Over 50% of Loan Modifications In Default Again

Chris McLaughlin — Tue, 09 Dec 2008 17:11:31 +0000

Mid-Day Market News & Commentary by Chris McLaughlin, December 9, 2008
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Let’s be Frank! Yes, Frank is a real client who made REAL money with the Short Sales Riches System … over $115,000 in one deal! And he only had $30 in his bank account. Think this can’t be true? Find out for yourself! We’re holding this again because of the tremendous demand that jammed up our servers last week … Right now there are only 8 spots left for tonight’s webinar:

Recession Proof Investing Webinar (Tuesday, 9 PM EST, 6 PM PST):

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Good news for Realtors and investors … Home sales in October weren’t off as much as expected. The National Association of Realtors Pending Home Sales Index dropped .7 percent to 88.9 versus 89.5 in September. Economists had been expecting a drop of 3.2 percent versus the .7 percent. “Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, the NAR’s chief economist.

And if you thought REOs and short sales would slow going into 2009, you better think again. According to the Office of Comptroller of the Currency, which evaluated loan modifications made in the first half of 2008, 36% of borrowers had re-defaulted by being more than 30 days late. Furthermore, after 6 months, the rate was 56%.

What does this mean? It means that there is a lot of legitimacy to the argument that the government should not throw good money after bad and provide loan guarantees for loan modifications; rather they should use that money to create jobs for new purchasers. As Office of Thrift Supervision John Reich said: “I do have a concern about money for loan modifications, particularly with such a high range of re-default.” Reich further stated that “[f]ocusing on job creation is a better way to focus federal dollars than on a loan modification process may be only partially effective.”

All eyes were on Congress today as Fannie Mae and Freddie Mac officials defended their actions, or at least tried to spread the blame around for the current housing crisis. But House Oversight and Government Reform Committee Chairman Henry Waxman (D., Calif.) said that” the CEOs of Fannie and Freddie made reckless bets that led to the downfall of their companies…[t]heir actions could cost taxpayers hundreds of billions of dollars.

“But it is a myth to say they were the originators of the subprime crisis. Fundamentally, they were following the market, not leading it,” he continued.

Now on to our real estate educational section…

Safe Money Moves for Unstable Economic Times

Searching for save money moves during these unstable economic times? Chances are you drive by one of the best investments every day; short sale real estate remains one of the best places to park your cash. Not convinced? Keep reading to find out why short sale investors are taking in more profits than ever despite the downturn in the economy.

1. Inherent Value – Not an I.O.U….unlike other forms of paper-backed investments, real estate has an inherent value rather than simply an I.O.U. issued in exchange for debt. Stocks, bonds and other financial instruments are no better than the paper they are printed upon when the economy takes a turn for the worst. When confidence fails, there is little more you can do with them than use them as fuel for a fire. On the other hand, real estate provides shelter, food, entertainment, natural resources and more.

2. Indexing “Hedge”. The media is beginning to talk about the possibility of devaluation of the dollar. Should this type of “worst case” scenario take place, all dollar denominated investments are likely to be impacted. Historically, tangible assets fair well during even the toughest economic times.

3. Contrarian. Investing is a numbers game; by definition for there to be winners there must be losers. As harsh as it may sound, savvy short sale investors recognize this reality and take steps to protect the financial future of themselves and their family by buying when others are selling and selling when others are buying. Ask yourself – what is the real estate market doing right now?

4. Diversify. Concerned about putting all your eggs into one basket? Short sale investors have a plethora of choices including types of property (single family rentals, condos, farm, timber, natural resource rich land, apartments, commercial, retail, office, fixer-uppers,), locations, amenities (age restricted, waterfront, luxury, golf etc) plus so much more. Rather than look outside of real estate, simply seek alternative forms of investment properties.

5. Plan for Prosperity. Even during the worst economic era there were those who managed to make fortunes by realizing the potential in every situation. Today is no exception. Rather than follow the masses worrying whether or not the government will have enough money to bail-out their company or fund their beleaguered retirement account, take your financial future into your own hands by planning for prosperity. Find out how easy it can be to automate your short sales investments and build a prosperous financial future by joining in for one of our seminars.

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Over 50% of Loan Modifications In Default Again