home sales

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

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

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

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

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

NAR – existing home sales up, prices down

Existing-home sales continued to recover in the first quarter with gains recorded in 49 states and the District of Columbia, while 22 percent of the available metropolitan areas saw prices rise from a year ago, according to the latest survey by the National Association of Realtors (NAR).  Total state existing-home sales, including single-family and condo, rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8 percent below a 5.18 million pace during the same period in 2010.  Also in the first quarter, the median existing single-family home price rose in 34 out of 153 metropolitan statistical areas (MSAs) from the first quarter of 2010, including four with double-digit increases; one was unchanged and 118 areas showed price declines.  The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. The median is where half sold for more and half sold for less.  Distressed homes, typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier. 

Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price. The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.  Investors accounted for 21 percent of first quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.  According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 4.85 percent in the first quarter, up from a record low 4.41 percent in the fourth quarter, but below the 5.00 percent average in the first quarter of 2010.  In the condo sector, metro area condominium and cooperative prices – covering changes in 53 metro areas – showed the national median existing-condo price was $152,900 in the first quarter, down 10.4 percent from the first quarter of 2010.  Eleven metros showed increases in the median condo price from a year ago, one was unchanged and 41 areas had declines. 

Regionally, existing-home sales in the Northeast increased 0.8 percent in the first quarter to a level of 800,000 but are 7.3 percent below the first quarter of 2010. The median existing single-family home price in the Northeast declined 5.0 percent to $234,100 in the first quarter from a year ago.  Existing-home sales in the Midwest rose 7.9 percent in the first quarter to a pace of 1.09 million but are 5.0 percent below a year ago. The median existing single-family home price in the Midwest fell 5.3 percent to $124,400 in the first quarter from the same period in 2010.  In the South, existing-home sales increased 8.5 percent in the first quarter to an annual rate of 1.96 million and are 2.8 percent higher than the first quarter of 2010. The median existing single-family home price in the South slipped 0.6 percent to $141,800 in the first quarter from a year earlier.  Existing-home sales in the West jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.

Trade gap widens

The U.S. trade deficit widened more than expected in March, as exports leapt to a new record but imports rose nearly 5 percent as oil prices jumped, a U.S. government report showed on Wednesday. The deficit rose to $48.2 billion, the widest since June 2010, from a slightly downwardly revised $45.4 billion in February.  Analysts surveyed before the report had pegged the March trade gap at $47.0 billion.  U.S. exports grew 4.6 percent in March to a record $172.7 billion, in the biggest month-to-month gain since March 1994. But imports grew 4.9 percent to $220.8 billion as the average price for imported oil hit $93.76 per barrel, the highest since September 2008.

The wider-than-expected trade gap could prompt analysts to trim their estimates of already weak first-quarter U.S. economic growth. But the rise in imports and exports also suggested strengthening U.S. and global demand as trade returns to pre-crisis levels.  Both U.S. goods and U.S. services exports set records in March, as did two sub-categories—foods, feeds and beverages and industrial supplies. U.S. exports to Canada and South and Central America also set records and exports to the European Union were the highest since July 2008.  U.S. imports were the highest since August 2008, just as the global financial crisis was beginning to bite into trade. Imports hit a record $232.1 billion in July 2008, before tumbling sharply over the next six months.  U.S. petroleum imports were also the highest since August 2008 and the U.S. petroleum trade deficit was the widest since October 2008.

MBA – mortgage applications up

Mortgage applications increased 8.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending May 6, 2011.  The Market Composite Index, a measure of mortgage loan application volume, increased 8.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 8.3 percent compared with the previous week. The Refinance Index increased 9.0 percent from the previous week, and is at its highest level since the week ending March 18, 2011.  The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier. The unadjusted Purchase Index increased 7.1 percent compared with the previous week and was 25.8 percent lower than the same week one year ago.

“Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program.   The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points,” said Michael Fratantoni, MBA’s Vice President of Research. “Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall.”

The four week moving average for the seasonally adjusted Market Index is up 2.9 percent.  The four week moving average is up 0.4 percent for the seasonally adjusted Purchase Index, while this average is up 4.3 percent for the Refinance Index.  The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.7 percent the previous week. The refinance share is at its highest level since the week ending March 25, 2011. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent from 6.7 percent of total applications from the previous week.

