freddie mac

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The FINAL Short Sale Sensei webinar:

She was one of them.  She attended their office parties.

She’s sat down to dinner beside them.  Socialized and went

to sporting events with them.

 

If there’s a tactic or strategy the bank’s kept hidden from

investors, she knows it.  She’s the Short Sale Sensei. 

 

And she’s ready to spill the beans in a FINAL ENCORE this coming

Saturday, at 3 PM ET, NOON PST, on a fr-ee webinar, right here:

https://www1.gotomeeting.com/register/261917249

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

Pending home sales drop 7.6%

According to the National Association of Realtors (NAR), its Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, dropped 7.6% to 90.4 from a reading of 97.8 in December, and is 12.3% higher than January 2009 when it was 80.5. NAR said the harsh winter hampered home sales. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR chief economist Lawrence Yun. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the US, hampered shopping activity in February.” Analysts say extension of tax credit is doing little to boost pending home sales, and given that the Federal Reserve will end purchase of mortgage backed securities this month, the housing recovery is going to take time. “When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought,” said Mark Vitner, an economist at Wells Fargo Securities. “We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.” On a regional basis, the pending home sales index dropped 8.7% to 71.3 in the Northeast, dropped 13.2% to 102.9 in the West, dropped 8.9% to 81.2 in the Midwest, and dropped 2.1% to 98.1 in the South.

Construction of multifamily units to rise in 2010

Green Street Advisors, a research firm, says real estate investment trusts are likely to begin construction of multifamily units worth about $1 billion in 2010; this is a significant increase over the $100 million of development starts in 2009. This comes as a bit of surprise since apartment vacancy is at a record high and the unemployment rate is not expected to come down any time soon. Analysts point out that construction cycles of multifamily units run into a few years and companies have to start today and be ready when the market turns around. Companies are betting that limited supply of new units coupled with an improving economy will help the sector in another couple of years. After 2012 until 2015, “apartment REITs may generate the best property net operating income growth that they’ve seen in a very long time, maybe ever,” said Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods. While the sector has significant risks, analysts believe things are getting better. “There’s an element of risk,” said Andrew McCulloch, an analyst with Green Street. “But if you were to go back a year, the outlook is much more clear today. Their confidence level in that eventual recovery is much higher.”

Analysts predict better times for commercial mortgage

The commercial mortgage market, which hit the lowest level last year since 2003, is likely to do better in 2010. Analytics firm Trepp, which monitors collateral performance on related commercial mortgage backed securities (CMBS), says the amount of commercial loans at least 30-days delinquent rose to 6.72% in February; this is the smallest increase in six months. In addition, the value of commercial real estate loans that collateralize CMBS increased to 76.7% of the original loan price through January 2010, up from 75.9% in December, according to Debtx, a research firm. Cushman & Wakefield, a commercial real estate (CRE) services provider, has predicted a 30% increase in global CRE investments in 2010. Analysts believe mortgages are the best option now for both high yields and safety, and will attract the attention of investors in 2010. David Hutchings, head of research at Cushman & Wakefield says investors aren’t shying away from the risk in CMBS. “While challenges clearly remain and a double-dip cannot be ruled out, a higher risk appetite among financiers and investors will continue to fire the market,” Hutchings said.

Factory orders rise 1.7%

According to the Commerce Department, new orders for goods manufactured in U.S. factories rose 1.7% in January; this is the ninth rise in the last 10 months. Orders for nondurable goods, including food, paper products, petroleum and coal products, rose by 0.9% in January while orders for durable goods such as computers, cars and machinery, rose by 2.6% in January. Manufacturers have been battered by the financial crisis and the recession hit demand for durable goods in the last couple of years. Orders for heavy machinery fell 9.2% in January after posting a 7.3% increase in December. “The culprit here is turbines,” said Michael Feroli, an economist at JPMorgan Chase. “You smooth it out and things weren’t as robust as they seemed in December, but maybe not as dire as they seemed in January.” The decline in orders for heavy machinery has not dampened economists’ outlook. The declines in orders of heavy equipment “don’t change our opinion that capital spending is recovering,” said Aaron Smith, an economist at Moody’s Economy.com. “There’s always a tendency for the turbines and generator category to be weak in the first month of the quarter and stronger in the last month and that trend is particularly strong for the first part of the year.”

