inflation

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Permanent Modifications Showing Slight Improvement

According to a report from Barclays Capital, modification rates picked up over December and January as servicers converted more trials into permanent modifications under the Home Affordable Modification Program (HAMP).  According to the latest HAMP progress report from the Treasury, servicers provided more than 66,000 permanent modifications through December. Participating servicers receive more than $35 billion in total capped incentives, but the program could reach as high as $50 billion. Modification rates “turned a corner” in October 2009, according to BarCap analysts, congruent with the rise in HAMP permanent conversion rates. The Treasury recently changed document guidelines for the servicers that go into effect June 1, 2010. After that date, borrowers seeking help through the program must provide certain documentation to enter into a trial modification. At the start of the program, servicers collected the documents during the three-month trial plan, creating a lag time in the permanent conversion rate.  Out of the more than 1 million borrowers in HAMP trials, 34% have been on private-label securitized loans – meaning the loans are not held by Fannie Mae, Freddie Mac or Ginnie Mae. After assuming a similar conversion rate for non-agency loans, analysts found 22,600 non-agency permanent modifications under HAMP.  “This ties in closely with the 25,000 loans modified in past two months that we see using our custom logic on Loan Performance. A higher number based on our logic also makes sense to us as some servicers have non-HAMP modification programs,” according to the report. 

DSNews.com – FTC says no more upfront loan modification fees

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.  “Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” FTC Chairman Jon Leibowitz said. “The proposed rule would outlaw up-front fees so companies can’t take the money and run.”  The FTC has brought 28 cases against companies suspected of foreclosure rescue and mortgage modification scams, and state and federal law enforcement partners have brought hundreds more. According to the agency, generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable program.  “Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered,” Treasury Secretary Timothy Geithner said. “I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices.”  The proposed rule also would bar providers from telling consumers to stop communicating with their lenders or mortgage servicers. It would also require them to disclose to consumers that they are for-profit businesses, the total amount consumers will have to pay, that neither the government nor the lender has approved their services, and that there is no guarantee that the lender will agree to change their loan.

Geithner says no double dip

U.S. Treasury Secretary Timothy Geithner said yesterday that the risk the U.S. economy will slip back into recession is lower now than at any time in the past year, but that recovery will be slow and uneven.  Even though credit ratings agency Moody’s last week warned that anemic U.S. growth, on top of already stretched government finances, could put pressure on the country triple-A status, Geithner dismissed concerns that rising U.S. indebtedness might put pressure on the United States’ prized triple-A credit rating.  “Absolutely not,” Geithner said when the interviewer suggested rising debt levels could put pressure on the top-notch rating. “That will never happen to this country.”  Former Treasury Secretary Hank Paulson, however, says that reducing the federal budget deficit poses “the most serious long-term challenge” to the United States. He also says he realized as Treasury secretary it was tough to convince lawmakers to tackle controversial issues without a crisis.  Geithner claimed there were even some encouraging signs in Friday’s report on U.S. unemployment for January, which showed another 20,000 jobs lost but a dip in the unemployment rate to 9.7 percent from 10 percent in December.  He said the Obama administration is doing everything it can to enhance recovery prospects and played down chances that growth might stall and push the United States back into recession.

The EU debt crisis and us

“Sovereign debt panic” finally struck last week, causing severe one-day drops in stock markets from New York to London to Toronto on Thursday.  The epicentre of the crisis is Greece, in danger of defaulting on its debt payments to worldwide holders of its government bonds, or sovereign debt.  The world is awash in potentially unsustainable debt, and the U.S. looms largest. President Barack Obama just tabled a budget that projects a doubling in America’s national debt, to $28 trillion (U.S.), by decade’s end. That’s twice the size of the U.S. economy.  Yet it’s the EU who is threatening the wealth of all of us. If Greece defaults on its debts, and it’s followed by Spain and Portugal and possibly Ireland and Italy as well, then the collapse of Lehman Brothers in 2008 will seem like a mere blip.  It isn’t so much the risk of default by these countries themselves that is spooking the markets at the moment, but the possibility that a still-skittish financial system will succumb to another fear-driven contagion. 