Oil down

Oil prices slipped to near $103 a barrel today as traders weighed mixed signals about the strength of energy demand in the U.S., the world’s largest economy.  The American Petroleum Institute (API) said late Tuesday that crude inventories rose 2.9 million barrels last week, more than the increase of 1.6 million barrels predicted by analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.  However, inventories of gasoline, which have dropped 11 straight weeks, fell by 295,000 barrels last week, the API said.  The Energy Department’s Energy Information Administration (EIA) reports its weekly supply data — the market benchmark — later today.  In the meantime, its downward revision of estimates for oil consumption weighed on markets.  The EIA now expects global demand for oil to grow by 1.4 million barrels a day in 2011, about 120,000 barrels a day less that it forecast a month ago.  The forecast “has temporarily stopped the price recovery,” said a report from Commerzbank in Frankfurt.  Oil prices have swung sharply since the beginning of May, dropping 15 percent last week before rebounding about 6 percent so far this week. Investor concern that flooding on the Mississippi River could damage refineries and disrupt fuel shipments helped push crude higher yesterday.

WSJ – banks offer $5 billion to close foreclosure probe

The nation’s biggest banks are willing to pay as much as $5 billion to settle claims by federal and state officials of improper mortgage-servicing practices, according to people familiar with the situation.  The offer is considerably less than the amounts sought by state and federal officials, some of whom are asking for more than $20 billion in penalties. The banks’ figure comes as mortgage companies and state and federal officials continue their efforts to strike a settlement of investigations sparked by allegations of “robo-signing” and other questionable foreclosure practices that came to light last fall. 

Bank representatives met Tuesday with state and federal officials in the latest round of negotiations. On Friday, banks received revised term sheets from government negotiators. One sheet revised proposed changes in mortgage-servicing practices. The second term sheet governs how penalties would be allocated; among other things, it details how they would have to reduce loan balances for certain borrowers.  “It sets forth a structure that establishes how funds would be disbursed both on the state and federal levels,” said a spokesman for Iowa Attorney General Tom Miller.  Banks also are opposed to any broad-based write-down of principal balances, saying it will provide an incentive for borrowers to default.

The banks intend to propose that as much as $5 billion be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes, according to people familiar with the matter. One idea is that foreclosed borrowers could receive several months of free rent once they find new housing, one of these people said.  All sides want a settlement to resolve widespread breakdowns in foreclosure procedures but any agreement must satisfy an unwieldy mix of parties, including state attorneys general, the Federal Trade Commission and the Department of Housing and Urban Development.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 150 high-value, high-profit
      properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

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

      closed 2,786 sides for a closed sales volume of

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

Smart Real Estate News & Commentary by Chris McLaughlin April 28, 2011

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

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

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

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

NAR – pending home sales rise

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors (NAR).  The Pending Home Sales Index (PHSI) rose 5.1% to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4% below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.  The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

The PHSI in the Northeast fell 3.2% to 63.4 in March and is 18.4% below March 2010. In the Midwest the index rose 3.0% in March to 83.5 but is 16.6% below a year ago. Pending home sales in the South jumped 10.3% to an index of 110.2 but are 10.5% below March 2010. In the West the index increased 3.1% to 103.7 but is 4.1% below a year ago.  Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24% and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

GNP slows

Gross domestic product, the broadest measure of the nation’s economic health, rose at an annual rate of 1.8%, the Commerce Department reported today. That’s a significant slowdown from the 3.1% growth rate in the final quarter of 2010.  Most predictions for growth have fallen precipitously over the past several weeks as rising prices spooked forecasters. Economists surveyed by CNNMoney were predicting growth of 2.0% in the first quarter. But some estimates were as high as 4.3% just two months earlier.  The sharp rise in oil prices in recent months was a major drag on growth. Besides cutting into the amount of money consumers had to spend on other items, the higher prices for imported oil caused a rise in the nation’s imports, which cut into GDP. The increase in imported goods shaved 0.8 percentage points off of growth by itself.  Rising inflation on overall prices also took a bite out of growth. Since GDP is adjusted for inflation, higher prices mean the economy must grow at a faster pace just to keep up. Consumer prices were up at a 3.8% from a year earlier, according to the report, compared to a rise of only 1.7% in the fourth quarter.  And the weak real estate market continued to weigh on the economy, as investment in homes and housing construction fell at a 4.1% pace in the quarter, while investment in non-residential real estate, such as offices, stores and factories, plunged by 29%.  But economists are expecting the slowdown to be temporary — they still project full-year growth of 3.1% for 2011.