Payrolls fall less than expected in February

The jobless rate remained unchanged at 9.7% in February compared to January. The Labor Department said employers cut 36,000 jobs in February; analysts had expected at least 50,000 jobs to be cut in February. On a sectoral basis, professional and business services added 24,000 jobs in February; manufacturers added 1,000, construction companies eliminated 64,000 jobs, financial sector cut 10,000, and the government cut 18,000 jobs. The Labor Department said it is difficult to measure the impact of winter storms on employment. “Nor do we know how new hiring or separations were affected by the weather. For those reasons, we cannot say how much February’s payroll employment was affected by the severe weather,” said Bureau of Labor Statistics Commissioner Keith Hall. Economists say the less than expected job cuts are an indicator that unemployment is easing. “We are almost there, the point where we are consistently adding jobs,” said Ken Mayland, president of ClearView Economics. “The economy is making incremental but broad-based gains towards improvement.” Since the start of recession, 8.36 million jobs have been lost and unemployment remains the single biggest challenge for President Obama.

Now on to our real estate investing educational section…

Friday File – 15 Minute Resolution

Today’s 15 minute resolution is to learn the basics about using Twitter.  Think you don’t need to set up a Twitter account? Better think again. Despite the somewhat frivolous sounding name, Tweeting is becoming big business as heavy-weight real estate investors like Guy Kawasaki and even the Donald (as in Trump) sign-on.

A few of the most frequently cited reasons for joining Twitter include:

1. Sell products or services…sounds like a good reason for real estate investors to join right there!

2. Stay in immediate contact with a large number of people…ditto!

3. Monitor your reputation in real time. Find out what people are saying and take steps to enhance your professional reputation along the way.

4. SEARCH – Learn to use this powerful tool as soon as possible. Visit http://search.twitter.com/ 

5. ADVANCED TWITTER SEARCH – Serious tools for serious investors. Localize your search by area, specific people, places or other criteria…real time information.

6. Obtain data on your own Tweets with the use of social media analytics like www.objectivemarketer.com.

So, now that you know just a few of the reasons why Twitter is so important, it’s time to put your 15 minute resolution into effect. This week take time to create a Twitter account if you don’t have one (it’s simple…just visit www.twitter.com) or pimp out your Twitter page if you are still making do with a plain vanilla template.

1. Visit www.twitterbackgroundsgallery.com to find an easy to use Twitter template or create your own. Be sure to make your contact information highly visible but keep it simple, clean and concise.

2. Use the url field! Seriously folks, a blue background is bad enough but make the most of all the marketing potential by populating the existing fields.

3. Have it done for you. Not a designer by nature? No need to worry…it’s easy to have a complete Twitter account fully set-up and waiting for you.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid 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
–

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

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

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

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

Short Sale Automation … The Paperless, Easy Solution.  Join us

tomorrow (Tuesday) at 3 PM ET, NOON PST as we unveil a new

way to manage what used to be chaos:

 https://www2.gotomeeting.com/register/231942947

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

Home prices fall

Home prices fell, but just 2.5% during the last three month of 2009 compared with the fourth quarter of 2008, according to the S&P/Case-Shiller Home Price Index. That was a big improvement over the past three years.  “As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now, said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “However, the rate of improvement seen during the summer of 2009 has not been sustained.”  The index did rise 1.6% on a seasonally adjusted basis during the fourth quarter compared to the previous three months, for the third consecutive quarter of increase.  S&P reports the national statistics quarterly and an index of 20 cities monthly. The 20-city index inched down in December, falling 0.2% compared with November. Only four cities showed improvement.  One of those was Las Vegas, where prices rose 0.2% — the first monthly gain for that city in three years.  The future of home prices remains difficult to forecast, though, as the market at some point will have to weather the withdrawal of government measures to boost home buying, Yale economist Robert J. Shiller told CNBC.  “This isn’t a forecast, but it’s a worry that home prices might drop substantially from here forward once this support is taken away,” Shiller said in a live interview after the report was released. “Mortgage rates will go up, the economy might double-dip, the expectations for housing which helped drive the market might change suddenly once people see this support being withdrawn.”

