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Fannie Mae Foreclosures Nearly Double in Q110

The amount of foreclosures held by the government-sponsored enterprise (GSE) Fannie Mae nearly doubled from 2009. According to the quarterly earnings report filed for Q110, Fannie Mae holds more than $11.4bn in single-family foreclosed properties, up from $6.2bn in Q109. The foreclosure rate in its single-family portfolio reached 1.36%, up from 0.55% last year. For the quarter, Fannie reported an $11.5bn loss and requested $8.4bn in aid from the Treasury Department.

The foreclosure volume reached over 109,000 from 62,000 in 2009. At the beginning of the period that number was just over 86,000. The region with the most was the Southeast with 17,700, followed by the Midwest with 15,000 and the Southwest with 12,800. The West was fourth with 12,600 and well behind the others, the Northeast had 3,500 foreclosed properties in the Fannie Mae portfolio. In the report, Fannie pointed out that foreclosure levels in the first half of 2009 were affected by foreclosure moratoria. “The continued weak economy and high unemployment rates, as well as the prolonged decline in home prices on a national basis, continue to result in an increase in the percentage of our mortgage loans that transition from delinquent to foreclosure status and significantly reduced the values of our foreclosed single-family properties,” according to the report.

Real estate’s new problem: Not enough homes

Despite the housing bust and high foreclosure rates, in some areas real estate agents are complaining that they don’t have enough homes to sell. There is currently an eight-month supply of homes on the market — meaning that, at the current sales pace, it would take eight months to run through the backlog. That’s still a lot compared to the six-month supply that is expected in a normal market, but it is much better than it was. In Denver, Phoeniz and San Francisco they are even bidding-war tight.  In California, almost all cities have a short supply of single-family homes. That’s especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors. There are plenty of more expensive homes in California, but this inventory is going quick: inventory for million-dollar-plus homes has dropped from 21.6 months to 10.9 months.

Ordinarily, rising prices are an indication of shrinking inventory. But these are far from ordinary times. Never have there been so many properties that could be for sale — but aren’t. This so-called “shadow inventory” comes from two main sources: properties lenders have not yet repossessed or have not yet put back on the market; and homeowners who want to sell but who have refrained because of low prices. Lenders are also holding back on foreclosing at all, either because they’re having trouble handling the volume of repossessions or because they want to sell off some of the inventory they already have.  Zillow.com surveys estimate that 8% of homeowners are very likely to try to sell their homes in the next twelve months if they see signs of improvement in their local markets.

Stocks set for big slide

U.S. stock futures dropped Tuesday amid growing worries about whether a massive European aid package would be enough to fix the region’s debt woes. At 6:15 a.m. ET, Dow Jones industrial average, S&P 500 and Nasdaq futures were all sharply lower. Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins. U.S. stocks joined a worldwide rally and surged Monday, posting their best day in 14 months. The source of the enthusiasm was a nearly $1 trillion European rescue package aimed at stabilizing the euro and providing aid to the regions’s debt-laden governments. But confidence in the EU bailout began to fade Tuesday. Worries that it would not be enough to fix the problems facing many European governments led to a drop in world markets. 

The House Financial Services Subcommittee on Capital Markets will hold a hearing on last Thursday’s stock market roller coaster ride, in which the Dow sold off nearly 1,000 points in under ten minutes before rebounding. Erroneous trading in more than 300 stocks, due to errors in electronic trading programs, resulted in the Dow’s biggest ever intraday sell off.  World markets: Dollar and commodities: The dollar was up 0.8% against the euro and 0.3% on the British pound. The greenback was down 1% on the Japanese yen. U.S. light crude oil fell $1 to trade at $75.80 a barrel on the New York Mercantile Exchange. COMEX gold for June delivery jumped $8.30 to $1,209.90 per ounce. Bonds: Treasury prices were higher early Tuesday, pushing the benchmark 10-year yield down to 3.48%. Bond prices and yields move in opposite directions.

