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Smart Real Estate News & Commentary by Chris McLaughlin January 19, 2012

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Foreclosures at 49 month low in December

An annual report of foreclosure activity in the US found the number of properties subject to default notices, scheduled auctions or bank repossessions in 2011 dropped 34% from the previous year, according to a RealtyTrac report released today. In addition to the overall decline in foreclosures, the report found that December activity was at the lowest level since August 2007. However, the report cautions 2012 could likely see an upswing in activity.  For the fifth straight year, Nevada recorded the most foreclosure activity of any state in the nation. While 1.45% of housing units nationwide had at least one foreclosure filing in 2011, the Nevada rate was 6%. That translates into foreclosure filings for 1 in 16 housing units in the state.  Despite having the distinction of the country’s highest foreclosure rate, the situation in Nevada has improved significantly from years past. Foreclosure activity in 2011 was down 31% from that of 2010. Default notice filings dropped 70% in the fourth quarter compared to the third quarter. However, that decrease may be largely attributed to a change in Nevada state law that requires an additional affidavit before beginning the foreclosure process.

Other states with an above-average percentage of homes with at least one foreclosure filing in 2011 represent almost every region except New England:

-  Arizona – 4.14%

-  California – 3.19%

-  Georgia – 2.71%

-  Michigan – 2.21%

-  Florida – 2.06%

-  Illinois – 1.95%

-  Colorado – 1.78%

-  Idaho – 1.77%

BOA rebounds

Bank of America (BOA) matched profit expectations and exceeded revenue estimates for quarterly earnings, sending shares that had been trading below $5 just a month ago spiking higher in premarket trading.  BOA posted fourth-quarter earnings excluding items of 15 cents per share, up from 4 cents in the year-earlier period.  Net income was $2 billion, compared to a loss of $1.2 billion in the same period a year ago.  Analysts had expected the company to report earnings excluding items of 15 cents.  After the earnings announcement, the company’s shares jumped 6.4% in pre-market trading.  After struggling along the way to deal with regulatory requirements and blowback from the European debt crisis, BOA posted a full-year profit of $1.4 billion against a loss of $2.2 billion in 2010.  The company has been busy shedding non-care assets, moves that resulted in a 43% cut in credit losses and $34 billion in proceeds.  In particular, BOA said it made $2 billion in the fourth quarter by selling its stake in a Chinese bank and selling debt. That offset losses and higher legal expenses in its mortgage business.

A million homeowners may get writedowns

About one million American homeowners would get writedowns in the size of their mortgages under a proposed deal with banks over shady foreclosure practices, US Housing and Urban Development Secretary Shaun Donovan said yesterday.  The deal, which could be struck within weeks, would mark the largest cut in the mortgage load since the start of the credit crisis.  “We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help,” Donovan said at a US Conference of Mayors meeting in Washington.  Talks involving federal officials, state attorneys general and major banks to resolve allegations of “robo-signing” and other misconduct in foreclosures have dragged into their second year.  Donovan’s announcement came the same day that two big regional US banks disclosed they had set aside funds related to mortgage servicing matters, a sign that lenders beyond the five largest mortgage servicers may join the expected settlement.  In exchange for between $20 billion to $25 billion in relief to distressed homeowners, the banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial — will put behind them potential government lawsuits about improper foreclosures and abuses in originating and servicing the loans.  Using Donovan’s estimate, the settlement could provide roughly a $20,000 reduction each for the one million borrowers.

Unemployment down

The number of people seeking unemployment benefits plummeted last week to 352,000, the fewest since April 2008. The decline added to evidence that the job market is strengthening.  Weekly applications fell 50,000, the biggest drop in the seasonally adjusted figure in more than six years, the Labor Department said Thursday. The four-week average, which smooths out fluctuations, dropped to 379,000. That’s the second-lowest such figure in more than three years.  A department spokesman cautioned that volatility at this time of year is common. Applications had jumped two weeks ago, largely because companies laid off thousands of temporary workers hired for the holidays.  When weekly applications fall consistently below 375,000, it usually signals that hiring is strong enough to push down the unemployment rate.