Jobs bill passes

The Senate voted Monday to push forward a $15 billion jobs creation bill that would give businesses a tax break for hiring the unemployed. The 4-prong bill will:  Exempt employers from Social Security payroll taxes on new hires who were unemployed; Fund highway and transit programs through 2010; Extend a tax break for business that spend money on capital investments like equipment purchases; and Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.  The final legislation is a scaled-down version of an $85 billion bipartisan draft bill that was crafted by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa.  However, the bill does not extend the deadline to apply for unemployment benefits and the COBRA health insurance subsidy. Some 1.2 million people will run out of benefits after Feb. 28 if the deadline is not extended. Lawmakers are looking to pass a separate, 15-day extension to give them time to enact a longer fix.  And unlike the House’s bill, the Senate measure does not provide additional assistance for states. Many governors, who are holding their annual meeting in Washington, want the Obama administration to send more federal dollars their way so they can cope with yawning budget gaps.  Labor leaders and left-leaning think tanks all say the Senate must do more to spur job creation – as if the Senate can fabricate jobs out of thin air somehow.

Commercial real estate prices up

US commercial real estate prices, as measured by Moody’s Investors’ Service/Real Estate Analytics, Commercial Property Price Indices (CPPI) increased for the second month in a row in December, rising 4.1%, as the commercial real estate (CRE) market continues to face several challenges, such as the rising tide of defaults and subsequent foreclosures.  Moody’s said the index’s improvement was the largest month-over-month increase in the nine-year history of the CPPI and followed a small, 1% gain in November. The volume of transactions also rose in December, typical for the end of the year, Moody’s added. In December, 716 transactions totaling $9bn were recorded in the month. At the end of December, CRE prices are down 29.2% from a year ago and 39.8% from two years ago. They are 40.8% below their peak values.  But, Moody’s said, it’s uncertain whether the recent price increases represent CRE passing the bottom of the market or are only the “volatility of a market in transition.”

Underemployment at 20%

According to a Gallup poll released today, nearly 20% of the U.S. workforce lacked adequate employment in January.  Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.  This is a big deal, because underemployed people spent 36% less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month.  Gallup surveyed more than 20,000 U.S. adults from Jan. 2 to 31. The results have a 1% point margin of error.  Gallup found that underemployed Americans were more likely to have a favorable view of Obama, with 55% approving of his performance as president against 49% of the wider public.  Hopefully this doesn’t give President Obama ideas for a campaign strategy – to put people out of work to increase his popularity.  The poll’s estimate of U.S. underemployment is higher than official statistics, and tends to paint a darker picture of the economy than official statistics. The Labor Department, for its part, disagrees with Gallup and claims only 16.5% of American workers were without employment or worked part-time for economic reasons in.  A Labor Department official said the government rate may be lower because it factors out temporary seasonal changes in employment to better reflect the underlying economy.

DSNews – Subprime securities fall in value

Heightened concerns about the valuation of subprime assets backing U.S. residential mortgage-backed securities (RMBS) has manifested in an across-the-board drop for all vintages, Fitch Solutions reported last week.  The ratings agency’s U.S. Subprime RMBS Price Index fell by just under 6 percent month on month to 7.17 as of February 1, down from 7.62 as of January 1.  All vintages dropped in value, highlighting concerns about the valuation of all RMBS subprime assets. Driving the declines was the 2007 vintage, which dropped by 17.7 percent, followed by the 2005 vintage falling by 9.5 percent month on month. Recent loan level analysis conducted by Fitch Solutions on the indices’ constituents found that the 2007 vintage showed a significant jump in 90-day plus delinquencies rising from 13.7 percent to 14.2 percent.  “The rise in delinquencies is signaling a potential increase in 2007 loan defaults,” explained Thomas Aubrey, managing director at Fitch Solutions.  Further evidence of a potential rise in defaults is in the six-month constant default rate (CDR) for both 2007 and 2005 vintages, both of which fell only marginally, the company said. Fitch explained that this is in stark contrast to much larger declines in the default rates of 2004 and 2006 vintages.

Now on to our real estate investing educational section…

Fiscal Survival of the Fittest

Survival of the fittest applies to economics as well as biology – in fact, some would argue the concept is better applied to the financial arena than any other area of study. Unfortunately, it’s a fact few Americans want to face head on…it goes against the steady diet of “American ingenuity” and the (false) belief that any child born in the good old USA can grow up to be anything they want. While there are exceptions to every rule, survival of the fittest is an economic trend currently undergoing the equivalent of an ice-age extinction as one era gives rise to an entirely new one. Research by consulting firm McKinsey found a few unsettling statistics that demonstrate the depth of the problem:

Over 70 percent of currently employed Americans work in jobs for which there is low or declining demand. This includes both blue collar and white collar. Competition for jobs that cannot be shipped overseas (healthcare for example) has created high competition which is driving down wages and promoting part-time, per diem and other “job sharing” situations.

