inflation

Smart Real Estate News & Commentary by Chris McLaughlin August 20, 2010

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Standard & Poor’s expects delinquencies to remain high

S&P expects declining mortgage applications, high unemployment, the number of distressed sales, and a backlog of foreclosed properties not yet for sale to keep home prices down.  Agency loans backed by bond resolutions rated by S&P and at least 60 days delinquent or in foreclosure rose to 6.05% in the first quarter from 4.48% a year ago, but fell from 6.57% for the fourth quarter of 2009, according to analysts.  Without a decrease in unemployment – S&P chief economist David Wyss projects the figure hovering around 10% for the rest of this year – and tangible economic improvement, the ratings service expects agency delinquencies rates to remain high.  Wyss also sees difficulties with loan restructuring and delays in the foreclosure process keeping foreclosure inventory high for the next 18 months. And “additional foreclosures could put more pressure on home prices, possibly affecting loans” in agency portfolios, which could increase delinquency rates, according to the credit rating agency.  Still, analysts “don’t expect fluctuations in delinquency rates alone to cause ratings action at this time.”

State taxes

A Tax Foundation report says that Tennessee has the highest combined state and average local sales tax rate of any U.S. state, at 9.44%, while two Alabama cities are tied for the highest combined state, county and city sales taxes. Birmingham and Montgomery both levy an average of 10% on purchases.  Chicago used to hold the title of highest metro area sales tax, but lost it after Cook County lowered its rate by 0.5% in July, leaving it with the sixth highest rate at 9.75%.  Among the nation’s other metro areas with at least 200,000 inhabitants, there are five California cities with sales tax rates above 9%: Long Beach, Los Angeles, Oakland, Fremont and San Francisco. Glendale, Ariz., and Seattle also ranked high on the list.  the state with the second highest combined sales tax rate after Tennessee is California, at 9.08%, while Arizona came in third, at 9.01%. Other states with particularly high rates are Louisiana, Washington, New York, Oklahoma, Illinois, Arkansas and Alabama.  There are 34 states that allow local governments to charge a local option sales tax on top of the state sales tax, while 16 states have no local sales tax. There are five states that have no statewide tax at all: Alaska, Delaware, Montana, New Hampshire and Oregon.  Sales taxes are levied by state, county and city governments. As a result, rates vary widely across the nation, making it difficult to measure and compare sales tax trends, said Kail Padgitt, a Tax Foundation economist.

Olick – not just the tax credit

“There’s no question that the home buyer tax credit, which expired at the end of April, pulled home buying demand forward and thus created an inevitable drop-off afterward.  It would be wrong, however, to blame the current lull in home buying/selling entirely on the tax credit hangover.  You need only look at a report today from California-based MDA Data Quick, headlined, ‘Bay Area July Home Sales Down Sharply.’  Sales in San Francisco in July fell to the lowest level in 15 years, down 19 percent from June and down nearly 23 percent from July of 2009.  It was also one of the largest monthly drops recorded.  ‘There’s been a pause in the market. Some potential buyers – including those who held off until the tax credits expired – will take their time to assess market conditions, searching for signs of renewed price cuts,’ says DataQuick President John Walsh in the release. 

“Depending on the economy and other factors, that might be what some of them find, especially in areas with a growing number of homes for sale – particularly distressed properties.”  There’s even more to it than that, specifically a startling lack of confidence. Yesterday the chief economist for the National Association of Realtors, less than a week before the release of its monthly existing home sales report, warned that this lack of confidence, grounded or not, could pose a bigger risk to recovery than expected.  ‘As long as people hold back, whether realistically or irrationally, or rationally,’ Lawrence Yun says, ‘then naturally there will be too much supply in relation to the demand, and that could lead to some over-correction in home prices in some markets.’  And we didn’t even bring up foreclosures in the conversation.  Add this to a new report from Zillow.com that one third of all homeowners in the U.S. still think the housing market has yet to hit bottom and nearly the same amount think the worst is yet to come.  And another report from Trulia.com (and mind you these are real estate sale Websites) that finds fewer renters than ever now intend to buy and fewer Americans than ever think owning a home is part of the American dream, and dare I say, ‘Case closed.’”

