so-rich, or how many of these luxury homes are second homes that the owners don’t really need, or how rich folks don’t give a hoot about their communities and see these homes purely for their investment value?

Nah, I’d rather do a little math. Here’s my problem with the thesis of this article: A little less than 14 percent of the loans outstanding in the U.S. are “jumbo,” meaning over $417,000, according to government statistics (FHFA). The number of loans that are over $1m are even less than that. So when we’re talking about rates of default, you have to factor in the share of the market that you’re looking at and the bottom line numbers. Yes, the rate is higher, but it’s a far smaller share of borrowers, and that makes the numbers far more volatile. Just 1.7 percent of all home sales in May were of homes over one million dollars. That just gives you an idea of how small that marketplace is. Yes, we can always find the odd celebrity that squandered away all their millions and defaulted on the loan, but I would take a big step back before I come to the conclusion that the ‘rich: are more likely to default on a loan than the “unrich.’”

CMBS Delinquency Rate Exceeds 8%

The US commercial mortgage-backed security (CMBS) delinquency rate ticked up 17 basis points to 8.14% in June, according to Fitch Ratings. It marked the smallest increase in 11 months, and the fifth straight month of loan resolutions in excess of $1bn. Fitch noted $1.5bn of loans leaving the index helped to offset the $2bn of new delinquencies, bringing the total net increase in delinquencies to $512m of loans. Newly delinquent loans in June bore smaller average balances of $10.1m than the index’s overall $13.1m average. No loans with a balance in excess of $100m became newly delinquent in June. “While delinquencies slowed for the month, this trend is not expected to continue,” said Managing Director Mary MacNeill. “The number of distressed properties continues to grow, and if borrowers are unable to access capital for leasing costs or are unable to restructure their loans to a leverage level commensurate with sustainable property values, they may stop subsidizing debt service payments.” Loans continue to transfer to special servicing at an elevated rate, with a net increase of $4.2bn in performing specially serviced loans in June. In total, $23bn of loans in special servicing remain less than 60 days delinquent but face an increased risk of default. The multifamily delinquency rate rose to 13.82%, from 13.65% in May, while the office delinquency rate grew to 4.84% from 4.59%. The retail delinquency rate grew 16 basis points to 6.19% from 6.03% in May, while the industrial delinquency rate grew 41 basis points to 5.48%, from 5.07% in May. The rate of delinquency in hotel loans grew a single basis point to 18.62%.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Are you putting the power of social media marketing to work for your real estate business? If not now-when? If you have been sitting on the sidelines waiting for the perfect time to take the plunge, here are a few stats and facts that should provide all the inspiration required:

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.

The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.

Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.

Over half of YouTube users are under 20 years of age.

Take Away’s…

1. Make mobile a priority when using social media websites. Mobile users on both Facebook and Twitter are more active, linked to more people and increasingly interact exclusively via applications outside of the web interface.

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

5. Put an “I” in social media marketing. Effective marketing is an extension of your professional “voice” but that doesn’t meant it must take a lot of time and effort. Learn how to put the power of social media marketing to work for your real estate endeavors by joining one of our webinars or other informational sessions.

See you at the top!

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

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

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

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

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

Home delinquency rate increases

admin — Wed, 07 Jul 2010 14:29:08 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

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IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

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*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

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It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect you to obtain the free DVD and tune in to the encore Wednesday at 8:30 PM ET, 5:30 PM PST:

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Home delinquency rate increases

According to a report by Lender Processing Services, Inc. (LPS), there’s a 2.3% month-over-month increase in the nation’s home loan delinquency rate to 9.2% in May 2010, and early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010. According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO. The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in “shadow” foreclosure inventory.

After a two-month decline, deterioration ratios increased, with 2.5 loans rolling to a “worse” status for every one that has improved. The number of delinquent loans that “cured” to a current status declined for every stage of delinquency, except in the “greater than six months delinquent” category. This improvement was likely the result of trial modifications made through the Home Affordable Modification Program (HAMP) that transitioned into permanent status. LPS manages the nation’s leading repository of loan-level residential mortgage data and performance information from nearly 40 million loans across the spectrum of credit products. Diana Olick says, “Oh good, so the HAMP program is helping “cure” those 6 month+ delinquencies. No, they’re just delaying them yet again, since we know that the re-default rate on HAMP is only rising. Forget cure and think remission.”