Hiring improved in the second half of 2011. In December, employers added 200,000 jobs. That marked the sixth straight month in which the economy added at least 100,000 jobs. And the unemployment rate fell to 8.5%, a three-year low.  For all of 2011, the economy added 1.6 million jobs. That was up sharply from 940,000 in 2010. Economists say they expect roughly 1.9 million more jobs to be added this year, according to a survey by The Associated Press.   Still, the job market has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. More than 13 million people remain unemployed. Millions more have given up looking for work and so are no longer counted as unemployed.  The manufacturing sector remains a bright spot. Factory output jumped 0.9% in December, the Federal Reserve said this week. That was the sharpest monthly gain in a year. Manufacturing gained 225,000 jobs last year, the most since 1997.  The economy likely grew at an annual rate of about 3% in the final three months of last year, economists estimate.  That would be a sharp improvement over the 1.8% annual growth rate in the July-September quarter. Rising consumer spending is thought to be fueling much of the gain in the current quarter.  Even so, economists worry that growth could slow in the first half of 2012. Europe is almost certain to fall into recession because of its financial troubles. And wages failed to keep pace with inflation last year. Without more jobs and higher pay, consumers might have to cut back on spending. That would weigh down growth next year. Consumer spending accounts for about 70% of the economy.

Olick – do apartments face a bubble?

“A huge surge in rental demand and comparatively little apartment supply created a boom in multi-family construction in the last year, but with the single family housing market slowly beginning to show signs of life, the concern among banks and investors is that all that supply will hit the market just as rental demand drops off.  Based on preliminary estimates of Q4 ’11 activity, multi-family loan origination volume increased to $82 billion in 2011, up from $50 billion in 2010, according to Chandan Economics. Understandably, some lenders and investors are starting to ask questions.  ‘While 2012 should be another good year for apartment REITs, there is concern amongst some investors and managements that market expectations may be hard to beat,’ say analysts at Sandler O’Neill. ‘Based on discussions with managements, revenue growth should match sentiment but expense growth may be the wildcard.’

Rents have been rising steadily as apartment vacancies drop and ’rental nation’ pervades consumer sentiment, but 2012 will likely not see as robust rent growth as 2011; housing affordability continues to improve and renting is becoming ever more expensive than owning.  ‘A stretched consumer is beginning to push back harder against rental increases, and new supply and a slowly healing single-family market will begin to equalize what has been a lopsided, renter-dominated housing market for over 5 years,’ say analysts at Green Street Advisors.  Mortgage applications surged 23% last week, according to the Mortgage Bankers association, although most of that was refinances. Another positive came from the NAHB’s home builder sentiment index, which saw big gains in builder confidence, citing improved sales and buyer traffic. So is there real cause for concern about apartment demand?  ‘Only in some markets,’ says Sam Chandan of Chandan Economics. ‘Austin is a case in point. The supply response has been unusually strong there. Apart from specific cases like that, we do not anticipate a strong reversal in the rental bias until jobs accelerate markedly.’

Since 2004, when homeownership rates peaked, the population of 20-34-year-olds grew by 2.8 million, according to researchers at CoStar Group, a commercial real estate information company. But the number of households shrunk by 300,000. In other words, younger Americans were doubling up with roommates or moving back in with their parents.  ‘This suggests big pent up demand – as much as 1.4 million new households within this prime renting cohort,’ says CoStar’s Suzanne Mulvee.  We also have to remember that many Americans now have either damaged credit or not enough of a downpayment to qualify for today’s low interest rate mortgages. That could keep them as renters for many more years, as credit standards aren’t likely to loosen any time soon.  Pent-up demand will, like everything else in real estate, vary from market to market. In Washington, DC, for example, investors in multi-family are still very bullish, as home prices are strengthening and apartment supply is still limited. In other areas, like Las Vegas, where distressed homes are selling at big discounts, rental demand may wane more quickly for apartments, as those unwilling to buy choose to rent single family homes.  Another headwind to the multi-family sector could be more investors buying foreclosed single-family homes in bulk to rent. With federal regulators and the Obama administration seriously considering a program to sell bulk foreclosures owned by Fannie Mae and Freddie Mac, there could suddenly be a large supply of single family rentals competing against multi-family buildings. Again, that would largely be in the sand states, as there are far fewer foreclosed homes in major cities where apartments are and will likely continue to see big gains.”