Normally Greece would simply devalue the drachma, or allow the markets to do it for them, and that adjustment would rebalance the economy and eventually make it more competitive, while also raising the value of foreign liabilities and making the people poorer.  But that can’t happen, because Greece is part of the monetary union, and the euro is held up by Germany’s strength. There’s talk of Greece leaving the euro, or being kicked out, but that would just make matters worse: outside the euro Greece would go into a downward spiral, dramatically increasing the value of its euro-denominated debts and creating hyper-inflation.  While it’s hard to imagine any of these countries’ governments defaulting on their debts, restoring their budget balances is going to hold back their economic growth for a long time and lead to higher long-term government interest rates around the world.

Now on to our real estate investing educational section…

It is estimated over 95% of millionaires made their money from real estate. On the other hand, the average Realtor earns less than $40,000 annually. Why the discrepancy? Obviously it’s quite possible to make stellar returns from real estate yet each and every year plenty of people barely make ends meet even while working at it full-time.  Yet research shows that success in real estate doesn’t require full-time work, a large private income or many of the other trappings of success typically associated with wealth creation from other venues. In fact, plenty of part-time investors far outperform fulltime real estate associates each and every year. Learn the secret of their success with these quick tips:

1. Accept Success – Seriously! Have you ever stopped to contemplate how easily most people accept failure or fate versus those that take responsibility for their own success? It’s quite remarkable when you stop to think about it. Understand that everyone is capable of making a success from short sale investments – but few people actually do so not because they are helpless but because they wait for help rather than forging their own path. When in doubt about what to do, first find a mentor and then…simple do it. IF it’s wrong you will learn from the experience but if not, you have made progress either way.

2.  Work at home when possible. Set a schedule then stick to it. Don’t allow distractions to clutter up your productive short sale investing time. Hire childcare if needed, find a reputable and reliable virtual assistant and then focus time and energy on building the foundation for your short sale empire by automating as much as possible.

3. Dump dumb rules. Simply your life and investing goals as much as possible. Sit down and think about how much time it takes you to argue with your spouse about some minor situation versus finalizing a deal or making offers on upcoming short sales. Re-evaluate what rules and roles dominate your day then eliminate those that don’t enhance your life.

4. Learn to say NO. Stop apologizing and don’t try to do it all yourself. It’s not in your best interest (or that of your family and friends) to tackle more than you are able to deal with on a regular basis. Leave space for down-time as well as impromptu activities. Short sale investments are especially prone to last minute maneuvers where those that win aren’t necessarily the most prepared but simply those in the right place at the right time.

5. List- Buy. The more you list the more they buy and vice versa…the more you buy the more you have to list as a short sale investor. It’s a numbers game so take action and automated it as soon as possible.  Increase your target marketing efforts on a regular basis; once you reach the desired number of homes, begin to switch your strategy to include more affluent clients.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

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

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

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

***********

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having about how to work less and make more money

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Houses” signs, or call more FSBO’s (for sale by owner

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there are only so many hours in the day, right?

 

There’s a saying “The less I work, the more I make.” 

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Housing sales fall, factory output increases

The National Association of Realtors said its seasonally adjusted index of sales agreements fell 16 percent from October to a November reading of 96. It was the first decline following nine straight months of gains and the lowest reading since June.  The drop was far larger than the 2 percent expected from economists surveyed by Thomson Reuters, and analysts were surprised.  “This was bound to happen at some point, although not by this much,” wrote a startled Jennifer Lee, senior economist with BMO Capital Markets. “Gulp,” she added.  “It will be at least early spring before we see notable gains in sales activity as homebuyers respond to the recently extended and expanded tax credit,” Lawrence Yun, the Realtors’ chief economist, said in a statement.  