MBA – Refinances increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 2, 2010 increased 6.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6.5% compared with the previous week. The Refinance Index increased 9.2% from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0% from one week earlier. The Purchase Index has decreased eight of the last nine weeks. The unadjusted Purchase Index decreased 2.3% compared with the previous week and was 34.7% lower than the same week one year ago. “Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30% compared to April, the last month in which buyers were eligible for the tax credit.” The four week moving average for the seasonally adjusted Market Index is up 6.4%. The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 8.3% for the Refinance Index. The refinance share of mortgage activity increased to 78.7% of total applications from 76.8% the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4% from 4.7% of total applications from the previous week.

Credit card delinquencies down

The American Bankers Association (ABA) says the number of consumers behind on their credit card payments fell to an eight-year low in the first quarter of 2010, and delinquencies across a wide-range of consumer debt categories have also fallen. High unemployment and plummeting home values during the financial meltdown appear to have spurred consumers to shore up their finances and banks to limit their lending, resulting in fewer Americans being late with payments, the industry group said.

About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year — the first time since 2002 that the rate has fallen below 4%, the ABA said Wednesday. And ABA’s composite ratio, which tracks delinquencies across eight key categories, fell to 2.98% from 3.19% the previous quarter — a sign of modest improvement in the U.S. economy, the group said. “Consumers are doing a much better job managing their finances, building their savings and spending and borrowing less,” ABA Chief Economist James Chessen said. The Commerce Department’s most recent reports on personal spending and income also showed that consumers stashed a higher portion of their earnings into savings in May than they did a month earlier.

Shopping center vacancies rise

According to research firm Reis Inc, the vacancy rate in U.S. strip centers during the second quarter rose 0.10 percentage point from the first quarter to 10.9%, slightly below the 11% in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday. Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space. That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis.

Asking rents fell 0.3% from the first quarter to $19.07 per square foot, the lowest since the end of 2006. Factoring in months of free rent and other perks landlords offered to attract and retain tenants, effective rent fell 0.5% to $16.58 per square foot, the lowest in nearly five years. Reis said that roughly half of its clients plan to take advantage of the cheap rents in their expansion plans. At large U.S. malls, the vacancy rate rose 0.10 percentage point from the first quarter to 9%, the highest since the first quarter 2000, when Reis began tracking regional malls. Asking rent fell 0.2% to $38.72 per square foot, marking the seventh straight quarter of decline. Asking rent was the lowest in more than four years.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.
The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.
Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.
Over half of YouTube users are under 20 years of age.

Take Away’s…

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

See you at the top!

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin July 2, 2010

admin — Fri, 02 Jul 2010 13:59:12 +0000

Forward this e-mail to your friends!

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http://www.smartrealestatenews.com/

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

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

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

IT’s BACK: NO FLIP RICHES REOPENS THIS SATURDAY!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect

you to obtain the free DVD and tune in to the encore

Saturday at 3:00 PM ET, NOON PST:

https://www2.gotomeeting.com/register/159690035

**********************************************************
Pending home sales ‘fell off a cliff’

It was expected, but not this bad. Experts did suggest that home sales would drop once the homebuyer tax credit lapsed at the end of April, but no one expected it to be close to a shocking decrease. According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It’s even off 15.9% from a year ago when the nation was barely emerging from the recession. “The pending home sales report is a disaster,” said Mike Larson, a real estate analyst for Weiss Research. “Sales fell off a cliff after the tax credit expired. It’s the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001.”

Lawrence Yun, NAR’s chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up. Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when — or if — the job market will ever bounce back. “We’re not creating jobs,” said Larson. “The housing problems now are being driven by broad economic problems.

US employment figures continue to threaten

Agreed, getting the economy back on track does mean a lot more than stimulus packages. Is the President listening? The patchy US economic recovery faces a crucial litmus test Friday when fresh unemployment figures are released. Most analysts say the ranks of jobless Americans are likely to have swollen to more than 15 million, pushing the unemployment rate from 9.7 percent to 9.8 percent. With the Congressional elections due in November, that does not sound good for the President. Unemployment is a crucial issue with voters and for the markets, as well. With fears of a double dip recession in recent weeks looming, the Dow Jones Industrial Average lost more than ten percent of its value, over fears about the fate of the US economy.