Goldman Sachs and JPMorgan Chase Roar Ahead

The trading operations of Goldman Sachs and JPMorgan Chase made money every single business day in the first quarter, a feat that was a first for the companies and underlines the boom in Wall Street’s investment banking revenues. Goldman’s trading desk recorded a profit of at least $25 million on each of the quarter’s 63 working days, making more than $100 million a day on 35 occasions, according to a regulatory filing issued on Monday. The result, following a series of regulatory probes into Goldman’s trading activities, could fuel criticism of its business model and market behavior.

However, JPMorgan also achieved a loss-free quarter in its trading unit — making an average of $118 million a day, nearly $5 million an hour — as it built on the gains made during the financial crisis when rivals faltered or failed. The 14 largest global investment banks reported $78.8 billion first-quarter revenues, their best numbers in three years and just 1 percent shy of the record. Analysts said the resurgence might give ammunition to politicians who want to impose a global banking tax and could strengthen the hand of regulators seeking to force banks to hold more capital and liquid assets against future problems. Goldman, which is already facing civil fraud charges from U.S. regulators over a mortgage-backed security, could also face particular calls to rein in its operations. Morgan Stanley analysts found that Goldman had continued to lead the pack in revenue overall in the first quarter as industry leader in equities and in fixed income, currencies and commodities (FICC). FICC revenues now account for 61 percent of investment banking revenues globally, compared with about half before the crisis.

NYC Recession May Linger for Average New Yorker

New York City’s recession likely will linger for the average resident, for a long time. The city’s recovery might be rocky and long, according to a report by the think-tank Fiscal Policy Institute, due to the high number of job-seekers, the concentration of job losses among middle- and low-income people, soaring bankruptcy rates at small and medium businesses, and the risk the city will slash public workers to close a budget gap. After nearly sinking during the credit crunch, Wall Street last year resumed earning record profits. “For the average New Yorker, however, the bite of this recession is much worse and there is no end in sight,” the report said. The recession hurt residents of the city particularly hard because commuters hold about 40 to 50 percent of its highest paying jobs. “In most moderate and average paying sectors, city residents hold 90 percent or more of the jobs,” the report said. Employers must hire 400,000 workers to reduce joblessness to pre-recession levels, the report said. The Fiscal Policy Institute says it works to ensure taxes are fair and that public services are adequate.

Now on to our real estate investing education section …

Response & Rebuttals

Sooner or later every real estate agent or real estate investor needs to learn the strategic skill of negotiation. Perhaps one of the most difficult for the majority of novice and veteran pro’s alike is how to properly phrase a response or rebuttal….especially to these all too common situations.

Modify these to reflect your unique style of communication and don’t be surprised to find yourself using them on a regular basis!

Problem: Strong viewpoint based exclusively on personal opinion void of objective data, reasoning or case study.

Response: “That is an interesting point and you might be right but I’d like to understand more. What leads you to believe….?”

Problem: Tangent or extensive personal agenda unrelated to the primary objective.

Response: “I’m not clear how that connects to the discussion. Can you clarify the relevance to me?”

Problem: Negative Reaction

Response: “I had the impression you were feeling x (fill in). If so, I’d like to understand why. Is there something I’ve said or done that made you uneasy?”

Problem: You have a negative reaction or response.

Response: “This is probably more my problem than yours but when you said x (fill in), I felt…(fill in). Am I correctly understanding your intention or point?

Problem: Others appear unwilling to negotiate.

Response: “Is there anything I can say or do that will change your mind?”

Problem: Cannot decide between several options.

Response: “We have x number of ideas or choices on the table, let’s examine them one at a time while evaluating the pros and cons of each”.

Problem:  You are unsure whether or not a particular fact or feature is relevant or important.

Response: “This may not be relevant but if so, let me know and I will look into it for you”.

Problem: Select individuals dominate a discussion or other parties provide minimal feedback.

Response: “I’d like to give my reaction to what has been said so far and hear what you and others think”.