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 January 17, 2012

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Orlando short sales 12% higher price

The median price of homes sold in Orlando during December 2011 ($118,000) was 12.38 percent higher than the median price in December 2010 ($105,000). During 2011, Orlando’s median price climbed 24.34 percent from a low of $94,900 in January to a high of $118,000 in December. The median price of “normal” sales that closed in December 2011 was $159,900 (representing a decrease of 0.06 percent compared to December 2010). The median price for short sales in December 2011 was $105,000 (an increase of 10.53 percent compared to December 2010), and the median price for bank-owned sales in December was $80,000 (an increase of 6.67 percent compared to December 2010). Orlando Regional Realtor Association (ORRA) members participated in 13.86 percent less home sales in December of this year than in December of 2010: 2,125 and 2,467, respectively. At year’s end, the number of sales for all of 2011 (27,703) was 3.48 less than in all of 2010 (28,701).

In month-over-month comparisons, sales of foreclosed homes declined 56.29 percent in December 2011 compared to December 2010. Short sales and “normal” sales both increased (by 24.41 percent and 14.15 percent, respectively) in December 2011 compared to December 2010. Normal sales (871) accounted for 40.99 percent of all transactions in December 2011, while short sales (785) accounted for 36.94 percent and bank-owned sales (469) made up the remaining 22.07. The Orlando average interest has dropped to a new low once again. Buyers who purchased an Orlando area home in December paid an average interest rate of 3.99 percent, which is the lowest since the ORRA began tracking the statistic in January of 1995. Homes of all types spent an average of 103 days on the market before coming under contract in December 2011, and the average home sold for 92.40 percent of its listing price. In December 2010 those numbers were 97 days and 94.45 percent, respectively.

New York’s factory index up

The New York Fed’s “Empire State” general business conditions index rose to 13.48 from a revised 8.19 in December, topping economists’ expectations of 11.0. It was the highest level since April 2011. New orders climbed to 13.70 from a revised 5.99, while inventories also gained to 6.59 from minus 3.49. The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions. Employment gauges showed strength. The index for the number of employees rose to 12.09 from 2.33 and the average employee workweek index climbed to 6.59 from minus 2.33. Manufacturers were also more optimistic about their outlook with the index of business conditions six months ahead rising to its highest level since last January at 54.87 from 45.61.

More failed HAMP trials

Mortgage servicers are putting more failed Home Affordable Modification Program (HAMP) trials through foreclosure than they were one year ago. According to Treasury Department data released last week, 10.6% of the more that 615,000 canceled HAMP trials completed the foreclosure process as of Nov. 1. That’s more than double the 4.4% of failed HAMP trials foreclosed on as of November 2010. While foreclosures are increasing, alternative modifications on these loans are dropping. Of the canceled HAMP trials, 39.7% went through the bank’s own private programs, down from 45.4% over the same time period, according to Treasury data. Foreclosure completions as a percentage of borrowers never accepted into HAMP trials are lower but still increasing as well. Of the 1.8 million borrowers denied a HAMP trial, 7.6% completed the foreclosure process as of Nov. 1, up from 5% one year before. Roughly 26.5% of these borrowers received alternative modifications, which held flat over the last year.

The increase in more foreclosure completions on failed HAMP trials occurred at nearly every large servicing shop participating in the program. Citigroup saw the highest jump. Of the 71,808 HAMP trials it canceled, roughly 13.5% completed the foreclosure process as of Nov. 1, up from 3.1% one year ago. At Ally Financial, the percentage increased to 12.8% from 6.4% over the same period. At JPMorgan Chase, the increase went to 11.3% from 6.2%. And at Bank of America, the largest servicer in the program, 9.3% of failed HAMP trials went through foreclosure compared to just 1.9% the year before. The highest percentage is currently held by OneWest Bank. It foreclosed on more than 19% of its roughly 20,000 failed HAMP trials, up from 10% last year. Interestingly, Wells Fargo has one of the lowest percentages of completed foreclosures on these mods at 6.7%, almost the exact same percentage one year before.