Goldman predicts that payrolls shrunk by 100,000 last month, the first negative figure this year. Faced with an uncertain outlook and poor access to credit, US firms have been reluctant to rehire workers, as the private sector created just 41,000 jobs in May. Congress is currently locked in a bitter debate over extending unemployment insurance for over one million workers and is likely to balk at a wider spending package. Heidi Shierholz of the Economic Policy Institute, a Washington-based think tank, said “The private sector is not yet poised to takeover and sustain a robust recovery.” Last week, the Labor Department reported that new jobless claims rose to 472,000, an increase of 13,000 from the week before. But Washington is now more focused on elections in which the national debt is also likely to feature prominently, and that may mean that some 1.7 million unemployed and their troubles will have to be ignored.

Home Buyers Get Tax Credit Closing and Flood Insurance Extensions

The National Association of Realtors® worked closely with congressional leaders on both sides of the aisle toward the timely passage of two bills to extend the home buyer tax credit closing deadline and reauthorize the National Flood Insurance Program. Both bills had cleared the House earlier and were passed by the Senate last night, heading for the President’s signature. The tax credit closing deadline and the NFIP reauthorization were extended to September 30. Extending the tax credit closing and flood insurance deadlines will help provide additional stability to real estate markets across the nation, NAR said. The passage of H.R. 5623, the Homebuyer Assistance and Improvement Act, applies the homebuyer tax credit closing deadline extension only to homebuyers who have ratified contracts in place as of April 30, 2010, but could not close before June 30. There will be no gap between June 30 and the date the president signs the bill into law. Senate passage of the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), reauthorizes extension the NFIP until September 30, allowing currently stalled transactions to move forward. The bill is retroactive and covers the lapsed period from June 1, 2010, to the date of enactment of the extension. Any new policy applications or renewals that were signed and submitted during the lapsed period will be effective from the date of application. In the case of waiting periods, the waiting period will start from the date of application.

Diana Olick – Housing’s Powerful Lobby Surges Ahead

“Last week, at the monthly lockup for the existing home sales report, the Realtors’ chief economist, Lawrence Yun, told reporters that if the closing date wasn’t extended, 180,000 home buyers who signed contracts by April 30th, would lose the tax credit due to delays in closing. He blamed these delays on the tough mortgage market, new appraisal rules and the still-complicated short sale process (when a home is sold for less than the value of the loan). So Congress tried to attach a three month extension on the closing date to other legislation last week, but those bills never passed. But the powerful troika of Realtors, builders and mortgage bankers pushed full speed ahead, rallying the troops. So, lo and behold, before midnight last night, a stand-alone measure made its way through the Senate, as the House had passed it the day before.

The Realtors alone are one of the most powerful lobbying forces in Washington, number one in spending in the real estate industry and 13th out of all industry lobbyists. Add the National Association of Home Builders and the Mortgage Bankers Association, and you get a force that spent $5 million in just the first quarter of this year and is on pace to break last years $27 million tab. Many Realtors also moonlight as state legislators, city council members, mayors and school board presidents; if you think members of Congress don’t understand that, think again. Housing represents a lot of jobs, plain and simple, and now is a critical time for the industry. The home buyer tax credit and its extension and its closing extension were all the result of this powerful lobby. Now, as Congress looks forward to tackling mortgage behemoths Fannie Mae and Freddie Mac, you can bet these three associations will be buying their lobbyists new shoes for walking the hill. Government may be trying to extricate itself from the business of housing subsidies, but the industry has no such plan. Get ready for a surge in K Street spending, as housing builds itself back from the ground up.”

Swinging Short Sale Discounts

Short sale discounts from regular retail home prices are varying widely from market to market in the US, according to RealtyTrac, an online foreclosure marketplace. This week, RealtyTrac released a report that foreclosure sales took up 31% of all home sales in the US through Q110. According to the report, there were 88,000 pre-foreclosure sales, often short sales, in Q110, for an average discount from retail home prices of 14.7%. By comparison, REO discounts in the US averaged 34%. But while some are seeing large short sale deals above the 14.7%, others are not. Bill Gassett, a broker with RE/MAX Executive Realty in Hopkinton, Mass., said he’s seeing slightly different numbers, suggesting that short sale discounts vary differently even within states. “There are amazing discounts right now for buyers in the Bluffton/Hilton Head Island market if they are willing to pursue a short sale,” said Tisha Chafer, a real estate agent with Century 21 Southern Lifestyle Properties in Bluffton, S.C. Bluffton is on the very southern-most tip of South Carolina. “If you are patient and can handle dealing with the time it takes for the bank to process the file then you will be rewarded at the end with a property that you were able to purchase at a great price,” she added.

Walter Mueller, a broker at Exit Realty Charleston Group said the listing price is set differently depending on which lender a broker is working for. Some want the listing price set at market value. Others want it listed at the amount of the mortgage balance, while others still have no preference. But Mueller said buyers are becoming more aware of the opportunities short sales and REO provide.