Faith in government low

Steen Jakobsen, Chief Investment Officer at Litmus Capital Partners, says a big risk for markets is the fact that faith in the US government’s ability to fight the economic markets, as well as in central banks’ monetary policy tools, is eroding.  “The fact of the matter is that people have a huge disbelief in government,” he said.  “The real crisis 2.0 is not about the new normal or whatever term is being used, the new crisis is a crisis of faith in the US system. We’re far away from that point now but that is a clear risk,” Jakobsen said. 

Because people are losing faith in the governments’ ability to bring the economy back on track, the impact of various policies is smaller, while keeping interest rates at record lows has altered investors’ perception about what this actually means for the market, Jakobsen warned.  Investors no longer perceive low rates as good for stock markets because they create liquidity, but as a sign that a slowdown in economic growth is coming, he said.  Jakobsen predicts zero or even negative growth for the US economy for the third and fourth quarters.

DSNews.com – Modifications pick up, but not from HAMP

The industry has completed about 975,000 permanent loan modifications so far in 2010, according to estimates released this week by the Hope Now Alliance.  Of those, just over 331,000 have been processed under the umbrella of the federal government’s Home Affordable Modification Program (HAMP), while nearly 644,000 have been restructured using servicers’ own proprietary mod programs.  The latest data from the Treasury provides details on what happens to borrowers that are not accepted into HAMP. 

Based on information from the eight largest HAMP participants, 45% of those that don’t make it into a preliminary HAMP trial receive an alternative modification from the servicer; 2.4% lose their home through a pre-foreclosure short sale; just over 10% are pushed through to foreclosure; and nearly 3% file for bankruptcy.  According to Hope Now’s report, servicers have initiated more than 1.2 million foreclosures so far this year, and completed foreclosure sales on 583,000 homes.  The Alliance’s data, though, shows that servicers slowed the pace of foreclosures in June. Foreclosure starts dropped 7% compared to the previous month, and foreclosure sales were down 9%. 

Economy to get worse?

We’ve all anticipated a gradual gain in US employment, but what seems to be happening is a surprising deterioration, and that has economists worried about the increasing threat to the economic recovery.  Yesterday’s jobs report was just the latest confirmation that things are getting worse instead of better.  The monthly Labor Department report for July showed 71,000 private jobs were created even as total non-farm payrolls fell 131,000, and that trend is confounding economists, who say the net job creation in the private sector ought to start having some effect on the weekly number.  “There’s got to be an awful lot of job-churning going on if we can have positive private sector employment growth for seven months out of the year and this (weekly claims) thing is drifting up,” says Kurt Karl, chief US economist at Swiss Re in New York. “Businesses have got to be laying off a lot of people and hiring a lot of people, and the net is slightly positive.” 

Besides the sharp drop in government payrolls and the dynamics of the benefits program, small business remains a major concern, since recent surveys have shown waning confidence among small business leaders.  The multiplicity of factors lining up against the labor market is sure to stoke up talk about a double-dip in the economy, or at the very least little chance of meaningful gains for quite some time.  “It’s not good, it just isn’t, particularly when you piece it together with all of the other data we’re getting,” says Paul Ashworth, senior economist at Capital Economics in Toronto. “This isn’t just rising claims and nothing else is going on. We’re seeing activity rates going down, we’re seeing confidence weaken—a lot of not very encouraging signs.”

Now for our real estate education section…

Friday File – 15 Minute Resolution

Ever dream of buying a beautiful investment property in a far-away place like Brazil or perhaps something a little closer to home like the lovely island of Jamaica is more to your liking…Well, whatever your taste, chances are your good old Uncle Sam has already bought some land in the same area and with the economy being what it is, he’s ready to wheel and deal.

This week’s 15 minute resolution is a quick way to find – and potentially fund – the investment property of a lifetime. Luxurious locations and even some attractive funding make these worth the time to take a second look.