DSNews.com – Home ownership dropping

The U.S. Census Bureau reported yesterday that the homeownership rate dropped to 66.4% at the end of the first quarter. It’s fallen back to a level not seen since 1998. Analysis of the numbers shows that the housing bust has more than reversed the increase in homeownership gained during the boom.  Economists at the research firm Capital Economics say the further decline in the homeownership rate in the first quarter “provides yet more evidence that Americans are now less able and less willing to buy a home.”  Paul Dales, the firm’s senior U.S. economist, said, “Part of this fall is due to foreclosures and the combination of high unemployment and tighter credit conditions preventing households from getting on the property ladder.”

But, Dales added, “[I]t also seems likely that there has been a reduction in the desire to own a home now it’s clear that housing is not a one way bet.”  At the same time, the homeowner vacancy rate fell to 2.6% from 2.7%, but Dales says this figures till remains above the long-run trend, suggesting that there is still too much supply.  Two million of the homes up for sale were sitting empty during the first quarter and another 4 million empty properties were not even listed, he explained.  “The inevitable consequence of low demand and high supply is lower prices,” Dales said.

Unemployment up

The number of initial claims rose to to 429,000 in the week ended Apr. 23, up 25,000 from the week before. It was the highest level in three months, and surprised economists, who were expecting initial claims to drop to 390,000 in the latest report.  The 4-week moving average of initial filings– a number that tries to smooth out week-to-week volatility — also rose above the threshold to 408,500, up 9,250 from the previous week. The 8-week moving average, which is an even better gauge for the longer-term trend, also ticked above 400,000.  In the government’s last monthly reading on the labor market, the unemployment rate fell for a fourth straight month in March to 8.8%, the lowest since March 2009, as the economy gained 216,000 jobs.

The Labor Department’s April job report is due at the end of next week.  Meanwhile, the number of Americans filing for ongoing claims decreased 68,000 to 3,709,000 in the week ended April 16, the latest data available. That’s the lowest figure since September 2008, and below economists’ estimates for 3,690,000 continuing claims.  Ongoing claims reflect people who file each week after their initial claim until the end of their standard benefits, usually after 26 weeks.  The 4-week moving average for ongoing claims fell by 22,750 to 3,697,750.

Ryland’s loss grows

Homebuilder and mortgage lender Ryland Group posted a first-quarter loss of $19.5 million, or 44 cents per share, as the company continued to grapple with falling home sales and a real estate market flooded with competing foreclosures and existing home sales.  The firm reported a loss of $14.3 million, or 33 cents a share, a year earlier.
 The builder, which also maintains its own mortgage finance group, failed to meet analyst expectations, with the average analyst expecting a loss of 31 cents a share.  Ryland’s loss deepened as sales fell about 30% to $168.6 million for the first quarter, down from $241.9 million a year earlier.

Home sales fell 17.2%, with only 966 new orders reported in the first three months of 2011, compared to 1,167 a year earlier when the homebuyer tax credit was still in play coaxing buyers into the market.  Ryland’s results for the quarter were hurt by pretax charges on inventory, valuation adjustments and other write-offs for the period.  The company’s deepening loss comes at a time when homebuilders are struggling to attract new buyers.  Moody’s Investors Service recently revised the ratings outlook for PulteGroup Inc. from positive to stable over concerns the homebuilder’s operating performance and the industry’s return to a more stable environment will take more than a year.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
420 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!

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

closed 2,786 sides for a closed sales volume of

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

Smart Real Estate News & Commentary by Chris McLaughlin March 29, 2011 

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

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

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

Home prices fall to 2009 levels

The S&P/Case-Shiller home price index covering 20 major markets fell 3.1% year-over-year, and was down 1% compared with December 2010.  After rebounding nearly 7% off their post-bubble lows, prices have fallen more than 5% since July and are only 1.1% higher than the bottom set in April, 2009.  “January brings us weakening home prices with no real hope in sight for the near future,” says David M. Blitzer, a spokesman for S&P.  The dismal report followed other negative housing market indicators recently. Sales of existing homes were off nearly 10% in February and new homes sales were at a record low.  “The housing market recession is not yet over,” said Blitzer, “and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”

Economy on the mend

A new survey from KPMG shows that 68% of manufacturing executives believe business activity will be higher in the next 12 months. That’s up from 57% in October.  Forty-one% of those same executives say they plan to hire more in the weeks and months ahead. That number was just 28% five months ago.  As far as revenue is concerned, 65% of manufacturers surveyed by KPMG expect revenues to rise in the next year.  Things are also getting brighter for the U.S. service sector. Sixty-six% of executives believe business activity will pick up within the next 12 months. However, they’re not quite as optimistic on hiring. Only 28% of those who responded expect to add jobs in the short term, and that’s up ever so slightly from October.