According to the Office of the Comptroller of the Currency, 17% of the 108,000 HAMP modifications began in the second quarter of 2010 went 60 or more days delinquent within one year. That’s compared to a 31% redefault rate for other private programs. D. Corwyn Jackson, whose company The Corwyn Group helps to train housing counselors for foreclosure prevention, said servicers are getting mixed signals from the government-sponsored enterprises Fannie Mae, which administers HAMP, Freddie Mac and other stakeholders across the country. “The servicers are mandated to stick to the agreed upon foreclosure time lines by state,” Jackson said. “But other stakeholders such as nonprofit housing counseling agencies across the nation are requesting servicers during the negotiation to exhaust their loan workout options before starting the foreclosure process.”

The GSEs charge servicers for taking too long to complete the foreclosure process under specific, state-by-state guidelines. Servicers are expected to still consider the borrower for the GSE programs, but time is of the essence. BofA, for example had to pay Fannie and Freddie $1.3 billion in foreclosure delay penalties in the first nine months of 2011. GSE policies and the failed HAMP trial foreclosure rates is beginning to show in the overall economy. Over the same time period covered by the Treasury data, the shadow inventory of homes in foreclosure or on the verge it has been declining. According to CoreLogic, roughly 1.6 million homes sit in this inventory, down from 2.1 million in November 2010.

DOJ steps up ratings probe

The Justice Department (DOJ) has stepped up its investigation of Standard & Poor’s (S&P) mortgage bond ratings during the financial crisis, the Wall Street Journal reported today. At least five former S&P analysts have been contacted by federal prosecutors in recent weeks, after some had not heard from investigators for more than six months, the newspaper said. The McGraw-Hill Cos Inc unit disclosed in September it had received a Wells notice from the Securities and Exchange Commission indicating it could face civil charges for its ratings of a 2007 mortgage bond deal called Delphinus 2007-1. It has not yet disclosed any investigation by the DOJ, which the WSJ reported is a civil probe. Prosecutors are examining whether S&P managers pushed to weaken standards the company had set for rating the mortgage deals, and whether the company followed its established criteria in assigning ratings. The recent interviews lasted two to three hours, and the former employees were told they would likely by contacted again, the Wall Street Journal said.

DSNews.com – vacant foreclosures cost money

A recent study from the Government Accountability Office (GAO) found that non-seasonal vacant properties across the United States rose 51 percent over the span of a decade, from nearly 7 million in 2000 to 10 million in April 2010. Ten states saw vacancies go up by 70 percent or more as a result of high foreclosure rates. Those with the largest increases over the last decade were Nevada (126 percent), Minnesota (100 percent), New Hampshire (99 percent), Arizona (92 percent), and Florida (90 percent). Georgia, Michigan, Colorado, Rhode Island, and Massachusetts also experienced increases above 70 percent. The elevated number of vacant homes carries with it a hefty price tag for lenders that must resume ownership after foreclosure. GAO found that in 2010, Fannie Mae and Freddie Mac reimbursed servicers and vendors over $953 million for property maintenance costs. However, it’s local governments, many of which are already dealing with depleted funds, that are feeling “significant” pressures from the rise in home vacancies, according to GAO.

The agency notes that other studies have concluded vacant foreclosed properties may reduce prices of nearby homes by as much as $17,000 per property. As a result, municipalities report being out millions of dollars in lost tax revenues. That’s in addition to extra expenditures to put staff, systems, and programs in place to ensure local property ordinances are met, as well as costs associated with addressing public safety issues posed by extended periods of vacancy or improper property maintenance. GAO says the localities it studied are all engaged in multiple strategies to try to minimize the costs and other negative impacts that vacant properties create for their communities.