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales. Pending sales were down 26 percent from October in the Northeast and Midwest, 15 percent in the South and 3 percent in the West.  “This sudden drop risks the stability housing markets have enjoyed in recent months,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.  The good news is that orders to U.S. factory output posted a big gain in November, according to the Commerce Department. That data was the latest evidence of a strong turnaround in manufacturing as industries from China to Europe show signs of recovery.  Orders rose by 1.1 percent in November, more than double the 0.5 percent increase economists had forecast. The increases were widespread with the exception of autos and aircraft, which posted declines.  The Institute of Supply Management had reported Monday that its key gauge of U.S. factory activity showed manufacturing was expanding in December at the fastest pace in more than three years.

Olick on HAMP

Diana Olick from CNBC is back from vacation and is no fan of President Obama’s HAMP bailout:   “Clearly the housing boom of the past decade was fueled far more by faulty mortgage products than low interest rates, and to find proof of that you need look no further than the government’s own mortgage bailout. The Home Affordable Modification Program (HAMP) is trying desperately to keep these faulty mortgages alive by changing their interest rates, but many many borrowers are unable to meet even the lower monthly payments. The underwriting, the lending, the products themselves are simply irreparable. And we’re about to find out how monetary policy affects the housing market, as the Fed winds up its $1.25 trillion program to buy Fannie and Freddie securities, thereby artificially keeping interest rates low by keeping demand high. The Fed claims its on track to pull out March 31st, as planned. Add that to current shenanigans in the bond market which are pushing mortgage interest rates up already, and you’ll get that monetary policy whether you like it or not.  What’s interesting in all of this is that the action in the housing market right now is cash-only buyers/investors. They’re sidestepping the mortgage market entirely. But as I said, these are investors, by and large, and not real organic home buyers. The housing market, while it may have become a commodities market over the past decade, is inherently not one and therefore cannot recover with investors alone.”

Financial crisis not over

According to several top economists at the annual American Economic Association, America’s financial crisis is nowhere near over.   That stands in sharp contrast to rising optimism in the banking sector, which analysts say has benefited disproportionately from government bailout efforts.  “The recession is not over,” said Michael Intriligator, professor of economics at the University of California, Los Angeles.  He predicted economic output would not return to pre-crisis levels until 2013, while the job market would not fully recover until 2016.  U.S. gross domestic product expanded 2.2 percent in the third quarter, but the sustainability of the recovery remains the subject of fierce debate. Simon Johnson, an economist at MIT’s Sloan School of Business, said that by propping up the financial sector, government efforts to date are only delaying another inevitable crash.  By giving large financial institutions the assurance that they are too big to fail, and thereby offering an implicit guarantee to excess risk-taking, Barack Obama has made the problem worse.  “The crisis is just beginning,” Johnson said. “Have bankers won? In the short-term, absolutely. The immediate opportunity for change has already been missed.”

Bankers optimistic 

As if to bolster what Simon Johnson said above, Jim O’Neill, head of global economic research at Goldman Sachs (a banker), is wildly optimistic, claiming that the global economic rebound is likely to be even stronger than many have anticipated and developed markets have the potential to outperform emerging markets.  Goldman Sachs analysts estimate that the world economic growth will be 4.4 percent this year and 4.5 percent in 2011.  Investors should be “really hopeful” about the US economy, after Monday’s ISM survey results, according to O’Neill.  “It looks like you’ve got an environment with stronger than expected growth, with policy makers at least in the West still saying ‘we’re not doing anything guys, go ahead and party,’” said Clive McDonnell, a regional strategist at BNP Paribas Securities.

DS News.com – Mortgage-Related Failures Hit Record Level in 2009

According to MortgageDaily.com, a source of mortgage news for the mortgage industry, more than 200 mortgage-related firms ended operations or failed last year, the highest number since the site began tracking the data in 1998. The previous record was set in 2007, but 2009 now marks the worst year in the industry.  Up from the revised 124 closings in 2008, the closings of 225 mortgage-related operations were tracked in 2009 at the mortgage graveyard – a journal of failed lenders maintained by MortgageDaily.com. As banks account for most of the country’s residential originations, MortgageDaily.com said the annual surge in mortgage-related failures was fueled by a 400 percent spike in bank failures. In addition, credit union failures, including corporate and state-regulated institutions, were up by more than a third.  Ocala, Florida-based Taylor Bean & Whitaker Mortgage Corp. was among last year’s most notable failures. The company was forced into bankruptcy after it was suspended by the Federal Housing Administration (FHA) in August. Lend America, based in Melville, New York, lost FHA approval in November and suffered a similar fate. Tied to the failure of Taylor Bean, Montgomery, Alabama-based Colonial Bank was seized by the Alabama State Banking Department in August and sold to BB&T.