NAR – pending home sales rise

The Pending Home Sales Index (PHSI), a forward-looking indicator released by the National Association of Realtors (NAR), rose 2.1% to 90.8, based on contracts signed in February, from 88.9 in January. The index is 8.2% below 98.9 recorded in February 2010. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.  The PHSI in the Northeast fell 10.9% to 65.5 in February and is 18.4% below a year ago. In the Midwest the index rose 4.0% in February to 81.1 but is 15.9% below February 2010. Pending home sales in the South increased 2.7% to an index of 100.3 but are 5.3% below a year ago. In the West the index rose 7.0% to 105.6 and is 0.6% higher than February 2010.  The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.  An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

Oil down in price

Benchmark crude for May delivery was down $1.02 to $102.96 a barrel by early afternoon in Europe in electronic trading on the New York Mercantile Exchange. The contract dropped $1.42 on Monday to settle at $103.98. In London, Brent crude was down $1.04 at $113.76 a barrel on the ICE futures exchange.  Oil prices have come off near two-year highs above $106 last week after coalition bombing pushed back Gadhafi forces and allowed rebels to retake key oil ports. Fighting is expected to become more fierce as rebels approach the capital Tripoli — a Gadhafi stronghold.  Trading volume of oil futures fell last week to its lowest level this year as investors tracked news not only from the Middle East, but also Japan. The Japanese government said it would release 22 days worth of inventories from its strategic petroleum reserves to ease shortages in the regions devastated by the March 11 earthquake and tsunami.  Traders are also gauging the strength of the U.S. economic recovery. The Conference Board index of consumer confidence will be released later Tuesday, and analysts will be looking for signs that buying sentiment has improved in tandem with the falling unemployment rate.  “If we see a disappointing consumer confidence number and a higher dollar there is a very real chance” of oil falling to $100 or below before the end of the week, energy consultant The Schork Group said.

MBA, NAR and others release set of principles for mortgage reform

The undersigned organizations, representing a variety of stakeholders in single- and multifamily housing, believe the following principles should help guide efforts to restore and repair the nation’s housing finance system:

-  A stable housing sector is essential for a robust economic recovery and long term prosperity.  Housing, whether through homeownership or rental, promotes social and economic benefits that warrant it being a national policy priority.

-  Private capital must be the dominant source of mortgage credit, and it must also bear the primary risk in any future housing finance system.

-  Some continuing and predictable government role is necessary to promote investor confidence and ensure liquidity and stability for homeownership and rental housing.

-  Changes to the mortgage finance system must be done carefully and over a reasonable transition period to ensure that a reliable mortgage finance system is in place to function effectively in the years ahead.

Private investment capital is critical for a robust and healthy mortgage marketplace, and the current government-dominated mortgage system is neither sustainable nor desirable.  However, investors must be confident that they understand the risks and rules that can affect them.  As policymakers move forward with Dodd-Frank Act rulemakings and similar regulatory efforts, it will be important to provide clarity and certainty to the marketplace in a manner that promotes recovery and growth.  As such, the future mortgage system should seek to ensure a workable balance between sound underwriting principles, consumer protection and the need for responsible innovation and risk-taking. 

As critical as it is to attract private money to the mortgage markets, an appropriate and clearly defined role for the government is essential to preserving financial stability.  Government support through various insurance and guarantee mechanisms is especially important to facilitate long-term fixed-rate mortgages, affordable financing for 2 low- and moderate-income borrowers, and financing rental housing in all parts of the country including rural areas.  While the goal should be to move toward a largely private secondary market, the private and public sectors should work as partners in creating a variety of financing options to ensure the availability of safe, stable, and affordable financing.  Accomplishing all of these goals will require an on-going dialogue between policymakers and other key stakeholders, including industry and consumer groups.  Our organizations stand committed to being part of this process.