Efforts range from simple data-gathering to more precisely identifying vacant properties, to acquisition and rehabilitation or, in some cases, demolition of abandoned properties. In addition, some local governments have tasked servicers with additional responsibilities for maintaining properties, amended their code enforcement rules to establish greater incentives for property maintenance, and established specialized housing courts to address vacant property and other housing issues. These strategies, however, face various challenges, particularly the lack of financial support to effectively address such a large-scale problem, according to GAO. As a result, governments in many of the communities GAO examined are reaching out to members of the community – including neighborhood groups and private developers – in an attempt to leverage all available resources. In addition, local governments have called for increased federal funding and greater attention by federal regulators to servicers’ role in managing vacant properties.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 January 16, 2012

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

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*** Follow Chris on Twitter–>

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

Foreclosures to take longer

Reviews of hundreds of thousands of foreclosure cases ordered by regulators last year will take months longer to complete than first expected, according to documents filed with federal banking regulators.  The delays could postpone compensation for some homeowners harmed by improper foreclosure actions.  The reviews cover foreclosure actions in 2009 and 2010 by the nation’s 14 largest mortgage servicers, which handle payments for about 65% of US mortgages. They are required by enforcement orders announced by federal regulators in April.  Under the deadlines set in April, the reviews — which are being done by independent consultants hired by servicers — should have been completed this month.  But reviews of Bank of America’s (BOA) foreclosure cases could take until November, a letter that BOA’s consultant filed with the Office of the Comptroller of the Currency (OCC) indicates. BOA is the nation’s largest mortgage servicer, and the Promontory Financial Group is its consultant.  JPMorgan Chase’s consultant, Deloitte & Touche, indicated it may need about the same amount of time, according to its letter.

Review time frames have lengthened for other servicers, too, because the detail, scope and complexity of the reviews weren’t fully known in April, says OCC spokesman Bryan Hubbard.  Some companies may finish before others. Some may beat the timelines in their letters. Some deadlines may get longer, Hubbard says.  The OCC says servicers should not wait until all reviews are done to compensate homeowners.  While 4 million cases are eligible for reviews, consultants will sample only some for errors such as unlawful foreclosures and excessive fees.  Borrowers who faced a foreclosure action on their primary home by one of the 14 servicers in 2009 or 2010 are eligible for reviews. Anyone eligible who asks for a review by the April 30 deadline will get one, the OCC says.

Consumer sentiment up

The Thomson Reuters/University of Michigan preliminary January reading on its overall index of consumer sentiment rose to 74.0 from 69.9 in December for the fifth month of gains and the highest level since May 2011.  The report topped expectations of 71.5 and was in contrast to December’s weaker-than-expected retail sales reported on Thursday.  Thirty-four% of consumers polled in the consumer confidence survey said they had heard of recent job gains, a record high in the survey’s history and well above December’s 21%.  “The data suggest a stronger consumer spending outlook, rising to about a 2.1% gain in 2012,” survey director Richard Curtin said in a statement.  But consumers still lacked confidence in government economic policies with the majority rating policies unfavorably for the sixth month in a row.  Americans also remained dour on their personal finances with just 24% expecting their finances to improve in January, slightly below 25% last month.  The survey’s barometer of current economic conditions rose to the highest since February at 82.6 from 79.6, while its gauge of consumer expectations gained to 68.4 from 63.6.

2013 for housing recovery?

A poll of 23 economists and analysts found a consensus for no change in the S&P/Case-Shiller home price index in 2012, compared with a median 0.3% decline that was forecast in the last poll in November.  Many say that a recovery in the housing market is a key requirement for any vigorous rebound in the world’s largest economy. The spectacular collapse in US housing, which sent average prices plummeting by a third, was the trigger for the 2008-09 financial crisis and subsequent recession.  The meager 1.5% gain expected in 2013 will offer little comfort to the millions of Americans trapped in negative equity — owing more to their mortgage lender, and in some cases much more, than their houses are worth.  “I think we are seeing stabilization, but unfortunately it’s stability at the bottom,” said Lindsey Piegza, economist at FTN Financial, describing the grinding halt to several years of relentless price declines.  The average price of a US home is currently around where it was nine years ago, and the most recent data, from October, showed price declines still accelerating.