US auto sales hit 30 year low in 2009

US auto sales are expected to have hit a 30-year low of about 10 million when figures are released today, but analysts expect more than 1 million cars and light trucks to have been sold in December, the best monthly performance since Cash for Clunkers in August.  Financial firms wrote 5.5 percent more car loans in the third quarter compared with the prior three months, Experian Automotive says. Fourth-quarter figures aren’t yet available, but Jesse Toprak, vice president of the auto pricing tracker TrueCar Inc., said December saw an uptick in auto-loan approvals for consumers with average or above-average credit.  Today, a top-tier borrower can get a 36-month auto loan with an average monthly rate of 5.74 percent, down from 6.65 percent a year ago, according to Informa Research Services. But the cost has risen for people in the bottom tier: The average rate has climbed to 18.56 percent, from 16.47 percent a year ago.

CMBS Delinquencies May Grow 58% in Next Six Months

According to monthly research by credit-rating agency Realpoint, the delinquent unpaid balance for commercial mortgage-backed securities (CMBS) rose “substantially” in November – more than 16% – to $37.93bn from the previous month, and the rate of growth looks likely to continue.  Multifamily loans surpassed retail loans in November as the largest contributor to overall CMBS delinquency, Realpoint said. The sector accounted for 1.23% of the CMBS universe, but 26% of total delinquency.  The overall delinquent unpaid balance of CMBS rose “an astounding” 440% from one year earlier, when $7.03bn of unpaid balance was delinquent in November 2008. Realpoint indicates the rate of growth in delinquency looks unlikely to let up as the market heads into 2010.  “Overall, following the delinquency reporting of the $4.1bn Extended Stay Hotel loan and the experienced average growth month-over-month, we now project the delinquent unpaid CMBS balance to continue along its current trend and grow to between $50bn and $60bn by mid 2010,” Realpoint researchers wrote in the December 2009 report.  With these figures, Realpoint expects delinquent CMBS to grow as much as 31-58% by mid-2010.  Realpoint researchers project the delinquency percentage to grow between 5% and 6% through Q110, potentially surpassing the 7-8% mark under heavy stress scenarios through mid-2010.

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

Secrets to Phone Success for Foreclosure Investors

Much has been written about secrets to telephone success for all types of sales but rarely is it possible to obtain all the best possible tips in one convenient place. Here at the Short Sales blog we make a practice of providing information you can really use in your day to day investing techniques so without further ado, here are the top ten secrets to phone success for short sale investors.

1. UP the Ante. Buyers who call to inquire about homes listed in advertisements with a price listed can usually afford more. Research indicates most people responding to an ad with listed price tend to be more conservative and searching for bargains. Make a point of asking about upper limits then provide enticing alternatives whenever possible.

2. Downsize. Buyers calling about homes with signs in front are usually at – or above – their upper limit. Research indicates prospective buyers that respond to yard signs often have lower income or credit scores. Be sure to screen callers carefully and have other more affordable options available.

3. Ask questions. The person who asks the most questions tends to be “in charge” of the conversation. Be prepared to ask plenty of questions when responding to a call or inquiry; it’s a good way to begin building a list of potential prospects.

4. Follow-Up. Experts have found that buyers and sellers rarely tend to call back but will respond to information that meets their search criteria. Make it a priority to gather relevant information then follow-up whether via email, phone or standard mail.

5. Ask. Always ask buyers if they have a house or other property for sale. Even if you don’t make an offer, it could become an important part of the negotiation process. It’s also a quick way to generate a little extra cash or goodwill by making a referral to your favorite agent or broker.