Signatories:

American Bankers Association

American Financial Services Association

Community Mortgage Banking Project

CRE Finance Council

Housing Policy Council of the Financial Services Roundtable

Independent Community Bankers of America

Manufactured Housing Institute

Mortgage Bankers Association

Mortgage Insurance Companies of America

National Apartment Association

National Association of Home Builders

National Association of Realtors

National Council of State Housing Agencies

National Multi Housing Council

Real Estate Roundtable

Securities Industry and Financial Markets Association

Homeowner help running into trouble

Iowa Attorney General Tom Miller — a leader among the states involved in a probe into mortgage servicers’ foreclosure practices — has said he hopes to have a done deal to help homeowners by early May, after state attorneys general, regulators and the five largest mortgage servicers are expected to meet this week in Washington to resolve allegations that thousands of homeowners were foreclosed on wrongly.  But making that timeline looks increasingly difficult, according to sources close to the negotiations — especially since the discussions officially begin tomorrow.  One of the major sticking points is an effort to get the five largest mortgage servicers to consider reducing the principal on some loans held by underwater homeowners.  Regulators and attorneys general sent the banks a 27-page offer, or so-called “term sheet,” in early March that included ways in which homeowners could more easily get mortgage modifications. Among the ideas was a reduction, in some cases, in the principal amount that they owe on their house. 

However, seven state attorneys general have written letters to Miller saying that they think the opening offer goes too far. They specifically don’t agree that banks should be forced to reduce principal on underwater loans. The state officials who wrote letters represent Oklahoma, Alabama, Nebraska, Virginia, Texas, Florida and South Carolina.  Banking groups representing those involved declined to talk about the settlement discussions underway. However, the banks are expected to push back against any measure that would require them to write down mortgage loan principal.

Olick – mortgage storm brewing

“When it rains, it pours, but we’re looking at a hail storm in housing finance this week, as government starts the business of taking itself out of the housing business. Tomorrow morning the FDIC will release and vote on proposed risk retention rules for the mortgage market. This includes the ‘Qualified Residential Mortgage’ definition. A QRM would be exempt from risk retention, where the banks have to hold on to 5% of the risk when securitizing loans.  The QRM will likely require a 20% down payment on the loan, as well as other underwriting criteria, and loans sold to Fannie and Freddie (while still in conservatorship), as well as FHA loans, would be exempt. At the same time, Fannie, Freddie and the FHA are making themselves more expensive, as they try to shrink their currently overwhelming market share.  Barely a few hours after the vote, House Republicans will introduce a slew of, possibly six, bills designed to reform/shrink/eliminate Fannie and Freddie. Then comes more at a hearing on Thursday on housing finance.

All of this begging the question: Without Fannie and Freddie, does the 30-year fixed still exist in a fully private market? And what are the dangers if it doesn’t?  ‘We continue to believe that low cost, 30-year fixed-rate mortgages are the best way to support the housing market and see anything that threatens this product as negative for those with housing exposure as it will slow the eventual housing recovery,’ writes Jaret Seiberg at MF Global. ‘That means negative pressure on the big banks, the mortgage insurers, and the home builders.’  It also means mortgages get more expensive for you and me.  ‘There’s no question if the government gets out of the business of backing mortgages, rates should go up, underwriting will be tougher, down payments will go up,’ Toll Brothers CEO Douglas Yearley Jr. said today on CNBC. ‘It’s going to affect all of us. It would be a head wind.’  A head wind is not exactly what we need in the midst of a hail storm. Am I seeming too gloomy to you? Given that the number of contracts signed for existing home sales rose a whopping 2% month to month in February? I don’t think so. Home prices are falling again, negative equity is rising, foreclosure inventory is surging and consumer confidence in housing is non-existent. Add rising interest rates to that, and you really do have the perfect storm.”

Now on to our real estate investor news…

Investing in REO/Bank-Owned Properties 101

When a property goes into foreclosure, the bank takes possession of the title and tries to sell it outright. If a property does not sell at the foreclosure auction, it goes back to the mortgage company and becomes real estate owned (REO) property. Surprisingly, many foreclosure auctions result in no bids at all. That is often because buyers need to have cash or a check ready to pay and not everyone has that quick of access to funding…unless they have been watching our webinars on how to obtain quick cash and profit from deals even if you are flat broke. Another common reason that people fail to take advantage of the great deals available at auction is because they might not have had enough time to do the proper amount of research. Regardless of the reason, if a property does not sell, the lender takes back the property…something they are prefer not to do with such significant numbers of non-performing loans on the books. .