Remember, a conversation is a lot like cooking…put in the right ingredients in order to obtain the desired results. The basic rules for the recipe include:

1. Identify the primary points made by the other person.

2. Ask for the data, information or experience that led them to that conclusion.

3. Infer the underlying belief or assumption.

4. Verbalize your conclusion and ask the other person if this is correct.

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

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HAFA encourages short sales to avoid foreclosure

Short sales give distressed homeowners an exit that doesn’t lead through credit-damaging foreclosure and saves bank’s money compared with taking and selling houses with failed mortgages. That should make them a preferred option. But short sales take longer, often two months longer, and can be nearly impossible if other lenders have liens on the house. So at the urging of the National Association of Realtors, the U.S. Treasury Department came up with a new program to encourage short sales. Home Affordable Foreclosures Alternatives, or HAFA, went into effect April 5, although banks and real estate agents will need time to take full advantage of its provisions. HAFA encourages short sales chiefly by, (a) holding parties to deadlines for various parts of the process (b) providing financial incentives, including $3,000 to help the homeowner relocate; $1,500 for servicers to cover their extra costs; and as much as $2,000 for mortgage security investors who allow as much as $6,000 of sale proceeds to go to other lien holders (c) allowing the current mortgage holders to get pre-approved short-sale terms before listing the property for sale (d) requiring that homeowners be fully released from future liability for the first mortgage debt. 

Under HAFA, banks must decide within 10 business days whether to approve or deny a requested short sale under the program. Banks already have an inventory of 1.1 million foreclosed houses, recent estimates by LPS Applied Analytics of Jacksonville, Fla., show. Many more will be heading for a short sale or foreclosure. The Mortgage Bankers Association said more than 9 percent of homeowners were behind at least one payment on their mortgages in the fourth quarter. LPS figures 4.8 million are delinquent or already in the start of the foreclosure process. The HAFA program can’t reach many of those houses. Lenders participating in the federal government’s effort to encourage mortgage relief for distressed homeowners — Home Affordable Modification Program — are required to participate in HAFA as well.

Strength in Recovery? Not Yet

U.S. companies are plowing money back into their businesses at a rate that demonstrates growing confidence in the economy’s recovery, but still leaves questions about its strength. The Commerce Department reported Friday that private investment in equipment and software, everything from machine tools to word-processing programs, rose at a robust annualized rate of 13.4% in the first quarter of 2010, adjusted for inflation. Business investment overall, including money spent on warehouses and office buildings, grew at an inflation-adjusted annualized rate of 4.1%, dragged down by the persistent slump in commercial real estate. The increased spending on equipment and software encouraged hopes that businesses will help lead the economic recovery, generating enough investment and jobs to sustain a recent resurgence in consumer spending.

So far, though, it is falling well short of the pace needed to drive the kind of sharp, “V-shaped” recovery that has followed deep recessions in the past. Together with rising exports, the business investment “is enough to generate a sustainable recovery, but not enough to generate a V,” said Nigel Gault, chief U.S. economist at consultancy IHS Global Insight. In the first four quarters after the harsh recession of 1981-82, inflation-adjusted investment in equipment and software rocketed back at an average annualized rate of 21%, helping to drive nearly 8% growth in the broader economy. Most business surveys show optimism rising and many companies planning to boost capital expenditures further in coming months. But disparities remain. Business investment still has a long way to go to reach normal levels. In the first quarter of 2010, net private investment—including capital spending on everything from houses to assembly lines, minus depreciation—stood at 1.6% of economic output, well below the 20-year average of 5.4%. Meanwhile, the smaller firms that tend to account for an outsize share of job growth are facing serious obstacles, as banks shy away from providing credit.

Diana Olick – Bye Bye Home Buyer Tax Credit

“It was the last day of the home buyer tax credit…for the second time.  Of course given all the hype on the home builder web sites, you’d think this was the last day of the housing market as we know it.  And was it working? Well, hard to say.  One guy we spoke to in suburban Maryland just couldn’t get the seller to budge quickly enough. Another in New York City was rushing to get a developer to sign by midnight but there seemed to be some issues. I emailed a Realtor I know out in Burbank, CA, David Fogg, and he responded:  “The real story is the intense difficulty qualified people are having in obtaining financing, as well as the appraisal regulations which are hurting many home sales.” So does the housing market implode at midnight?  I seriously doubt it, seeing as the tax credit extension already hasn’t had nearly the effect the first credit did last fall.  In the run-up to the previous deadline, we saw annualized sales volume rise to nearly 6.5 million units. Volumes then tanked to 5m units by January and were only up to 5.3m by March. I doubt we’re going to get back to 6.5m by April. All this says is that demand was pulled forward, and there just aren’t that many buyers left who are buying solely because of the credit.