The market is still under pressure from an excess of homes up for sale. Fifteen of 20 respondents said monthly foreclosures should subside this year, while five didn’t see any let-up until 2013.  Among 20 respondents, 15 said they expect foreclosures to ease some time this year, while five said it would not happen until 2013.  Gains in home sales and new home construction in November, and recent improvement in homebuilder sentiment, added only a touch of optimism at the end of last year.  Still, while the gain expected over the next two years is tiny compared with the more than 30% plunge from the peak in 2006, it is still a more cheery outlook than in some other parts of the world.  A recent Reuters poll predicted British home prices, which have not dropped anywhere near as far as they have in the US, will slip 1.7% this year. In China, they are expected to fall 10 to 20%.

Excess regulations hamper economy

Regulatory policies are badly undermining the economic objectives of governments around the globe by hampering bank activity, JPMorgan Chase chief executive Jamie Dimon said in a conference call discussing fourth-quarter earnings Friday morning.  “Regulatory policy is completely contradictory to government objectives,” Dimon said, citing restrictions on trading and new capital regulations as regulatory sources of slower economic growth.  Dimon said that although regulators have provided additional clarity on new capital rules, the clarifications are have demonstrated that the capital rules are “bad.”  He noted that higher capital requirements have made risk weighting even more important for banks. Under international capital standards, different kinds of bank assets receive different capital treatment, a practice known as risk weighting.

Dimon also criticized the so-called Volcker rule banning proprietary trading. He warned that if the rule is not carefully crafted, it could limit not just prop trading but market making.  “The United States has the widest and deepest and most transparent capital markets in the world,” Dimon said. “And the most liquid.   If you lose liquidity because you lose market making, you cost investors money.”  He said that pension funds, retirees, and other large investors could lose out if restrictions on trading go too far.  “We have to be very careful that we don’t destroy that [market making] as we try to limit — put a fair limit — on proprietary trading,” Dimon said.

Fitch downgrades Merrill mortgage securities

Fitch Ratings downgraded four classes of Merrill Lynch Mortgage Trust securities certificates backed by commercial real estate because the underlying loans are expecting losses.  At the same time, 17 classes of loans in the same series of securities were affirmed by the ratings giant.  Fitch specifically classified 76 loans as mortgages of concern. About 25 of those 76 are specially serviced loans.  The entire loan pool subjected to the downgrade had an aggregate principal balance of $2.2 billion at the end of December, compared to $2.5 billion at issuance.  Of those loans in special servicing, 16 are real-estate owned, three are in foreclosure, another three are delinquent and 1% are current.  One of the largest contributors to the expected losses in the pool is a three-story office building in Scottsdale, Ariz. The loan was moved into special servicing in October of 2009 when a large tenant that fully occupied one of the buildings terminated its lease and vacated the premises. As of mid-last year, the building’s occupancy rate stood at 62%.  A hotel located in Tampa, Fla., also is contributing to uncertainty over the pool of loans with a special servicer saying it would like to pursue a foreclosure.

See you at the top!
Chris McLaughlin

**************
Copyright Loss Mitigation Institute LLC 2011.
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 January 10, 2012

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

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*** Join Chris’ Facebook Fan Page–>

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

Senate committee approves statewide guidelines for foreclosures

The Banking and Finance Committee voted 5-2 in favor of sending the substitute to House Bill 110 to a full vote, which could happen as soon as this week.  According to the proposal, the bill would authorize cities and counties to create foreclosure registries that would have statewide requirements. The fee to register a property would not exceed $175, and the penalties for failing to register properties would be limited to $500 a month and $2,000 total.  The proposal does not preempt city or county ordinances requiring registration of foreclosed properties for repeated violations that remain uncorrected for at least 60 days, but would it would stop any other local foreclosure registries currently in existence.  Banking Committee Chairman Sen. Jack Murphy said such a law is needed to prevent cities and counties from treating fees associated with foreclosures and vacant properties as a cash cow.  “It can’t become a revenue source,” Murphy said. “That’s a tax. We need something standardized that everybody has to go by. That will keep abuse from occurring.”  Murphy cited reports that DeKalb County raked in more than $550,000 in fees in less than a year.