Fannie’s Appraisal Policies Updated

Fannie Mae updated its selling guide to provide additional appraisal-related guidance. The new policy addresses issues identified with appraisals after reviewing many mortgage loan files. Fannie will now require interior photographs of specific rooms and areas of the house in the appraisal report. The GSE provided guidance on when an appraisal is considered deficient and when a lender can make changes to the opinion of market value based on underwriter judgment, automated valuation models or other methodology. The policy changes take effect for all mortgage loan applications dated on or after Sept. 1, 2010. Additionally, the GSE provided guidance on appraisers’ use of foreclosures, short sales and builder sales as comparable. Fannie clarified that appraisers must be selected based on knowledge of specific geographical markets, access to appropriate data and sufficient experience. Specifically, Fannie said, a qualified employee of the lender may contact the appraiser to provide additional information or explanation about the basis for a valuation.

Now for our real estate education section…

Friday File – 15 Minute Resolution

Are you making the best use of available technology for your commercial real estate endeavors? For this week’s 15 minute resolution, several tools of the trade will be presented including a few novel ways to make the most of each. Pick your favorites and take 15 minutes to sign-up…in no time at all you can be reaping the rewards of your extra effort.

CoStar: Although a subscription is required, this is considered one of the most largest independent commercial real estate sites available. A “must have” for those seeking to break into the retail, office, manufacturing or other commercial real estate venture.

www.costar.com

LoopNet: An easy to use site dedicated to commercial properties, LoopNet has recently upgraded many of their tools including robust property research records, making it a strong competitor to CoStar.

www.loopnet.com

Also check out the LoopNet Commercial Real Estate Search iTunes application; it’s simple to use and allows you to do it all from the convenience of your phone.

http://itunes.apple.com/us/app/loopnet-commercial-real-estate/id349561448?mt=8

Finally, check out the CRE Online list of real estate investment clubs in your area. Not only is it a great way to network and learn from others but it’s also potentially profitable should you qualify to join.

http://www.creonline.com/clubs.htm

See you at the top!

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

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

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

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

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

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

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

admin — Wed, 30 Jun 2010 20:07:18 +0000

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Freddie Mac Short Sales Up 600% from 2 Years Ago

Freddie Mac CEO Ed Haldeman said the company has seen the number of its short sales increase 600% from 2008 as lenders look to dampen the impact of foreclosures hitting the marketplace. In a statement put out this week, Haldeman said Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed. That number could increase as the Home Affordable Foreclosure Alternatives (HAFA) program takes hold. The Treasury Department launched it in April to provide cash incentives to servicers for conducting short sales and deeds-in-lieu of foreclosure.

RealtyTrac, an online foreclosure marketplace, is even preparing a short sale report to go long with its usual foreclosure report every month. It won’t be available until the end of 2010 however. “Foreclosure alternatives like short sales and deeds-in-lieu help borrowers to avoid the stigma of foreclosure, shorten the waiting period before they can buy a new home, and may inflict less damage on their credit reports,” Haldeman said. While short sales still add to the housing supply and can put pressure on local home values, they often avoid the lack of maintenance or damage foreclosed homes often display. Since the middle of 2008, Freddie Mac reported total losses of $84.4bn, according to its quarterly reports. The company’s plight has forced a directive from the Federal Housing Finance Agency (FHFA), its conservator, to de-list its and Fannie Mae’s common stock from the New York Stock Exchange.

Foreclosures sell at 30% discount

Foreclosures accounted for a third of all sales — and sold at a nearly 30% discount — during the first three months of 2010. According to a new report from RealtyTrac, the marketer of foreclosed properties, 31% of all sales were foreclosures. And homebuyers purchasing those properties paid a whopping 27% less, on average, compared to sales of non-distressed homes. These foreclosure sales include properties sold in short sales or after a bank repossession, known as REOs in industry terms. It does not include transfers from borrowers to banks, as in a sheriff’s auction. Foreclosures have become a dominant feature of many real estate markets, finding willing buyers among young bargain hunters and savvy housing market veterans. Foreclosure sales were highest, expectedly in the bubble states of Nevada, Massachusetts, Rhode Island and Florida. Lenders have been trying to manage their inventories of foreclosed homes to prevent them from flooding the market and dragging down prices. The impact of foreclosure sales on the home sales market can have a depreciating effect on the entire inventory out there.