Bureau of Overseas Building Operations – Now this is a resource you hardly ever run across! This little known gem lists property owned (and listed for sale) by the federal government in exotic locations around the world. Pick up a beautiful 7,000 square foot home in La Paz Bolivia, a downtown condo in Santiago Chile or even an unbelievably beautiful executive residence on four acres in Kingston Jamaica. Other areas of interest include Haiti, Pretoria South Africa, and even Prague…just this week alone! Sign-up to receive instant notification of newly listed properties at http://www.state.gov/obo/c20736.htm.

How about tax-free living on an enchanted Island? If the idea of zero federal incomes taxes without the need for a Visa sounds interesting, be sure to check out all the great properties for sale in by the federal government in Puerto Rico. As a commonwealth, Puerto Rico is part of the United States but doesn’t pay federal income taxes. Great year-round weather, easy access to the mainland and more tropic fruit than you can consume in a lifetime make this an increasingly popular destination. Best of all, buyers are still able to use HUD/FHA and even VA vendee loan programs to purchase an island property with little money down!

Search all the properties at once by visiting http://www.homesales.gov/homesales/mainAction.do?pageAction=GetCounties&state=PR&stateName=Puerto%20Rico

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin August 18, 2010

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

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Fix A Flip Re-Opens … all new content, all new case studies.  This is

one webinar that you don’t want to miss!

When: Thursday, August 19th at 8:30 PM ET, 5:30 PM PST

Where: https://www2.gotomeeting.com/register/618365627

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22 cities in danger of double dip

A new report from Moody’s Economy.com singled out 22 cities that are at risk of slipping back into a recession in as early as three months. To come to this conclusion, the economists considered dwindling progress in employment, housing starts, home prices and industrial production.  The at-risk cities are spread across the country, ranging from Missoula Montana to Mobile Alabama, though more than half of the cities are in the South, and five are concentrated in the Midwest.  “With chances of a national double-dip recession now estimated at about one in four, several metro areas will probably experience their own downturns in the first half of 2011,” said economist Andrew Gledhill, author of the report.  Private sector hiring has been tapering off in recent months compared to the start of the year, triggering Moody’s to boost its forecast for a national double-dip from a 20% chance to 25% chance.   In the 22 identified metro areas, Gledhill said private sector hiring is particularly sluggish, increasing the chances of a slowdown.  Without a substantial pick-up in hiring, Gledhill said the number of cities in danger of a double-dip recession could grow, possibly reaching the triple-digits.  “There was a time when all 384 metro areas were in a recession. We probably won’t get to that point again, but given the growing risk of another national recession, we’re on the lookout for more metro areas that will be weakening substantially on several levels over the next six months to a year,” Gledhill said.  He added that a handful of metro areas, particularly those that are industrial economies, are also suffering from a recent falloff in manufacturing.

MBA – Refinance Activity Increases

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 13.0% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 12.4% compared with the previous week.  The Refinance Index increased 17.1% from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 3.4% from one week earlier. The unadjusted Purchase Index decreased 4.6% compared with the previous week and was 38.6% lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 2.6%.  The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 3.2% for the Refinance Index.  The refinance share of mortgage activity increased to 81.4% of total applications from 78.1% the previous week, which is the highest refinance share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7% from 5.9% of total applications from the previous week.

Obama’s tax hike

With Obama’s tax plan in place, people making more than $195,550 in taxable income ($200,000 in adjusted gross income) and joint filers with taxable income over $237,300 ($250,000 in adjusted gross income) would be pushed up from the current 33% and 35% tax brackets into 36% and 39.6% brackets next year.  “It comes down to the greater your earnings, the greater the tax hit,” said Robert Kerr, senior director of government relations at the National Association of Enrolled Agents. “But it’s all relative. For someone used to spending that money — whether on a big family or expensive habits — it’s impossible to say how much they would be impacted.”  Say you’re a single filer with a taxable income of $250,000. This year, you owed $67,617 in income tax under the 33% bracket. Under the new system, you would pay $67,912 in taxes next year, a slight increase of $295.  But those people making more than $300,000 are going to owe additional amounts in the thousands. For instance, if you make $382,650 you’ll owe an extra $4,095 in income tax.  Single filers with $500,000 in taxable income would owe Uncle Sam an additional $9,492 from this year’s tax bill. Meanwhile, joint filers with taxable income of $700,000 would owe $232,396 in 2011, an extra $17,088 from $215,308 in 2010.  Those Americans lucky enough to be earning millions each year, whether filing as individuals or jointly, could end up seeing increases in the six-figures.  A single filer with a million dollars in taxable income would owe $32,493 more than in 2010, While joint filers with the same income would owe $30,888 more than they paid in 2010.  For single filers making $5 million in taxable income, get ready to hand over $1,944,137 for the 2011 tax year, an increase of $216,493 from $1,727,644 in 2010.  And a joint filer with an income of $5 million is likely to see his tax bill go up more than $200,000 next year.