Mainstream stores are doing double-takes as consumers shift spending habits. Not only are brick and mortar stores under heavy competition from online retailers like Amazon but the bleak economy is finally taking a toll. Violating one of the core marketing principles ‘never undercut your own product’, heavy weight’s ranging from Proctor & Gamble to Macy’s are rolling out discount versions of their more expensive popular items. Cost of Tide got you down? Don’t worry, you can now buy Tide Basic…a discount version. Research shows 1/2 of Americans have already reduced spending and 1/3 plan to do so permanently with 18 percent of consumer switching from name brands to generics in the past two years alone.

So, how are Americans spending their money both today and into the near future?

1. Nearly 34 percent of the average household income goes toward housing. Expect this trend to continue as people downsize into affordable housing options.

2. Just over 19 percent goes toward entertainment and/or miscellaneous items…however, as a discretionary item this is subject to volatility.

3. Roughly 17 percent goes toward transportation – a number experts expect to hold steady as people opt for more affordable options.

4. Just under 13 percent goes toward food; a necessity to be sure but one that is subject to “replacement” purchases as people opt for hamburger instead of steak during tough times.

5. Approximately 11 percent on retirement and personal insurance.

6. Nearly 6 percent on healthcare.

Even a precursory look at where Americans spend their money tells the average investor where to spend theirs…housing, entertainment, transportation, food, financial products and healthcare. Those are the big six that run the American economy. Now stop and consider which are available to the average “little guy” investor…stocks and bonds for healthcare, insurance and finance have been decimated in recent years. The auto industry? Please! Now that’s it’s been nationalized you can count on the same efficiency that brought you the driver license office to run the auto industry. Food is notoriously volatile and forget direct intervention unless you have an unusual level of gardening know how. No, the answer remains the same today as it did 100 years ago…real estate. It’s not easily outsourced, it’s not subject to the market manipulations of stocks and bonds nor is it entirely dependent upon your ability to work yourself into an early grave. It simply requires a willingness to adapt to the new economic environment like all other species that learn to thrive or barely survive.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid 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
–

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

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

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

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

Done For You Lead Machine Unveiled Tomorrow!

You don’t want to miss this webinar … an all new done for you

lead machine with social media!  This is the first time that this new

concept has been unveiled — so don’t miss it!

RSVP here for the webinar tonight at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/340133283

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

Fannie and Freddie failing

Freddie Mac and Fannie Mae were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.  Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven’t yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows, and investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities. Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble.

After prices collapsed, sending shock waves around the world, the federal government put America’s housing-finance system on life support and it has yet to decide how that troubled system should be rebuilt.  On Dec. 24, Treasury said there would be no limit to the taxpayer money it was willing to deploy over the next three years to keep the two companies afloat, doing away with the previous limit of $200 billion per company. So far, the government has handed the two companies a total of about $111 billion. The government is “running Fannie and Freddie as an instrument of national economic policy, not as a business,” says Daniel Mudd, who was forced out as Fannie Mae’s chief executive in September 2008 when the government took control.  Other housing experts contend that prolonged government intervention will make it more difficult and costly to eventually wean the companies off government support. “The more aggressively we continue kicking the can down the road, the larger the losses become and the harder it becomes” to address the companies’ future, says Joshua Rosner, managing director at investment-research firm Graham Fisher & Co.  As mortgage delinquencies rise, Fannie and Freddie are required to set aside more capital to cover anticipated losses. Each quarter, if their revenues are insufficient to meet those financial needs, the Treasury has to kick in more money.  With delinquencies still rising, the outlook is grim. At Freddie, 3.87% of single-family mortgages were at least 90 days past due at the end of December, up from 1.72% a year earlier. Fannie is worse: 5.29% were 90 days past due in November, up from 2.13% a year earlier.

Olick – Obama shifting from HAMP to HAFA (short sales)?

Diana Olick picked up on something Seth Wheeler, Senior Advisor to the Treasury Department, said last week.  According to Olick:  “In discussing the Obama Administration’s Home Affordable Modification Program (HAMP), which is arguably less successful than anyone intended, Wheeler made a comment leading some to believe that the Administration may be shifting focus from modifications to another program which simply gets troubled borrowers out of their homes as quickly and cleanly as possible.  Wheeler told ASF members and guests, ‘Short sales, deeds in lieu are other ways to prevent foreclosures to help achieve stability [in housing].  Modifications are only for a certain subset of distressed homeowners.’”  Olick points to the widely acknowledged failure of HAMP and suggests that Wheeler’s mention of the Home Affordable Foreclosure Alternatives program (HAFA) is indicative of a shift in emphasis for the Obama administration. 