Wall Street reform bill reformed

Lawmakers came up with an alternative plan to save the Wall Street reform bill falling flat in the Senate. After key moderate Republicans who had supported earlier versions of reforms threatened opposition, Democrats leading negotiations in the Senate and House scrapped an effort to pay for reforms by taxing big banks and hedge funds to the tune of $19 billion. Instead, they agreed to pay for Wall Street reform by ending the $700 billion federal bailout program called the Troubled Asset Relief Program (TARP) immediately upon final passage of the bill. Lawmakers would redirect the stream of bailout repayments as well as untapped dollars to offset shortfalls created by the Wall Street reform bill, which spends money by creating new agencies. The move would offset $11 billion in spending. Republicans involved in financial reform talks balked and tried to get Democrats to cut the federal stimulus program to pay for Wall Street reforms. “This ranks right up there at the top of the list for pure deception for treating the American taxpayer in an inappropriate way,” said Sen. Judd Gregg, R-N.H. The full House is expected to take up the bill Wednesday.

Mortgage Refinance Applications Increase as Rates Continue to Drop in Latest MBA Weekly

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 25, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8.3 percent compared with the previous week. The Refinance Index increased 12.6 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 22, 2009.

The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier. The unadjusted Purchase Index decreased 3.8 percent compared with the previous week and was 36.0 percent lower than the same week one year ago. “Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey. Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows.”

Diana Olick – Is Home Ownership an American Right?

“Maybe the government doesn’t want to deal with Fannie Mae and Freddie Mac. just yet, but that doesn’t mean we should all just ignore the fact that these two ticking time bombs continue to support more than half of the mortgages in this country and the bulk of new originations. Is home ownership an American right? The government appears to say yes. In my piece on CNBC today, I relate through the history of just how we got to this ownership society…the politics, policies and politicians behind home ownership. But here I’d like to take the conversation forward. We know how we got here, and we know what happened when home ownership went completely haywire. Now the politicians are calling for “responsible” home ownership, and yet government continues to pour billions of dollars into programs and incentives that push more borrowers into homes that may not be the best fit. Today the S&P Case Shiller Home Price Index showed an improvement in home prices over the same period last year. California is leading the way in recovery.

But in an interview with David Blitzer of S&P, you would have thought prices fell through the floor again. Blitzer’s claim is that prices should be recovering far better and faster than they are. He cites the disappointing fact that nine of the top twenty cities hit new price lows at some point since the beginning of this year. And then there’s the concern that the gains are artificially boosted by the home buyer tax credit which expired April 30th.

Which all brings me back to my original thesis: Government gets involved in the housing market, the housing market surges and then that same housing market inevitably pays the price when government pulls out. This is not to say that there aren’t some good, long-term programs out there to spur home ownership for deserving, low-income buyers, but the idea that the government was somehow going to jump start home buying with a tax credit, and then that car would just keep on driving, really couldn’t work in this market. Government, yes, has a responsibility to save the banking system from a total meltdown due to bad mortgage debt, but the future of housing, of home ownership, needs to reinvent itself without artificial stimuli. Americans have to get back to basics, and by basics I mean affordability, responsibility, and plain common sense. Government is not famous for any of those.”

Now for our real estate education section…

Facts, Figures & Other Tidbits That Make a Real Difference

Admit it. Most people don’t have a head for facts, figures and statistics. Except for a few special people that seem to thrive on data and obscure calculations, just the mere mention of facts and figures tends to cause people to start shifting in their seat and looking for the nearest exit. This is NOT one of those situations. Today we are going to cover a few facts and figures that make a very real difference in your real estate and investing career. Things you can put to work and take straight to the bank. Try these out and see for yourself.

1. Establish a ratio. Not just any ratio…a ratio that has been proven effective. Burn this number into your brain and use it as a foundation for growth and maintenance. Research conducted by top agents and businessmen indicated a 34:1 ratio to successfully close one deal. Notice, these are successful agents so novice investors may need to use a higher ratio when first starting however, nothing says that each contact must be time consuming or made in person. Learn how to use social media to dramatically reduce the time, effort and expense to meet this criteria. Bottom line: make contact with an average of 34 buyers/sellers for every deal you close….but worker smarter not harder by using social media.