An REO or bank owned property can be a very good investment, if you perform due diligence and cover all your bases before you leap. Don’t automatically assume the property will sell for a deep discount; many do but not all. It’s important to keep a few things in mind:

• As is—Most REO properties are sold as is. Lenders don’t want to put any more money into the property and only wish to get rid of it for as much as they can.

It is also important to remember that the homeowners lost this property to the bank. You can safely assume that they were not making any repairs to the property once they knew it was going to be foreclosed upon. Be aware of hidden risks like plumbing and electrical as well and include wording in your offer specifying that it is subject to inspection.

• Do your homework—banks are trying to get as much as possible for their property. So not all REOs will be great bargains and you shouldn’t automatically assume they are. That doesn’t mean good deals can’t be found. It just means that you will need to look closely. Make sure to check out other comparable sales in the area and neighborhood so that you can get a feel for the market.
• Be prepared to counter—Once you make an offer, most lenders will make a counter offer that is much higher than you might expect. This is generally because they are trying to show their stakeholders that they are making a solid effort at getting a good price. If you are prepared for this, you can simply counter their counter-offer and move forward.

REO properties can be good investments, but are not automatic bargains. Make sure you balance the costs, including fees and repairs costs, with what you think you can get out of the property should you decide to resell or rent out and make your decision from there.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 150 high-value, high-profit
      properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

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

      closed 2,786 sides for a closed sales volume of

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

Smart Real Estate News & Commentary by Chris McLaughlin March 22, 2011

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

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

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

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

9.6% Dip In Existing Home Sales

Sales of existing homes fell in February after three straight monthly increases.  According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, went down 9.6% from January and 2.8% lower than February 2010 sales. The dip was much worse than what was predicted. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained,” said Lawrence Yun, NAR chief economist. As the credit market tightens, the recovery road looks rocky. There is a record level of all-cash purchases as investors are making a killing of homes at bargain prices, as inventory rose to 3.49 million units…  Traditional home buyers are expected to return only when mortgage credit conditions return to being normal.

Fed’s Fisher Opposes Extension of QE2

U.S. Federal Reserve Bank of Dallas President Richard Fisher said he opposes any extension of the Fed’s asset purchase program after June, saying inflationary pressures are building “world-wide.”  “No further accommodation is needed after June.  We can no longer press on the monetary pedal,” Fisher said in a speech at Goethe University in Frankfurt. Fisher has been skeptical of the program, dubbed QE2, saying two weeks ago, that it should prove “demonstrably counterproductive,” and it would be better to discontinue it.  Last week, the Fed voted to maintain its key lending target near zero and maintain its planned $600 billion in Treasury purchases through June.  As the Fed’s rate-setting board voted to continue the program, he warned of speculative excesses that may be contributing to the rise in oil prices. “We are seeing the signs of all the intoxication” that arises from cheap and available capital, Fisher said.

Diana Olick – Existing-Home Sales Plunge, Setback for Housing Recovery

Sales of previously owned U.S. homes fell unexpectedly sharply in February and prices touched their lowest level in nearly nine years, implying a housing market recovery was still a long off.  The National Association of Realtors said Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July. Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.

Oversupply of homes and a relentless wave of foreclosures are pressuring prices, holding back recovery in the sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s. Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month. All-cash purchases made up a record 33 percent of transactions in February. Sales last month fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 10.0 percent. At February’s sales pace, the supply of existing homes on the market rose to 8.6 months’ worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.

Chaotic Foreclosures Rock Shadow Inventory

Foreclosure time lines and an abundance of distressed home sales are causing wide fluctuations in shadow inventory across the country. On the whole, it is estimated that 5.3 million homes are in limbo between foreclosure and the sales market. Standard & Poor’s states it could take up to 49 months to clearn the shadow inventory. NAR quotes that Florida with 441,000 residential properties has the largest shadow inventory, followed by California with 228,000.  Generally shadow inventory properties are sold as distressed sales. The growing shadow inventories are attributed to the recent disruptions to foreclosure time lines.  The length of foreclosure process in Florida and California jumped 156% and 157% respectively since 2008.  Florida and California are expected to take 29 and 11 months respectively to clear their shadow inventory.