HAFA specifically targets short sales and deeds in lieu of foreclosure. According to the directive: Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower: Does not qualify for a Trial Period Plan; Does not successfully complete a Trial Period Plan; Is delinquent on a HAMP modification by missing at least two consecutive payments; or requests a short sale or DIL.  According to Olick:  “My guess is that last one is the most popular.  The HAFA program offers incentives in this program “upon successful completion of the short sale” or Deed in Lieu. They include borrower relocation assistance of $1500, a servicer incentive of $1000 to cover administrative and processing costs and investor reimbursement of $1000 for subordinate lien releases. That’s when the investor allows up to $3000 in short sale proceeds to go to subordinate lien holders.  ‘It is my belief that the success of HAFA will be vastly greater than HAMP,’ says Mark Hanson, a mortgage consultant in California.  ‘Going forward, figuring out exactly what this means for foreclosures, REO, house sales, housing inventory, values, bank balance sheets, second mortgages, RMBS prices, the builders, the mortgage insurers, and sentiment is where the focus will be.’”

Tax rate balloons

Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.   The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.  Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates.  In addition, employers pay federal unemployment taxes. If states don’t repay their federal loans, businesses could see their this federal tax go up as well in coming years, said Rich Hobbie, executive director of the National Association of State Workforce Agencies.  Higher taxes dampen employers’ ability to hire new workers, crimping any nascent economic recovery. Companies pay taxes on each employee on the payroll.  “There’s no doubt it discourages hiring,” said Douglas Holmes, president of UWC-Strategic Services on Unemployment and Workers’ Compensation, an employers’ trade group. “In fact, it leads to increased unemployment.”  Texas, Hawaii, and Florida are the hardest hit.

Consumer credit falls

According to the Federal Reserve, total consumer borrowing fell a seasonally adjusted $1.8 billion, an annual rate of 0.8%, to $2.456 trillion in December 2009.  Economists predicted a decline in total borrowing of $10 billion in December, according to a consensus survey from Briefing.com. November saw a downwardly revised 10.6% decrease, or $21.8 billion, in total consumer borrowing.  Sean Maher, associate economist at Moody’s Economy.com said he expected November to be revised upward, but instead it was even more negative — so December’s more upbeat data “doesn’t mean we’re out of the woods.”  For all of 2009, consumer debt dropped by 4% to $2.46 trillion from $2.56 trillion in 2008.  Revolving credit, which includes credit card debt, fell in December by $8.5 billion, or an 11.7% annual rate, to $866 billion. 

But nonrevolving credit, which includes car and student loans, bucked the trend. It rose by $6.8 billion, or a 5.2% annual rate, to $1.59 trillion.  The data’s recent volatility and large revisions make it difficult to make predictions, Maher noted, but he expects revolving credit will fall substantially in the coming months but will start to taper off around June.  “Consumers are still finding it tough to get credit, but there are some signs we’ve reached a bottom,” Maher said. The credit crunch should begin easing now, he said, “with breakeven around the middle of the year — and we’re looking for a pretty quick rebound by the second half of 2010.”

DSNews.com – Home ownership at lowest point in a decade

Home ownership in the United States hit a 10-year low during the fourth quarter of 2009. According to data released by the Census Bureau last week, the homeownership rate fell to 67.2% at the end of last year.  That’s down from 67.6 percent the previous quarter and 67.5 percent one year earlier. It represents the lowest percentage of Americans who owned a home since the second quarter of 2000. Homeownership has been on a steady downward slope since 2006, when it became evident that more and more borrowers were put into loans they couldn’t afford and housing woes began to eat away at the government’s long-time push to make the American Dream a reality for anyone that wanted it.