HSBC to sell mortgage unit?

HSBC Bank USA is considering the possible sale of its US-based mortgage unit, HSBC Mortgage Corp., and notified employees Monday of the possible options being considered although no firm timetable for a potential decision was provided. The bank, the U.S. subsidiary of London-based HSBC Holdings Plc, bases much of its US operations in New York state.  Options for the mortgage subsidiary include “a sale, merger or other business combination,” according to a statement from the bank, which also said the mortgage company may look to sell substantially all of its assets. It’s also possible that no changes at all will be made, the bank said.  Bank spokesperson Neil Brazil stressed to the press that HSBC is not looking to exit US mortgage originations, but is instead assessing how it conducts its mortgage business in the United States.  HSBC’s mortgage operations currently employ roughly 1,500 in the US, according to the company, and the company was the 21st largest mortgage originator in the US during 2009.  But Europe’s largest bank has been moving to reduce its exposure to unsecured lending and exiting unprofitable businesses for the past two years, transferring its North American consumer finance operations into a run-off portfolio following heavy losses from subprime lending.  Beyond considering options for its US-based mortgage business, the bank is in the process of divesting from other assets and recently announced that a deal to sell the remainder of its vehicle finance loan portfolio, which totaled $4.3 billion at the end of June, would close in Q310.

Record low rates again

According to the Zillow Mortgage Marketplace weekly update, The national, 30-year fixed-mortgage rate (FRM) slightly decreased from a week earlier, reverting back to the record low average of 4.28% set two weeks ago.  , 30-year rates vary regionally, of course, but the majority of states witnessed a deflation. Most large states saw a decline in rates: California’s current rate of 4.33% is down from 4.34% last week; New Jersey’s at 4.26% is down from 4.28%; Pennsylvania’s at 4.32% is down from 4.33%; Illinois’ at 4.3% is down from 4.34%, and Florida’s at 4.21% is  down from 4.24%.  Rates substantially decreased in New York to 4.25% from 4.41% and Texas to 4.19% from 4.29%. Rates increased in Massachusetts to 4.22% from 4.28%.  Zillow reported the national average rate for 15-year fixed home loans remained flat at 3.86%, while the rate for a 5-1 adjustable-rate mortgage (ARM) is 3.23%.  Zillow’s rates are based on real-time mortgage quotes from lenders registered with, but not exclusively bound to the company. The national average comes from thousands of daily quotes given to anonymous borrowers through their website. State averages are also available.

Now for our real estate education section…

Low-Down on Government Loans

Sometimes it seems the more things change the more they stay the same especially when it comes to the mortgage industry. However, this time it really is a bit different especially given the major upheaval in the mortgage market. With the majority of mortgage loans now guaranteed by the U.S. government, it is a good idea to review what is available and to whom. Here is the low down on government loans as of August of 2010.

Basic FHA Loan (Home Mortgage Insurance – HUD/FHA) – This program has grown into a heavy hitter within the industry despite the fact that it doesn’t lend money directly to buyers (in most cases) but rather insures or underwrites the loans.

Condominium Unit Purchase (Mortgage Insurance – HUD/FHA) – Similar to the Basic FHA loan above, this is designed with condo owners in mind.

Manufactured Home Loan Insurance (HUD/FHA) – Like the basic FHA and condo loans above, this program is designed for borrowers interested in the purchase of a mobile or manufactured home.

Hope for Homeowners – The media made a lot out of this little program which turned out to be a much smaller than originally anticipated. Designed to help people avoid foreclosure, the program provides new, 30 year fixed interest rate mortgages for those that cannot afford their current payments. Stringent requirements have limited the number of eligible participants.