Most experts I talk to, including the Realtors’ own economist, believe we may see another dip in sales and prices before we are really on the road to recovery. Remember, Spring is historically the busiest market, and we’d probably have seen some bump, tax credit or not. And it’s not like the government is gone from housing entirely, given that the $75 billion mortgage bailout is stemming some of the foreclosure crisis, and Fannie Mae is still offering 3.5% back when you buy one of their foreclosed properties.  Housing today is dependent on financing and confidence, and both of those are hanging by a thread. Frankly I’m glad to see the tax credit go, because maybe now we can see the housing market’s true colors, without excuses.”

DSNews.com – Fannie Mae takes a second look at REO Property Sales

Fannie Mae is tightening up its initiative to facilitate the sale of REOs to owner-occupants and entities using public funds, such as local housing and community development agencies. Fannie Mae says these buyers bring permanency and stability to tenuous markets where swollen inventories of foreclosures have taken their toll, and the GSE is making some changes to ensure owner-occupants and public entities have “first look” at its REO homes.

Fannie Mae initially rolled out its First Look initiative last fall. Under the program, the GSE only considers offers from those seeking to purchase a home as their primary residence and public entities during the first 15 days that a property is listed.  Julia Dugger, Fannie Mae’s senior manager of marketing communications, explained that the execution of the First Look program has been “tricky,” primarily because individual homebuyers and public entities usually can’t view multiple listing services (MLS), and consequently don’t know when the property they’re interested in was actually listed or when the 15-day First Look window ends. To address this snag, Fannie Mae is making some changes to the program. Going forward, First Look will be tracked based on days listed on the GSE’s REO marketing site HomePath.com. Public entities, too, are taking advantage of the no-investor marketplace provided by First Look, particularly those agencies that have been awarded federal funding through HUD’s Neighborhood Stabilization Program (NSP) to purchase, rehabilitate, and resell foreclosed and abandoned properties. Beginning today, Fannie Mae is extending the First Look marketing period for its REO homes in Nevada from 15 days to 30 days. Dugger says the GSE may explore lengthening the timeframe in other areas as well.

Goldman CEO acknowledges company ‘role’ in finance crisis

Goldman Sachs’ CEO Lloyd Blankfein said in an interview to CNN, broadcast Sunday that his company bears some blame for the real estate bubble that led to the global financial meltdown. “We made a contribution to the bubble,” adding that executives at the company now “beat ourselves up” for the error, although he said there was a lot of blame to go around. “How did we make a contribution? We’re a lender. We lent money to companies, we lent, we financed real estate ventures that had too much leverage, we made a contribution to leverage,” Blankfein said. “State and local governments took on debts and deficits, the federal government took on big deficits. All made a contribution to the over-leverage — and consumers over-leveraged themselves,” he said. But did we play a role in that? Absolutely we did,” he said.

He added: “Did we think we were doing that at the time? No. In hindsight? Yes. Goldman has been roundly berated for having emerged a highly profitable winner in the wake of the financial crisis, while many of its investors took major losses. Blankfein’s concession came just days after a contentious congressional hearing last week at which he and other current and former Goldman employees denied any wrongdoing after a Senate probe alleged fraud that the firm bet heavily against the housing market in 2007 without telling investors who were buying its mortgage-backed securities. Goldman faces a vexing dilemma, legal experts say, as the Justice Department conducts a criminal investigation into whether the financial services giant duped buyers of its securities. Goldman could lose its vaunted reputation for integrity if it admits to wrongdoing as part of a deal to avoid criminal prosecution. The value of Goldman’s stock has fallen $21 billion — a fifth of its market value — since the Securities and Exchanges Commission (SEC) alleged that the firm created and sold a mortgage-backed security in 2007 without telling investors that it had been partly shaped by a hedge fund manager who bet that it would fail. Friday, Goldman’s stock fell 9% to $145.20.

Now on to our real estate investing education section …

Bank Foreclosures vs Tax Foreclosures – Which is Better?