Regionally, homeownership rates are highest in the Midwest (71.3 percent) and in the South (69.1 percent) where housing is considered relatively affordable. They are lowest in the West (62.3 percent) and the Northeast (63.9 percent) where home prices are on the higher end of the spectrum.  Relative to a year ago, the biggest decline, though, was in the South (down 0.7 points) and in the West (down 0.4 points), where you can find the foreclosure hotspots of Florida, California, Arizona, and Nevada.  The Census Bureau also reported that the percentage of vacant homes in the U.S. rose from 2.6 percent in the third quarter of last year to 2.7 percent in the fourth. All told, there were 2.09 million homes sitting empty and available for sale at the end of last year, up from 1.99 million three months earlier, the agency said. As Bloomberg explained, this number includes both listed properties and those that banks have repossessed and have not yet listed.

Now on to our real estate investing educational section…

Sooner or later every short sale investor encounters a sale in danger of dying. Fortunately, with a few simple steps it’s possible to dramatically reduce the risk of spoiling a sale.

1. Get Smart. Prequalify and prepare from first contact. Everyone has an “A” list and a “B” list when it comes to prospective buyers but it’s still necessary to put things into proper perspective before spending a lot of time and effort on dead-ends. Remember, the internet helps to eliminate and reject prospects through the use of well placed questions and comments.  For example, asking a simple question such as “Is there another home you wished you had bought?” can explain a lot; price range, comfort zone and readiness just for starters.

2.  Value-Driven. Tough economic times have led most buyers to become more price conscious than ever; it’s no longer enough to simply show a few over-priced homes to prep for an attractive in-house alternative…instead, be prepared to demonstrate real value with low risk. Buyers want to know they won’t lose money in the long run by buying a given house or property.

3. Don’t Shut Doors on any Deal. Some buyers are just the opposite – they have money and when presented with the right opportunity – are willing to go substantially above and beyond their traditional budget. Don’t automatically exclude higher priced properties for those that have the means to make ends meet at a larger than life level. In this situation, recognize the price is not the prime motivator but rather the “right”  property. Determine what constitutes a desirable deal then make it happen.

4.  Time Right. Timing is everything but it takes time to learn how to distinguish valid help from harassment when working with prospective clients. Too soon and you can quickly cool even the hottest prospect…too long of a delay and you risk having others step in to fill your shoes.

5. Preferred Status. Everyone likes to feel special and as a short sale professional it is your duty to given individualized attention to every prospect….of course, some clients are just a bit more special than others especially when it comes to sealing the deal. Find a few ways to express that little extra something when working with your “A” list clients; meet at a local coffee shop then foot the bill (don’t worry – it’s a legitimate write-off) or schedule exclusive “preview” showings to the most promising prospective buyers before the big announcement. Remember, it’s the thought that counts not necessarily the size of the status symbol.

6. Teach sellers to think like buyers and vice versa. Yes, it’s easier said than done but it’s all in the wording. By teaching sellers to act like buyers and buyers to act like sellers you assure they will present and demand more reasonable offers. Think of it as a small investment that pays big dividends at closing time.

7. Have a contingency plan in place. Every good investor identifies the “out” long before buying into the given investment – it’s no different with short sales. Know when and how you plan to exit the property then have a contingency in place should something go amiss. It’s one additional layer of protection that allows short sale investors to sleep easy by knowing they have plenty of outlets for every property.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid 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
–

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

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

**********

Make sure you subscribe to the Short Sales Riches Youtube Channel to get Nathan’s latest videos:

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Making Home Affordable a disaster 

Critics of the Obama administration’s $75 billion program to protect homeowners from foreclosure increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes, and some economists and real estate experts now contend it has done more harm than good.    They say many desperate homeowners have sent payments to banks in efforts to keep their homes, wasting dollars they could have saved in preparation for moving to cheaper rental residences.  Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.  “The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis,” said Kevin Katari, managing member of Watershed Asset M

 anagement, a San Francisco-based hedge fund. “We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway.”  Mr. Katari contends that banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books.  Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.

Jobless claims down

The Labor Department says there were 432,000 initial jobless claims filed in the week ended Dec. 26, down 22,000 from the previous week’s revised 454,000, and the lowest since July 19, 2008, when there were 413,000 claims filed.  A consensus estimate of economists surveyed by Briefing.com expected claims to jump to 460,000.  Jobless claims have been trending downward since the end of March, when they peaked at 674,000, the highest figure since 1982.  4,981,000 people filed continuing claims in the week ended Dec. 19, the most recent data available. That’s 57,000 down from the preceding week’s revised 5,038,000 claims.  The 4-week moving average for ongoing claims fell by 122,250 to 5,101,250 from the previous week’s revised 5,223,250.  However, the fact that employers are running out of people to lay off isn’t necessarily a good thing.  The slide may signal that more filers are dropping off those rolls into extended benefits.  The employment picture will continue to improve a  s jobless claims continue to fall, but Tim Quinlan, economic analyst at Wells Fargo, said they will need to drop near 350,000 for positive job growth.