Rural Housing: Farm Labor Housing Loans and Grants – Once a major program within the federal government, the reduction in family farms has made this an all but forgotten program but one worth looking into for anyone interested in purchasing a family farm. Loans (and a limited number of grants) are available for land, housing, machinery and other assets required to buy, build and operate a farm.

VA – Home Loans – Interest Rate Reduction Refinancing Loan – Once considered the domain of veterans, this guarantee service also provides funding for the family of service members as well as veterans and others. Additionally the VA provides vendee loans for anyone interested in purchasing a VA foreclosure.

Section 203k Rehabilitation Mortgage Insurance – Interested in a major fixer-upper? Section 203k may be the right mortgage for you; once the main mortgage is obtained, this program provides the funding needed to make necessary repairs and upgrades to the property. Section 203h is a closely related program that provides funding for repairs and rebuilding due to natural disasters or other emergencies.

Home and Property Disaster Loans – The Small Business Administration may not be the first agency that comes to mind when you need a mortgage after a disaster but don’t be so quick to mark this one off the list; the SBA is able to assist small business owners, homeowners and even some renters after an area has been declared a disaster.

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin August 13, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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

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

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forensic audits, forbearance and Lease Back Programs…

forever.  You never talk to banks again!

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When?  This Saturday at 3 PM ET, NOON PST.

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New record for 30 year mortgage rate

Here we go again setting new records.  Freddie Mac’s weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since it began tracking the rate in 1971. Last week’s rates stood at 4.49%, and a year ago it was at 5.29%.  The 15-year fixed rate fell to 3.92% this week, the lowest since Freddie Mac began tracking it 1991, down from 3.95% last week and from 4.68% a year ago.  Adjustable-rate mortgages also declined, with the 5-year rate falling to 3.56% this week, the lowest since 2005 when the lender began tracking it. 

Mortgage tracker Bankrate.com, which surveys large lenders across the country, said the average 30-year fixed loan sank to a record low for the fourth consecutive week, falling to 4.57% from 4.66% the previous week.  The 15-year fixed rate, which is a popular option for refinancing, also fell to the lowest level in the history of Bankrate’s 25-year old survey, dipping to 4.06%, from 4.11% the week before.  While the 1-year adjustable-rate mortgage held steady at 4.8% for a fourth week, the 5-year adjustable rate mortgage dropped to a record low of 3.92% from 3.95% the previous week.

Retail sales up

According to the Commerce Department, total retail sales rose 0.4% to $362.7 billion, compared with June’s 0.3% decrease.  The June drop was revised from the originally reported 0.5%.  The overall sales percentage gain was slightly lower than anticipated. Economists surveyed by Briefing.com had expected sales would rise by 0.5% during the month. 

Consumer spending accounts for two-thirds of U.S. economic activity, so retail sales and related reports are closely monitored to gauge the health of the economy.  Sales excluding autos and auto parts rose 0.2% last month, in line with economists’ forecasts. In June, sales on the same basis were down 0.1%.  Motor vehicle and parts sales also rose 1.6% in the month, and gasoline store sales rose 2.3%.  Overall, retail sales are up 5.5% over July last year.

Lower Jumbo rates

Low interest rates may not be helping out with regular mortgages, but the higher end of the housing market is getting a boost from lower jumbo rates—mortgages of $417,000 and above.  Unlike conventional mortgages, jumbo loans by definition exceed the conforming loan limit of $417,000 set by Fannie Mae and Freddie Mac. Jumbo rates are loosely tied to long term treasuries but they are traditionally higher because of the risk involved for the banks in making a larger loan.

“Sales volume for homes worth more than $1 million across the country are up more than 35% from last year at this time,” says Walter Maloney, spokesman for the National Association of Realtors (NAR). “Homes between $700,000 and a million are also on the rise by some 29% over last year. There’s no question that’s because of the historic low jumbo rates.”  Just how low are the current jumbo rates? Last year at this time, a 30-year fixed jumbo rate was averaging more than 6%. It’s now at an all time low average of 5.07%. And the re-finance rate for a 30 year jumbo is currently at 5.30%. A fifteen year jumbo is at the historic low average of 4.68%.  The reason for the rate decline is simple, say the experts: banks, which have a part in setting jumbo rates, have money to lend and see the benefits in doing so at lower rates.