6. Don’t Make Assumptions. Investors tend to have clearly defined goals so it can be difficult to realize that both buyers and sellers may have little idea what they really want. Don’t make assumptions – instead, realize that lack of information is a rampant problem among many Americans. Be prepared to provide information, examples and education to make the deal work.

7. Compare the Competition. Most of the time, both buyers and sellers will have other ads circled. From time to time savvy short sale investors should know the local competition both in terms of what is for sale and the amenities offers. Don’t shy away from comparing your property or service against others – just be sure to do it in a positive way that reflects information.

8. Sell a Service – Not a House! This is a common mistake among novice short sale investors. Remember, every contact is an opportunity for present or future clients so make the most of it. Rather than responding about a specific property, learn to develop a relationship instead. After all, once the caller has rejected the property they have typically rejected your service. Differentiate yourself by providing solutions to their problems rather than just information on a single property.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

* Join my Fan Page: http://www.mclaughlinchris.com

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

Announcing the Re-Opening of FixAFlip!  But only a few spots

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Join Chris McLaughin, Nathan Jurewicz, and CPA Bob Beard this

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 Join us Sunday, December 13, at 8:30 PM ET, 5:30 PM PST:

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

4% get mortgage help 

Treasury officials, in the first comprehensive tally of permanent modifications made, say that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30, but 30,650 people in trial modifications have been denied.  That means that only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program.  A nearly equal number of trial modifications have been denied permanent assistance, the report showed. The reasons include not making monthly payments on time, not submitting all the necessary paperwork and not qualifying for reasons such as insufficient income.  

Homeowners claim that banks keep losing paperwork, but banks claim they often don’t get it in the first place.  Around 375,000 people should be eligible to receive long-term relief by year’s end, but only one-third of homeowners who have made at least three trial payments have submitted all the needed forms, Treasury officials say, and some 20% have not submitted any paperwork at all. Banks and government agencies have hired outside companies to knock on borrowers’ doors to assist them with completing the paperwork.  None of this addresses the real problems, of course:  a lot of people are underwater and don’t see the point of making payments, and quite a few know they won’t qualify once their real income comes to light.

Retail sales up

Retail sales jumped 1.3% in November, according to the Commerce Department, more than the expected increase.  The seasonally adjusted November increase represents $352.1 billion worth of monthly sales. This is slightly less than the October increase, when retail sales jumped 1.4% month-to-month.  Automobile sales had little to do with November’s gains this time — without including autos, retail sales rose 1.2% last month.  Economists had expected retail sales to rise 0.6% from October, according to a consensus of forecasts compiled by Briefing.com.  November sales included Black Friday, the post-Thanksgiving shopping spree that is generally one of the hottest days of the year for retail. But this year’s Black Friday disappointed retailers, with sales 0.5%, and falling short of Thomson Reuters’ forecast of a 2.1% rise.  The University of Michigan will release its preliminary consumer sentiment index for November later today. The November index is expected to rise to 68.8, according to a Briefing.com consensus, from the prior month’s index of 67.4. 

Fed outlines new mortgage market

Elizabeth Duke, a governor of the board of the Federal Reserve System presented a framework for a “better-functioning” mortgage market while speaking at the Federal Reserve Bank of Chicago.  Data collected under the Home Mortgage Disclosure Act for 2008 showed a fractured market for housing finance, Duke said, with frozen private lending and new loans dependent on government support. Only 75% of the mortgage companies active in 2006 remained in 2008 as warehouse lines of credit – which the companies depended upon to fund their loans – shrank “significantly,” Duke said.  “Some would argue that most of the really risky behavior is now out of the market,” Duke said. “But, unfortunately, the backlash has restricted a lot of perfectly responsible lending as well. Banks are reluctant to put any but the lowest possible risk loans in their portfolios.” 

Duke said that a new system must provide adequate consumer protection after widespread abuses so consumers can feel confident in negotiating a mortgage. “Second, there must be transparency at all levels. Retail products should be as transparent as possible, so that consumers find it easy to understand the terms and risks of their mortgages;  Third, the new system should encourage simplicity. Retail mortgage contracts ought to be as simple as possible. Too often, the complexity of mortgages has served to confuse borrowers and make it more difficult to make informed decisions; Finally, the new system should feature clear roles and properly aligned incentives for all players. Too often in the recent turmoil, we saw examples of misaligned interests and competing objectives,” Duke said.