Not in 2010

Experts from a range of political leanings, speaking at American Economic Association’s annual gathering, were in agreement when it came to the chances for a robust and sustained expansion in 2010.  It won’t happen.  Many predicted U.S. gross domestic product would expand less than 2% per year over the next 10 years. That stands in sharp contrast to the immediate aftermath of other steep economic downturns, which have usually elicited a growth surge in their wake.  Housing was at the heart of the nation’s worst recession since the 1930s, with median home values falling over 30% from their 2005 peaks, and even more sharply in heavily affected states like California and Nevada.  The decline has sapped a principal source of wealth for U.S. consumers, whose spending is the key driver of the country’s growth pattern. The steep drop in home prices has also boosted their propensity to save.  “It’s very hard to see what will replace it,” said Joseph Stiglitz, Nobel laureate and professor of economics at Columbia University. “It’s going to take a number of years.”  One reason is that U.S. consumers remain heavily indebted.  Another is that many of the country’s largest banks are still largely dependent on funding from the U.S. Federal Reserve and the implicit backing of the Treasury Department.  He cited government programs giving large financial institutions access to zero-cost borrowing as artificially padding their bottom lines.  “There’s something of an illusion of profitability,” he said.

Small business delinquencies rise again

Severe delinquencies by small and medium-sized U.S. businesses on the loans, leases andlines of credit to finance capital equipment rose again in November as lenders remained reluctant to extend fresh financing, PayNetInc reported on Monday.  Accounts behind 180 days or more, and unlikely ever to be paid, rose to 0.91% in November from 0.87% in October, according to PayNet, which provides risk-management tools to the commercial lending industry.  It was the 22ndconsecutive monthly increase in loans so far in arrears they ultimately may have to be written off by lenders.  Accounts in moderate delinquency, or those behind by 30 days or more, rose in November to 4.33% from 4.19% in October, according to PayNet.  But accounts 90 days or more behind in payment, or in severe delinquency, improved modestly in November, slipping to 1.40% from 1.43% in October. It was the fourth consecutive improvement in the measurement.  That was not the only glimmer of light in PayNet’smonthly  report. The company’s Small Business Lending Index, which measures the overall volume of financing, fell just 11% year-over-year in November.  While that indicates that lenders remain reluctant to extend credit to small and medium-sized businesses, it was the smallest decline in the index since the recession began.  “We’re not out of this slump yet,” said Bill Phelan, president and founder of Skokie, Illinois-based PayNet.  “But the year-over-year decline in the small-business lending index is smallest so far in this downturn and continues an encouraging trend line. From January through May, the index was falling 25 to 33%. And then from June to October, we saw moderating declines of 16 to 21%. So 11% is really another step in the right direction.”

Everyone on government payroll?

“Why don’t we just put everyone in the United States on the federal government payroll and call it a day?” asks Rep. Jerry Lewis, R-Calif.  He’s talking about the latest “Jobs for Main Street Act” title that House Democrats put on their $174 billion package last month.  Republicans are calling it “son of the stimulus,” the $787 billion economic recovery plan of nearly a year ago that they say was ineffective at producing jobs.  Jobs from the House bill’s $75 billion in infrastructure and public sector spending include tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers – basically all government jobs in one form or another.  Absent from the House plan were President Barack Obama’s proposals to attack unemployment through tax credits for small businesses that create jobs and for homeowners who make their dwellings more energy efficient. 

Even the investment in “shovel-ready” highway and bridge projects may not immediately translate into a reduction in the nation’s 10 percent unemployment rate.  Republicans cited government figures showing that, as of Sept. 30, only 9 percent of $27.5 billion for highways in the first stimulus bill had been spent.  The Congressional Budget Office estimates that of the $39 billion in the new House jobs bill directed to the departments of Transportation and Housing and Urban Development, only $1.7 billion will get spent before next October.  A lot of the money “hasn’t even gotten out of Washington yet,” said Rep. Eric Cantor of Virginia, the House’s second-ranked Republican. “Why is it still here if it was designed to create jobs?”