The original legislation was sponsored by state Rep. Mike Jacobs, a Republican lawmaker whose district includes DeKalb County.  The bill is a carryover from last year, when it stalled as lobbyists for cities and counties raised concerns that the bill could have unintended consequences. Several people representing groups who opposed the original version remarked that they had not seen the updated proposal until Monday’s committee hearing and were still evaluating whether it is an improvement.  “County and city elected officials are hearing a lot from the public about this,” said Clint Mueller, a spokesman for the Association of County Commissioners of Georgia. “There are a lot of foreclosed and properties that are not being taken care of. We have no idea where to even begin to find out who is responsible.”  Still, Mueller said it is important to ensure that municipalities are not punished in an effort to address the issue through state legislation.  “It could have far-reaching effects if it’s not done right,” he said.  If approved, the law would take effect July 1.

Small business optimism edges up

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 1.8 points to 93.8.  Eight of the index’s 10 components were either improved or flat. About half the gain was due to reduced concern about business conditions six months into the future, the NFIB said.  The index is still in recession territory, however, 6 points below the pre-recession average and more than 10 points below the same point in the recovery from the 2001 recession.  The gains in the index are supportive of the view that economic growth will pick up in 2012, but the gains are not likely to be substantial unless the index rises more sharply, the business group said.  The NFIB reported earlier this month that small businesses cut staff in December. The% of businesses reporting reductions in employment remained relatively low, but the percentage increasing employment, though larger, did not offset the losses and remains historically low for an expansion.

Zillow – 3 – 5 years away from normal

Real estate website Zillow.com on Tuesday released a report that shows South Florida home values were flat in November.  Zillow’s Home Value Index for Palm Beach, Broward and Miami-Dade counties was $137,000 – up 0.1% from October.  Values here have been flat or positive for seven of the past nine months. Prior to that, though, values had declined in 66 of the previous 67 months.  Zillow said home values in South Florida have fallen about 4% from a year ago and 55% from the 2006 peak.  Zillow’s report comes a day after a mostly encouraging forecast from the Clear Capital research firm.  Stan Humphries, chief economist for Zillow, said in a statement that supply and demand are still out of whack in many markets, and more foreclosures in 2012 are expected to hurt home values.  “Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values,” he said. “We’re still three to five years away from ‘normal’ housing market conditions.”

New details for MF Global

The investigation into MF Global is intensifying as federal authorities unearth new details and confront potential obstacles in their hunt for roughly $1.2 billion in customer money that disappeared from the brokerage firm.  While prosecutors and regulators have jointly conducted dozens of depositions with former and current employees, a senior official in the Chicago office of MF Global recently declined to meet with the federal authorities, people briefed on the investigation said.  That official, Edith O’Brien, a treasurer at MF Global, is considered a “person of interest” in the investigation, the people said. Federal authorities suspect that she transferred about $200 million to JPMorgan Chase in London on the eve of the bankruptcy of MF Global, money that turned out to be customer cash.  Authorities had expected to interview Ms. O’Brien last month. She instead balked at meeting voluntarily, asking first to strike a deal with criminal authorities that would excuse her from prosecution, the people said. The criminal investigation is led by the Federal Bureau of Investigation and federal prosecutors in Chicago and Manhattan.  The request by Ms. O’Brien is the first in this case, one person briefed on the investigation said. Still, such requests are common in federal investigations and it does not suggest that she violated Wall Street regulations. Ms. O’Brien has not been accused of any wrongdoing, and there is no indication that she intentionally transferred customer money to JPMorgan.  Ms. O’Brien’s lawyer, Reid H. Weingarten, did not respond to requests for comment.