Discounts Expected in Spring Housing Market

As the market readies for its busiest season, sales of previously owned homes fell sharply in February, setting the stage for steep discounting in the spring market.  The silver lining, say economists, is that bargain prices, coupled with low interest rates, might finally spur some buyers off the fence.  Even without the $8,000 federal tax credit industry watchers predict a larger number of transactions this year.  Still, Monday’s data painted a picture of pain and price declines that have spared no region. “The housing market is still clearly years away from staging any meaningful recovery,” Toronto-based Capital Economics wrote in a note to clients. Some builders of new homes are increasing discounts on residences and boosting commissions to brokers.

Overall, February’s weakness could have been driven by bad weather, deals canceled over lowball appraisals and a higher number of distress sales, according to the National Association of Realtors. A third of transactions were all-cash sales, and investors accounted for 19% of February sales activity, down from 23% in January. Low prices in many markets also reflect a new reality as sellers finally give in and reduce the asking prices on their homes in hopes of a fast deal.  Economists say the number of distressed sales will continue to rise, and put pressure on prices. But mortgage rates, which were trending upward during the fall and winter months, have been falling in recent weeks amid global turmoil over the crises in Japan.

DSNews.com – Delinquencies and Foreclosure Inventories decline

In what can be viewed as an anomaly of the current housing crisis, Lender Processing Services Inc (LPS) reported that the total loan delinquency rate for the U.S. mortgage market dropped to 8.80 percent. LPS calculates this stat based on loans that are 30 or more days past due, but not yet moved into foreclosure.  The company’s statistics are derived from its loan-level database of nearly 40 million mortgage loans. The analytics firm reports that the total loan delinquency rate for the U.S. mortgage market dropped to 8.80 percent. 

According to the firm, foreclosure activity was bottlenecked last fall when the news of improper affidavit filings surfaced and several large servicers temporarily froze proceedings to review internal processes, causing foreclosure inventory numbers to swell as loans languished in the pipeline.  LPS reports the states with the highest ratio of non-current loans – meaning the combined percentage of both foreclosures and delinquencies – are Florida, Nevada, Mississippi, New Jersey, and Georgia and those with the lowest percentage of non-current loans included Montana, Wyoming, Arkansas, South Dakota, and North Dakota.

Now on to our real estate investor news…

Bird Dog Ratio’s

There is a great deal of interest in becoming a bird dog and with good reason; six-figure income, zero start-up costs and extremely low risk make it a win-win for everyone involved. Unfortunately, a few less than scrupulous real estate guru’s have been promoting a bird dog type program that is long on promises and short on results. Now, we adhere to that old rule about “not saying nothing if you don’t have anything good to say” so our lips are mum on the offending party. However, in an effort to educate our readers, it is important to understand one ratio that will help prevent people from falling victim to promises that sound too good to be true.

Pay to Play

One of the newer twists to the bird dog field is the idea that you can pay to play with big investors. At first glance, it sounds like a great idea; you get direct contact with investors that have a proven track record and access to sufficient funding to close as many deals as they desire. The investors get to cherry pick the absolute best of the best properties by having a lot of eyes and ears scouring the area for the best properties.

But is the pay to play program everything it seems? It depends.

A Numbers Game

Like anything in real estate, it boils down to the numbers. Before paying anyone to become part of their bird-dog program, stop and do the math. For example, if someone is promoting a pay to play bird-dog program to 100 people who sign-up to participate, that is a lot of people going after the same properties in each area. Let’s just assume that each person averages ten different deals per year…with over 1,000 different properties to choose from, the chances of your property being selected is fairly minimal if the investor only buys 10 per year. It’s not bad if they buy 100 per year. As an example, one acquisition manager for a well known real estate investor said they evaluated over 1,000 deals a year and selected a couple of dozen at best. How does this translate to the average bird dog investor? Not all that well. By paying to play, you may actually be putting yourself at a distinct disadvantage rather than the desired advantage.

Use the Rules to Your Advantage

The solution? Simple. Use the rules to your advantage. Find out how many properties the investor buys each year as compared to the number of bird-dogs that are enrolled in any pay to play program. This is a “must know” ratio to determine prior to signing-up.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

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

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 150 high-value, high-profit
      properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

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

      closed 2,786 sides for a closed sales volume of

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