Tax foreclosures were once all the rage but with media attention on short sales and REO properties, they have recently fallen out of favor. Of course, among savvy real estate buyers and investors, nothing is “off the table” so it’s only fair to spend a bit of time examining the pros and cons associated with each.

Tax Foreclosures are Not Tax Deed Sales

It’s important to differentiate between tax foreclosures, tax deed sales and other forms of government sponsored property sales. Tax foreclosures are typically the result of unpaid tax or other liens placed on the property (for example, unpaid income taxes). Tax deed sales are often the result of a homeowner failing to pay the local property taxes on a given parcel; after a period of time the taxes are paid by someone else (often an investor) with a guaranteed rate of return ranging from 5 to as high as 18 percent upon redemption.  At some point and time in the future, if the original owner does not redeem the property and repay the prior property taxes plus interest, the property may eventually go up for auction.

Pros & Cons

Although tax foreclosure sales may sound simple enough, in reality they are often plagued by problems. For example, unlike short sales or REO properties, the buyer often assumes all prior liability for past due taxes when purchasing the property. Additional liens (including other forms of taxes, HOA fees, etc…) may add thousands to the purchase price of the property. Because the tax lien takes precedent over all other liens, a substantial sum may be required to obtain clear title and clear liens against the property. Remember, there is often a mortgage in addition to the back taxes owed.

Tax foreclosures can also be highly competitive; auctions often take place quarterly or once per month with extensive advertising used to attract maximum bidding. Pre-approval is necessary since closing typically takes place within 10 to 30 days after the auction. Bidders may conform to the dictates of the taxing authority rather than negotiate a closing based upon their own individual situation. Of course, the use of leverage, timing and other financial issues may significantly impact the individual rate of return for any type of real estate investment. Be sure to take all considerations into account before moving forward with a tax foreclosure sale.

Although both REO and tax foreclosed homes are typically sold in “as is” condition, the bank representative and others typically attempt to provide a thorough review of the property. Tax foreclosures should be extensively scrutinized prior to the sale in order to gain as much information as possible; it’s not unheard of for investors to believe they got a “great deal” and were the lowest bidder only to find out there were zoning irregularities, EPA restrictions or other major issues associated with the 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
–

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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

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

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

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Big cities buck the foreclosure trend, for now

A few of the country’s worst-hit spots in the first three months of 2010 have shown decline in foreclosure filings, but it is still a long way before healing happens.  Foreclosure filings declined in 14 of the top 20 cities year-over-year, most of which are concentrated in the Sunbelt “bubble” states of California, Arizona, Florida and Nevada. But the improvement during the first quarter, compared with 12 months earlier, may have been a statistical glitch, not evidence of a real trend. Plus, those improvements bucked the market’s general trend: Nationwide foreclosures rose 16% during the quarter. Much of the improvement may be attributed to government-led foreclosure prevention programs, especially a new program encouraging banks to facilitate short sales. Banks have figured out that short sales are less costly to them than foreclosures because they save on a long list of expenses, including legal fees, taxes and maintenance, and brokers’ commissions.

Las Vegas has been the hardest hit market, which had one foreclosure filing for every 28 households during the quarter, roughly five times the national average of one filing for every 128. Modesto, Calif., was the second hardest hit metro area, with a rate of one filing for every 34 homes, down more than 13% year-over-year. Cape Coral, Fla., was third, with one in 35, down 26% year-over year. Tied for fourth at one for every 36 homes were Riverside, Calif., (down 19%) and Stockton, Calif., (down 25%). Miami had the steepest year-over-year increase for any top 20 market. There were over 71% more filings during the first quarter of 2010 than it recorded during the same quarter in 2009. 

Senate Ends Financial-Bill Standoff

Lawmakers ended the three-day standoff holding up action on the financial-overhaul bill, leading to a new government authority to wind down failing financial firms. Democrats, in a concession, agreed to kill a proposed $50 billion fund to break up large, failing financial companies. The move gave Republicans an opening to end their opposition to moving the legislation. But in other areas, notably derivatives regulation—which will be debated Thursday—and consumer protection, the sides remain divided. Administration officials and lawmakers of both parties were already turning their attention to the coming floor debate, especially a series of populist amendments that could be difficult to defeat. 