Wall Street Journal scorches Obama

The Wall Street Journal released an editorial today that doesn’t have nice things to say about ” the Treasury’s Christmas Eve taxpayer massacre.”  It’s referring to the lifting of the $400 billion cap on potential losses for Fannie Mae and Freddie Mac as well as the limits on what the failed companies can borrow.  According to the editorial, “The loss cap is being lifted because the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the previous quarter.”  And that’s not all the WSJ has to say, either.  ” The government wants taxpayers to think that these are profit-seeking companies being nursed back to health, like AIG. But at least AIG is trying to make money. Fan and Fred are now designed to los  e money, transferring wealth from renters and homeowners to overextended borrowers.  Even better for the political class, much of this is being done off the government books. The White House budget office still doesn’t fully account for Fannie and Freddie’s spending as federal outlays, though Washington controls the companies. Nor does it include as part of the national debt the $5 trillion in mortgages—half the market—that the companies either own or guarantee.

The companies have become Washington’s ultimate off-balance-sheet vehicles, the political equivalent of Citigroup’s SIVs, that are being used to subsidize andnationalize mortgage finance.  This subterfuge also explains the Christmas Eve timing. After December 31, Team Obama would have needed the consent of Congress to raise the taxpayer exposure beyond$400 billion. By law, negative net worth at the companies forces them into “receivership,” which means they have to be wound down.  Unlimited bailouts will now allow the Treasury to keep them in conservatorship, which means they can help to conserve the Democratic majority in Congress by increasing their role in housing finance. With the Federal Reserve planning to step back as early as March from buying $1.25 trillion in mortgage-backed securities, Team Obama is counting on Fan and Fred to help reflate the housing bubble.”  Surely “hope and change” didn’t mean the sort of slimy Chicago politics the WSJ claims the Obama administration is playing?  The editorial ends with this scorcher:  “In today’s Washington, we suppose, it only makes sense that the companies that did the most to cause the meltdown are being kept alive to lose even more money. The politicians have used the panic as an excuse to reform everything but themselves.”

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

Biggest Buyers Market

When it comes to short sales, investors would do well to take a look at these major metropolitan areas presenting the largest peak-to-present value price drops. There are a variety of reasons each area has experienced larger than average price drops; from over building in Orlando to unemployment in Modesto, pressure on pricing has resulted in once in a lifetime bargains. Other areas such as Port St. Lucie or Lehigh Acres in Florida have been hit by a perfect storm of unemployment, over building and aggressive sub-prime lending practices combined with lax zoning standards to create a dramatic excess of inventory that could take years to absorb. Whatever the original reason, the result is clear…a big buyers market for those in the know.

Other hard hit cities throughout the nation include the following metro areas:

Merced California – With over 62% drop from highest price, the average cost of a home in Merced was $336, 750 in Q2 of 2006 compared to only $127,585 by Q3 of 2009.

Stockton/Modesto California – Both cities have lost roughly 54% of value since their former high in 2006. Today the average price is an affordable $168,000/$151,000.

Las Vegas Nevada – After a huge building boom during 2005 and 2006, Las Vegas residents are walking away from homes previously valued at over $300,000 which are now selling for just under $160,000.

Port St. Lucie Florida – After reaching a peak price of over $281,000 in 2006, prices in Port St. Lucie are lucky to bring in $151,000 as of Q3 of 2009. In fact, nearly all of Florida has been extremely hard hit due to a combination of high unemployment, sub-prime lending standards and an unprecedented building boom. Fort Myers, Cape Coral,

Naples, Marco Island, Bradenton, Sarasota and Venice are just a few of the other cities experiencing in excess of 40% or greater price decline.

Detroit – It should come as no surprise that Detroit and surrounding areas have been especially hard hit due to high unemployment despite the fact the building boom managed to miss much of Michigan. Affordable homes reached a high of $155,000 during 2005 but continued to plummet in price to the new low of just over $107,500 by the end of 2009.

Bottom Line – short sale investors looking for the best prices as compared to former high’s should concentrate their efforts on California, Nevada and Florida. Those searching for affordable housing alternatives may do well to examine Michigan andother areas of the mid-west that managed to escape much of the building boom from recent years. The greatest price stability is to be found in the New England states where prices remained relatively unchanged yet present some price reduction as compared to the past few years.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

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

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

http://www.shortsalesriches.com/blog

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

About the author:

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

    * As the top Florida foreclosure and pre-

      foreclosure expert, he oversees more than

      100 short sale & REO closings each month

   * Long-time authority on real estate investing

      and rapid 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