WSJ – mall occupancy up slightly

US malls and shopping centers experienced a slight improvement in occupancy during the fourth quarter, a relief for landlords that have been battling lackluster demand from retailers for most of the downturn.  But data service Reis Inc. cautioned that any recovery remains precarious and the outlook for this year is mixed, given the clouds hovering over the economy. While some retailers are expanding—such as Forever 21 Inc., Dick’s Sporting Goods Inc. and Dollar General Corp.—landlords can expect more headaches from high-profile store closures by companies such as Sears Holdings Corp. and Gap Inc.  The fourth quarter typically is the strongest for retail landlords as well as their tenants. Still, the fourth quarter of last year was one of the strongest since the recession hit, in terms of rising rents and occupancies.

Malls in the top 80 US markets posted an average vacancy rate of 9.2% in the quarter, down from the 11-year high of 9.4% in the third quarter, according to Reis, which began tracking mall data in 2000. Mall vacancies had been climbing steadily for most of the downturn since 2007, when the vacancy rate fell as low as 5.5%.  Demand for space at neighborhood and community shopping centers also strengthened in the quarter, with stores occupying an additional 3.1 million square feet in the top 80 markets. Because of new construction, vacancy in this category remained at 11%, where it has been for three quarters, a level last seen in 1991.  Owners of retail property have been hit hard during the downturn by overbuilding, consumer caution and competition from online shopping. In the three years covering 2008 through 2010, retailers at neighborhood and community shopping centers vacated a total of 31.6 million square feet, according to Reis.  But the most recent quarter’s results indicate that the worst might be over, especially with the economy adding jobs. A decent holiday shopping season also gave the retail property sector a boost, with 23 national chains reporting an average sales gain of 3.4% in November and December at stores open at least a year, according to Retail Metrics Inc.

The average annual rent at US malls rose to $38.92 a square foot in the fourth quarter, a 0.3% increase from the third quarter and the second consecutive quarterly gain, according to Reis. Mall rents had been mostly flat or declining since 2008.  Average annual rents at US strip centers increased 0.1% in the fourth quarter to $19.04 a square foot after 13 consecutive quarters of remaining flat or declining.  Retail landlords also have been helped by a virtual shutdown in new store construction, meaning they face less competition for tenants. Only 4.5 million square feet of shopping-center space opened in 2010, the lowest figure in 31 years, according to Reis. Last year was slightly higher, with only 4.9 million square feet being delivered.

HARP 2.0 effects to be seen soon

Effects of the retooled Home Affordable Refinance Program (HARP) may start to appear next month, analysts said yesterday.  Since the Federal Housing Finance Agency (FHFA) announced changes to HARP in October, servicers have been adjusting operations. Upfront fees, loan-to-value ratio caps and representation and warranty claims on the old loan file were eliminated for eligible borrowers.  The program launched in March 2009. Roughly 838,000 Fannie Mae and Freddie Mac borrowers were able to refinance into lower rates, but only about 7% of them had LTVs above 105%.

Prepayments slowed in December, according to Bank of America Merrill Lynch (BOAML) analysts, dropping 6% on Fannie Mae securities backed by 30-year fixed-rate mortgages.  “We anticipate another uneventful month in January before February provides the first glimpse into the new program’s prospects. Even before then, it is interesting to note that HARP-eligible pools — which responded slowly at the start of the current refinancing wave — continued to show slow, steady prepayment increases this month,” BOAML analysts said.

Rumors stirred of another plan from the White House to boost more refinancing. A white paper from the Federal Reserve made the case for one, along with other suggestions to address still lingering housing problems.  Analysts at JPMorgan Chase said Monday that modifying all coupon stacks of mortgage-backed securities would violate the prospectus. The loans, analysts said, need to be at risk of imminent default for such an action. If Washington started a refi wave on GSE loans and everything was moved into a 4% mortgage, Chase analysts believe it would only result in a total of $25 billion to $30 billion in annual savings for borrowers.  “The dollar savings of such a move are modest in light of the overall economy,” the analysts said and would merely be a transfer of wealth from investors to borrowers. “HARP 2.0 theoretically addresses many refi hurdles, and we will learn over the next six months how successful it will be.”

See you at the top!
Chris McLaughlin

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

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

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 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
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