Lawmakers from both parties have said the government needed new powers to avoid a repeat of the 2008 financial crisis, when regulators allowed Lehman Brothers to fall into a messy bankruptcy, bailed out American International Group Inc. and then asked Congress to approve a $700 billion rescue package. But there has been disagreement about how best to create a new regimen for breaking up failed companies that averts chaos in the market, and that doesn’t put taxpayers on the hook or suggest that the government will come to the aid of creditors and investors.  Other key parts of the Dodd-Shelby agreement would make it harder for top executives at failed financial firms to claim large compensation packages. It would restrict the ability of the Fed and Federal Deposit Insurance Corp. to act independently in an emergency. And it would give the government power to limit payments for certain creditors of failed firms.

More Mid-Size Banks Facing Closure

Ailing mid-size banks face closure as souring commercial real estate loans are taking a disproportionate bite into their balance sheets.   Last week, regulators shut down seven more banks in Illinois, three in Florida and two in California.  The total cost to the Federal Deposit Insurance Corp. Deposit Insurance Fund (DIF): $974m. According to the analytics firm, Trepp, the latest moves by the FDIC indicate the agency is focusing its resources toward one problematic region at a time.  According to Trepp partner, Foresight Analytics, the next region of interest could be Puerto Rico, where seven banks made it to the watch list. Through Q110, more than 2,100 banks reported quarterly financial reports, and 14 of them are considered undercapitalized, significantly undercapitalized or even critically undercapitalized. The common malady of each troubled balance sheet is toxic commercial loans.  According to Trepp, these loans account for an average of 51% of the banks’ non-performing assets – a disproportionately high percentage. 

More bank closings could be on the way. Failures in 2009 reached 140, an increase of almost 500% from 2008, according to research from Grant Thornton. At the end of 2009, the FDIC “Problem List” had grown to 702 insured institutions.  Trepp had earlier reported that problematic commercial loans spreading through commercial mortgage-backed securities (CMBS) would plague small and mid-sized banks more than the larger ones. The firm forecasts 200 of these banks will fail in 2010.

Diana Olick – Home Buyer Credits Live Past Friday

“Fannie Mae announced this week that it would extend its 3.5% seller assistance on its REO properties (foreclosures) to June 30, 2010.  It was originally supposed to expire May 1. “We are happy with the results of the program, which has helped us to sell properties quickly, thereby stabilizing neighborhoods and property values,” said Terry Edwards, Executive Vice President of Credit Portfolio Management. This program gives buyers back 3.5% of the final sales price to be used toward closing cost assistance or their choice of selected appliances.  Obviously it’s been helping Fannie unload its large load of foreclosures.  No surprise that with the home buyer tax credit expiring and foreclosures rising, Fannie would choose to extend a program that’s working like this.  Of course, remember, Fannie Mae (along with sister Freddie Mac) is under government conservatorship and is being fueled by billions of taxpayer dollars, so this program is nothing short of another government housing bailout.

DSNews.com – FHA’s Delinquency Rate Falls Below 9%

According to FHA’s March operations report, loans that are 90 days of more past due dropped to 8.8 percent at the end of last month – down from 9.2 percent in February.  The March rate equates to 536,858 mortgages in arrears. In February, the agency counted 553,929 mortgages that were in seriously delinquent status.  While the short-term improvement is notable considering delinquencies industry-wide are still climbing, FHA’s past due loans last month are still 1.7 points higher than the 7.7 percent delinquency rate recorded by the federal insurer in March 2009.  So far this fiscal year, FHA has paid 129,503 claims — 75,466 of which were loss mitigation retention claims, and 47,458 were claims for property conveyances.  Buyer demand for government-backed mortgages has yet to wane.

FHA said its annual application rate jumped 18.3 percent in March. The agency attributed the surge to prospective mortgagors racing to beat the planned increase in FHA’s upfront mortgage insurance premium – from 1.75 to 2.25 percent – which took effect April 5.  FHA received a total of 246,406 applications in March, up from 165,239 the previous month. This included 163,467 purchase cases, 75,541 refinances, and 7,398 reverse mortgages. Fifty-four of the refinance applications submitted to the federal agency were Hope for Homeowners (H4H) cases.  During the month of March, FHA insured 132,301 single-family mortgages for $24.1 billion, bringing the federal insurer’s total mortgages in force to 6,114,452 with a scheduled aggregate outstanding balance of $805.6 billion.