Inflation up

The Commerce Department announced today that the Consumer Price Index increased 0.3% last month after falling 0.1% in June.. Economists surveyed by Briefing.com were expecting prices to rise 0.2%.  Energy prices rose for the first time since January, as commodity and gasoline prices spiked more than 4% during the month. Food prices, however, declined 0.1% as the cost of fruits and vegetables decreased.  Core CPI, which is closely watched by economists because it strips out volatile food and energy prices, edged up 0.1% for the month, in line with economists’ forecast and down from the 0.2% increase in July. 

Costs for housing, clothing, cars and tobacco continued to rise during the month while prices for medical care, airline fares and household furniture slipped.  Prices also rose on an annual basis in July. Overall prices rose 1.2% over the past 12 months, driven by 5.2% spike in energy costs due to higher gasoline prices. In June, overall prices edged up 1.1% from the previous year.  Core CPI rose 0.9% over the past year.

DSNews.com – Losses on CMBS Loan Liquidations Climb in Q2

During Q2, Moody’s Investor Service says that the 342 commercial real estate loans liquidated at a loss had a weighted average loss severity of 42.8 percent, 740 basis points higher than the current 35.4 percent weighted average.  “We anticipate that the cumulative loss severity rate will continue to rise from 35.4 percent as more loans from the 2006-2008 vintages of CMBS are liquidated at relatively higher loss severities,” said Keith Banhazl, Moody“s VP and senior analyst. 

From January 1, 2010, through June 15, 2010, a total of $3.2 billion of debt underwent liquidations, Moody’s says, a $2.6 billion increase over the same period in 2009. April 2010 recorded the highest amount of liquidations by current deal balance, with over $742 million of debt affected.  Moody’s reports that loans backed by healthcare properties have the highest weighted average loss severity at 61 percent, while loans backed by office properties have the lowest average loss severity at 31 percent.  The ratings agency’s update on CMBS loss severities covers all outstanding conduit and fusion U.S. CMBS transactions, whether they are or are not rated by Moody’s.

Now for our real estate education section…

Friday File: 15 Minute Short Sale Resolution

According to research conducted by Nielsen, social media websites now consume 23 percent of all time spent online…and a significant percentage of users spend the majority of their time using social media via mobile computing and/or cell phone. In fact, Americans now spend an average of six hours each week on some type of social network.

On the other hand, email usage via desktop has dropped by nearly 50% while simultaneously increasing via smart phones. The use of search engines and web portals like Yahoo or Google has declined due to the increased usage of direct links in articles, blogs and even email which no longer require extensive searching. Perhaps one of the most surprising findings is that twice as many older Americans (aged 50 or above) visit social networks than those under 18 years of age.

Not only does all of this add up to a lot of communication but it should be an inclusive requirement for all your real estate and short sales success.  For this week’s 15 minute resolution, let’s take a look at a few less common social media marketing resources.

Adly: Reach over 70 million users on Twitter and Myspace with this easy to use advertising platform. Of course, the true value comes from the ability to target prospective clients in your area while gaining strategic insight into the local data.

FourSqure: With an emphasis on geo-location combined with business, Foursquare.com is a great way to connect with others in the local area while spreading the word via mobile communications. From open houses to micro-transactions, this is considered one of the most promising upcoming social media sites today.

Gist: Gist was designed from the ground up as a tool to help build professional relationships by providing the right information at the right time. Think of it as LinkedIn on steroids and take a few minutes to check them out for this week’s 15 minutes resolution.