2. Increase your odds. One of the biggest mistakes most people make when investing in real estate is to think the little things don’t matter. They do. Take the above ratio as an example. It’s tempting to believe that making contact with only 25 people instead of 34 is sufficient. Don’t believe it. Do the math and you will soon realize the impact on your business at the end of the year is likely to be a full 30 percent less than the person who maintained the 34:1 ratio instead! Take away…to grow your business you must not just meet the standard ratio but rather exceed it. Instead of retaining the 34:1 ratio you might need to adopt a 45:1 ratio but remember, by using social media it is possible to work smarter rather than harder while growing your business and profits.

3. Focus on one skill and delegate the rest. Veteran real estate professionals have learned the fine art of delegation but there is one skill that you should NEVER delegate…do you know what it is? Not only is it one of the most crucial skills to business success but it’s where the money is. In fact, it’s probably not an overstatement to say this is the single most important part of your business…yet the majority of real estate professionals are unable to identify this skill when asked. Even worse, many actually delegate this to others…a practice akin to handing over their business.

Have you guess yet? Plan and simple…lead generation. Consider this, real estate entails several core competencies including lead generation, presentations to buyers/sellers, marketing, negotiation, contracts, coordination of closing etc…nearly all of these are technical considerations that can be clearly defined and cost estimated to a narrow margin because they are predictable in terms of time and cost. Lead generation is different. Research has shown that top agents are able to convert nearly 80 percent of leads into successful transactions…novice agents and outside vendors average as little as 10 to 20 percent. Why pay more for less? Remember, the secret to success is to be in front of a qualified prospect when they are ready to buy – not when you are ready to sell. Learn how to use social media marketing to meet your objectives and find ready buyers by joining one of our free webinars.

See you at the top!

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

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

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

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About the author:

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

Short Sales Riches Blog » foreclosures

New home sales will be up?

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

Come learn from Nathan J.’s mentor who will do all your deals for you…

********************************************************** New home sales will be up?

More magic numbers from the WH

Freddie’s mortgage and issuance $179bn in H110

Soak the rich

DSNews.com – GSEs next?

Now for our real estate education section…

Bills, Bills, Bills – How Reform is Changing the Face of Real Estate

Existing homes sales fall

Smart Real Estate News & Commentary by Chris McLaughlin July 23, 2010

********************************************************** Existing homes sales fall

Most Americans think things will get worse

Inventories up, sales down

Bush did it … another perspective

Olick – don’t be fooled

Now for our real estate education section…

HAMP still a failure

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

Come learn from Nathan J.’s mentor who will do all your deals for you…

********************************************************** HAMP still a failure

Unemployment bill passes

Loan demand up

Michael Boskin – Obama’s economic fish stories

Wall Street Journal – reasons for a flat housing market

Tenant Act extended to 2014

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

Housing starts down

Smart Real Estate News & Commentary by Chris McLaughlin July 20, 2010

********************************************************** Housing starts down

Consumers will pay for new rules

Olick – Jumbo loans are back

Home Builder Confidence Plummets

Now for our real estate education section…

Mortgage Overhaul & What is Means for You

Diana Olick – Home prices being slashed, more coming?

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

Fix A Flip Re Opens … If you want your deals funded beyond 1 day,

Diana Olick – Home prices being slashed, more coming?

Foreclosures fall as bank repossessions quicken

Business vs Obama

Lost decade coming?

1 in 200 mortgages may be fraudulent?

Jobless claims and wholesale prices drop

Now for our real estate education section…

Becoming an Angel Investor

Wells Fargo leaves a gap in financing

Smart Real Estate News & Commentary by Chris McLaughlin July 13, 2010

Going … Going … GONE!

The LA Investor Summit is SOLD OUT!

If you would like to put your name on our waiting list please do so ASAP:

********************************************************** Wells Fargo leaves a gap in financing

Small business loans drying up

More mortgage bureaucracy in LA

Businesses hire workers because of tax breaks?

DSNews.com – Mortgage firms close

NFIB – Business optimism down

Now for our real estate education section…

When to Seek Outside Investors

Foreclosures to persist

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

********************************************************** Foreclosures to persist

Credit scores down

Olick – NYT caught with its pants down

CMBS Delinquency Rate Exceeds 8%

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Home delinquency rate increases

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

It’s time to get excited…

********************************************************** Home delinquency rate increases

MBA – Refinances increase

Credit card delinquencies down

Shopping center vacancies rise

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

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New home sales will be up?

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Existing homes sales fall

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HAMP still a failure

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Housing starts down

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Wells Fargo leaves a gap in financing

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Foreclosures to persist

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Home delinquency rate increases

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Pending home sales ‘fell off a cliff’

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Freddie Mac Short Sales Up 600% from 2 Years Ago