Now on to our real estate investing education section …

Google’s Sandbox & Trustrank – Online Lesson #4

This week we have focused on what it takes to get started with Google; as the leading search engine, Google is one of the most revolutionary tools used by real estate agents and short sale investors alike. Unfortunately, learning how to navigate the rapid changes required to obtain top ratings isn’t always as simple as it seems…especially for brand new websites.

It’s common knowledge among internet marketing experts that Google treats new sites very differently than older, more established websites.

This is due to the Sandbox and Trustrank protocols.

Sandbox or Sandbag?

The Google sandbox is a generic term used to describe the way Google treats new websites…some would claim a better description is “sandbag” rather than “sandbox”. Either way, it’s a slow path to nowhere for unaware newbies. Because Google wants to see quality content, organic yet steady growth and reliable marketing efforts, it tends to institute a type of “probationary” setting for new websites. Once established for 3 to 6 months, websites will begin to be indexed more frequently, resulting in faster growth. However, that doesn’t mean you can help “jump start” the efforts or overcome the Google Sandbox effect….

1. Buy an older domain name instead of a new one. The “waiting period” will be over and marketing efforts will be better received by Google.

2. Utilize PPC or Pay-per-click advertising during the initial growth stage. Don’t over-rely on this measure, instead use it judiciously while building traffic and links elsewhere.

3. Optimize your website and build links…slowly. Google doesn’t like to see large bursts of link activity that could indicate a less than desirable link relationship.

Trustrank

One method used by Google to enhance position is to achieve a higher trustrank rating. Although there are several criteria used to enhance positioning, some of the most important considerations include:

Domain age and length of domain name

Frequency of updates

Sitemap and security settings

Number of links and page rank of the websites that link to you

Absence of spam and/or linking lists

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
–

Real Estate News & Commentary by Chris McLaughlin, April 10, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and flipping short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar tonight where

we explain it all this Saturday:

 

https://www2.gotomeeting.com/register/843758890

———

Mortgage rates up, but still low

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS) today.  For the week ending April 9, 2009, the 30-year fixed-rate mortgage (FRM) averaged 4.87 percent, up from last week when it averaged 4.78 percent.  Mind you, last year at this time, the 30-year FRM averaged 5.88 percent.  Homeowner affordability should stay at record levels according to Frank Nothaft, Freddie Mac’s vice president and chief economist:  “Mortgage rates rose slightly this week but still remained historically low,” he said.  “Given these low rates, housing demand has strengthened.  Conventional mortgage applications both for refinancing and for home purchases have increased over the past five consecutive weeks ending April 3.”

 

 

Oil demand to drop and stay low

The International Energy Agency (IEA) said world oil demand will drop by 2.4 million barrels per day in 2009, blaming a growing consensus that economic recovery won’t take place until next year.  It said demand for this year was expected to be 83.4 million bpd, around one million bpd less than in its previous monthly report, a rate of oil demand contraction last seen in the early 1980s.  The IEA’s report said expectations of a collapse in fuel consumption were not “solely conjecture,” and cited early indications of “much lower” demand in developed and non-developed countries for the first quarter of this year.   The Organization of the Petroleum Exporting Countries has agreed to reduce supply by 4.2 million bpd since September, but in last month’s report, the IEA said even with strict adherence with OPEC supply cuts already in place oil stocks in developed nations won’t shrink until the middle of the year, and demand is already expected to contract further.

 

Goldman Sachs buying out of TARP?

According to a Wall Street Journal report, Goldman Sachs is considering a new stock sale to repay the $10 billion loan it received from the government last year under the Troubled Asset Relief Program (TARP).  Goldman could announce the offering to investors as early as next week, the report said and it is expected to be several billion dollars.  It’s really no wonder, since along with the money came an inquisition, all sorts of obligations, and public humiliation from the same politicians who set the stage for the problem in the first place.  If there’s one thing worse than bankers with their hands on our money, it’s politicians.