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

Smart Real Estate News & Commentary by Chris McLaughlin July 19, 2010

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Fix A Flip Re Opens … If you want your deals funded beyond 1 day,

this is the webinar you need to be on this coming Tuesday at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/618365627

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HUD wants a FICO of 500

The Department of Housing and Urban Development (HUD) said that it intends to require borrowers to have scores of at least 500 to qualify for FHA-insured loans. The agency has not required a minimum score before.  “It really is just conforming FHA standards to what FHA lenders have already been doing,” said Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.  As a result, the practical impact of this move will be extremely limited; during the second quarter of 2010, no FHA-insured loans were issued to borrowers with sub-500 scores. And, in fact, less than 1% of borrowers were below 580; most loans went to borrowers with scores above 620. 

The initiative is part of an ongoing effort to reduce default risk to the FHA loan portfolio and to boost the reserves that back those loans, according to HUD Commissioner David Stevens.  “These are the latest in a series of changes to allow the FHA to manage its risk better while continuing to support the nation’s housing recovery,” he said. “By protecting FHA’s capital reserves, we can continue providing affordable, responsible mortgage products and will remain the nation’s largest source of home purchase financing for underserved communities.”  During May, 8.97% of all FHA loans were seriously delinquent (seasonably adjusted). That was up from 7.93% during May 2009. But defaults have turned downward since January, when they peaked at 9.16%.  The defaults have drained FHA reserve, which is funded by insurance payments, to below the 2% minimum mandated by Congress. Taxpayer money could be in jeopardy if the insurance funds are depleted any further.

Hiring up slightly

According to a survey by National Association for Business Economics (NABE), employers grew payrolls for a second consecutive quarter this year. The percentage of firms increasing staff levels grew to 31% in the quarter, versus only 6% in the same period a year ago, while at the same time, the percentage of employers cutting jobs continued to move lower.  Looking ahead, the survey showed that 39% of companies expect to add employees over the next six months, the highest level of planned hiring since January 2008.  “The labor market continued to improve, with increases in current hiring and a rise in the percentage of firms planning to add workers over the next six months,” William Strauss, an economist at the Federal Reserve Bank of Chicago, said in a statement.

The U.S. unemployment rate stands at 9.5% as of June. The jobless rate has averaged 9.7% over the first half of the year, and many economists expect it to remain elevated into 2011.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, also indicated that the pace of the economic recovery slowed in the second-quarter.  Industry demand grew at a slower pace in the quarter, the survey said. Corporate profits grew as price and cost pressures remained tame. About one out of four firms increased capital spending versus the previous quarter, and a growing number expect to continue investing over the next 12 months, according to NABE.  While economic activity is expected to remain positive this year, more economists lowered their expectations for 2010 gross domestic product. Only 20% of prognosticators expect GDP will grow more than 3% this year.

Asking prices up slightly

After increasing for the first time in nine months in May, asking prices for active home listings were virtually unchanged in the June reading of the Altos Research 10-city composite price index. In addition, inventory of existing homes for sale increased both in June and for Q210.  The June median listing sales price for single-family existing homes was $477,937 in June, down $146, about 0.03%, below the May 2010 median of $478,083 for homes in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington DC.  Altos Research said 13 of 26 markets it tracks reported increases in asking sales prices for homes during the month of June.

For Q210, asking prices were up in 14 markets. San Francisco led both categories with a 2% in June and an increase of 4.4% quarter-over-quarter.  Following San Francisco in asking price increases was San Jose (1.5% in June, 2.5% in Q210), Austin (1%, 1.7%), Dallas (0.9%, 2.2%) and Cleveland (0.8%, 1.5%).  The market with the biggest decrease was Phoenix, down 2.4% from June and 3.9% in Q210, followed by changes in Miami (-2.3%, -4%), Washington DC (-0.8%, 0.4%), Las Vegas (-0.6%, -0.9%) and Boston (-0.5%, 0.1%).  Listing inventory totaled 304,831 properties in the 10-city composite, up 2.8% and 5.4% for the quarter. Chicago was the only market where listing inventory decreased in June, but the area was still up 0.7% for the quarter. While Detroit posted a 1.6% increase in listing inventory during June, it was the only market with a decrease in listing inventory for the quarter, down 2.1%. San Francisco lead all markets in inventory volume, up 7.6% in June and 13.5% for the quarter.

Antidote to an anti-business agenda?

Because of the perception that Obama is anti-business and his policies are causing small and large businesses to hunker down and wait out the witch hunt, House GOP Leader John Boehner said he supports a ban on all new federal regulations, after meeting Friday with business lobbyists who complained about uncertain economic conditions.  “I think having a moratorium on new federal regulations is a great idea. It sends a wonderful signal to the private sector they may have some breathing room,” Boehner said.  He said any ban would include an exemption for “emergency regulations” for some agencies, and suggested it could last a year.  Boehner and Illinois Republicans Peter Roskam and Aaron Schock convened a group of nearly 20 Washington-based business leaders on Friday who represent various sectors — including homebuilders, retailers and manufacturers — as part of their “America Speaking Out” initiative to gather ideas for the GOP legislative agenda.  Roskam said those in the meeting reported that a significant obstacle to the economic recovery is “the down-talking of the private sector, the rhetoric.” 

“The anti-business rhetoric that they see coming out of Washington is more than just symbolic.” Roskam added. “It’s creating a great deal of uncertainty.”  The people in the meeting repeatedly criticized the approach to the economy taken by the Obama administration and congressional Democratic leaders, criticizing excessive federal spending and burdensome government regulations.  Jay Timmons from the National Association of Manufacturers maintained the United States is “becoming one of the most risky places in the world in which to do business.” But Timmons did make a pitch for both parties to come together, saying, “It takes a bipartisan effort to get this economy moving again.”  Naturally, Ryan Rudominer, spokesman for the Democratic Congressional Campaign Committee, seized on the GOP meeting Friday to argue it would result in “a Republican agenda written for lobbyists by lobbyists.”  Apparently it’s better to have a Democratic business agenda written by social activists?

BoA encourages short sales

Bank of America (BoA) reported $35.7 billion in nonperforming loans, leases and foreclosed properties in Q210 – which is 15% above levels measured in the same quarter of last year.  These loans and properties increased more than $5 billion in total aggregate balance since Q209. The total did drop by more than $200 million worth of these loans and properties from the $35.9 billion reported in Q110.  They represented 3.74% of all outstanding loans, leases and foreclosed properties at the end of Q210.  Since 2008, BofA and the acquired Countrywide completed nearly 650,000 loan modifications. During Q210 alone, BofA completed 80,000 modifications, including 38,000 trial modifications that were converted into permanent workouts under the Home Affordable Modification Program (HAMP).  If a modification does fail, BoA is putting an emphasis on selling the home through a short sale ahead of foreclosure. At REO Expo 2010, Matt Vernon, the short sale and REO executive at BoA said that the bank added 1,000 employees to the short sale staff and will “do everything possible to liquidate property prior to foreclosure.”

Now for our real estate education section…

The 15 Minute Resolution…How to Generate Free Leads with Craigslist

This week’s 15 minute resolution is a simple but super effective way to put the power of CraigsList to work generating free leads. No spam, no expensive software and best of all…hardly no time is involved!

Everyone in real estate has probably tried to use Craigslist to buy or sell real estate; it’s powerful, free and frequently used by people throughout the entire nation. Unfortunately, it’s also slow, behind the times and a major drain on time for those that try to sort through pages and pages of dull links and competitors advertisements.

Now it’s possible to change all that with just 15 minutes of time and these quick steps:

1. Visit Google keywords or any of your favorite keyword finder to create a list of real estate/short sale related keywords. Great examples might include “motivated seller”, “commercial property”, “investment income” or any other relevant words that signify the type of property you are seeking.

2. Visit www.Craigslist.com and select the state and city of your choice. Copy the url exactly as it appears in the url address bar.

3. Visit the Google Advanced Search page at http://www.google.com/advanced_search?hl=en

- In the second line of the advanced search (where is says “this exact wording or phrase”) type in the keywords previously outlined one at a time.

- Scroll down the advanced search page to the bottom where it says “Search within a site or domain” and put the Craigslist.com url exactly as it appears in the address bar.

- Indicate the number of listings, whether you would like to receive results via email (or forward to your phone) and other parameters such as price. Viola’…that’s it! Now you are ready to start receiving instant leads via Craigslist for free. Not only will this save time and money when working with Craigslist but it’s a simple way to begin building a contact list in your local area or across the nation.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
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