 

Stress Tests pass, and fail

The “stress tests” the administration is conducting on the banks to see how well they would hold up if the recession deepens is under wraps for now, since President Obama asked the banks not to reveal the results until sometime around the end of April.  The surprise profit announcement for Wells Fargo may have kicked off a rally yesterday, but the results of the stress tests will probably show that the banks will still need more bailout funds.  Regulators say all 19 banks undergoing the exams will pass the tests, but add that no bank CAN fail them, since taxpayers will make sure they stay liquid.  And in spite of the recent rally, some analysts say that with the recession, banks are likely to record further large losses on credit cards, corporate loans and real estate.  Obama will meet today with Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and Federal Deposit Insurance Corp Chairman Sheila Bair to discuss the stress tests.

 

What does $11 Trillion look like?

CNBC has a series of graphics giving viewers a visual of just how deep in a hole we are – or in this case how big of a stack we are.  The national debt is shown as a huge stack of greenbacks dwarfing the Dubai Tower (tallest building in the world) and accompanied by the following caption: 

 

US National Debt

$11,046,247,657,049.48 (According to US Treasury Direct, 3/26/09)

The mounting US National debt, growing by billions every day, has recently topped the $11 trillion mark.  If denominated in $1 bills, the cash would stack as high as the tallest building in the world, the 2683.7 foot Burj Dubai skyscraper… 1,474,918 times.  At this height, it would create a block of bills with a base approximately twice the size of the Empire State Building, which is just under the size of three American football fields.

It is also interesting to note that this number is approximately 13 times the amount of US currency in circulation, according to the Treasury bulletin, which lists the amount at $853.6 billion as of December 31, 2008.

 

Now on to our real estate investing education section…

 

How to Irritate Lenders– Short Sale Newbie Mistakes

 

With all the benefits to be derived from approving a short sale offer, you might wonder why any bank would rather risk long vacancies, vandalism, months of no mortgage payments and the eventual cost and uncertainty associated with a home going to auction or other foreclosure sale. Believe it or not, most short sale investors simply don’t have the know-how to get the job done right. To put it plainly, the lack of professionalism and irritating actions dramatically decrease their odds of obtaining a great investment property. Find out a few of the more common ways to irritate your lender then sign-up with the ShortSalesRiches.com series to learn the right way to make money from short sales.

 

Badgering. Let’s face it, nobody likes to be badgered. Yes, you might be excited by submitting your first short sale offer but resist the urge to call too often or otherwise badger overworked staff. Maintain regular contact and put a system into place.

 

How Low Can You Go—Not that Low! While lowball offers are expected, don’t waste everyone’s time by submitting something excessively below the current market value. Keep it realistic and plan to justify the reasons why you think the offer is fair.

 

Requesting Repairs or Refunds. Although there are exceptions to every rule, short sales are sold ‘as-is’. The price should reflect needed repairs – including time and labor. Don’t expect the bank, lender or current homeowner to fix or repair anything. Problems that arise after the sale are also your problem so be sure to add in a bit of wiggle room especially if the homeowner plans to occupy the house for some time during or after the sale.

 

Bad Credit. Yes, they will look. Get your own finances in order and make a point of presenting them in the best light possible.

 

Threats.  Threatening to walk away from a deal, sue or other tactics rarely result in anything more than frustration for everyone involved. Unless a gross degree of misconduct was perpetuate against you related to a federal issues such as discrimination or other similar point, regular day to day mishaps are part of learning how to play the game. It’s essential to have a tried and true system in place that maximizes profit while minimizing time.

 

Homeowners with Assets. Homeowners have to demonstrate their need an inability to pay before a lender will agree to take a major loss. If your homeowner has other assets that could be turned into cash or compensate the lender for a loss then there is a high likelihood your offer will be rejected. Do your homework before blaming the bank – make sure the deal is win-win for all involved or you will likely just waste everyone’s time.

 

See you at the top!

 

 

Chris McLaughlin

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

 

P.S.

 

Don’t miss our webinar Saturday at 3:30 PM EST, 12:30 PM PST:

https://www2.gotomeeting.com/register/843758890

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

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

About the author:

 

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

 

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

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

     * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook:

http://www.facebook.com/addfriend.php?id=709199143

—