More money down the drain

The Obama administration is considering starting up a whole new program from the $700 billion Troubled Assets Relief Program (TARP) dedicated to dumping more  money into banks without restrictions so long as the funds were used to support loans to small businesses.  As an alternative, officials would also be prepared to ask Congress to modify the Troubled Asset Relief Program itself by easing pay limits and other restrictions that would be imposed on small business lenders, the newspaper said.  Jim Rogers, chairman of Jim Rogers Holdings, says the plan will leave the country with no way to help its way out of the next crisis.  The Treasury Department “has been putting out all of this stimulus and now they’re talking about extending the TARP,” Rogers said.  “Why are we listening to any of those guys down there? They’re making our situation worse,” he said. “They said in writing yesterday the solution to our problem is to spend more money … that’s what got us into this problem: too much debt.  That’s like saying to Tiger Woods, ‘you get another girlfriend and it will solve your problems’ or ‘five more girlfriends and you will solve your problems,’” he said.  “We’re all going to pay the price for this in, one, two, three years,” Rogers added. “The next time that we have problems in the economy, which will not be too long, we don’t have any bullets left. We’ve shot everything we had to solve our problems.”  Since labor leaders and Democrats in Congress have backed the notion, it’s almost certainly a horrible idea.

Some cities see an increase in listings 

While gross house listings in major US markets continued their decreases, listings in some of the markets hit hardest by the housing downturn saw an increase, according to ZipRealty’s survey of housing inventory.  The number of listings in 27 major US markets declined 2.42% from October to November. The 579,413 multiple listing service (MLS) listings in the markets is down 27.64% from November 2008. It’s the 17th straight month that gross listings for all markets declined month-over-month.  Boston experienced the greatest month-over-month decrease at 8.5%, followed by Minneapolis-St. Paul (6%), Washington, D.C. (5%), Denver (4.4%) and Chicago (4%).  San Diego led all markets with a 53.7% year-over-year inventory decline, followed by Los Angeles (53.7%), San Francisco Bay area (51.8%), Las Vegas (51%) and Phoenix (40.7%).  But some distressed markets experienced month-over-month listing increases in November, including Tucson (2.6%), Las Vegas (1.3%) and Orlando (0.6%). It was the first inventory increase in Las Vegas in 12 months, when listings increased 1.86% month-over-month between October and November 2008.

Now on to our real estate investing educational arena …

Friday File: Fact & Fiction About Fees

This week we focused on financial aspects surround short sales; from credit terms to FAQ’s about loan modification the emphasis has been on understanding loans. To finish the week in style we thought it was only fitting we should cover a few of the facts and fiction about fees including which are legit and which you have a fair chance of fighting.

Factual Fees

While you might take issue with any fees, the reality is that some are truly representative of services rendered including underwriting fees and processing fees. Underwriting fees are the actual charges for those that review the loan while processing fees are the costs for dealing with the details of the loan.

Closing costs are another set of expenses which are not actually fees but simply expenses require for various entities such as the local government.  Doc stamps and certain taxes fall into this category.

Appraisals, inspections and surveys are also customary charges you are likely to encounter for services by third party providers.

Fictional Fees

Email fees, appraisal review fees and ancillary fees are just a few of the increasingly common fictional fees being charged across the nation. While it may not be possible to avoid every junk fee, savvy buyers should certainly challenge these excess costs whenever possible. Here are a few other to keep an eye out for when applying for a mortgage loan:

• Photo review fee
• Satisfaction fee
• Funding fee
• Document prep fee
• Plot Plan fee
• Excess Escrow fees based upon loan amount(s)
• Notary Fee – even when signing in person
• FedEx/Overnight Delivery  – verify actual cost and use – don’t be charged when documents were emailed or faxed. Ditto for courier or messenger fees.
• Archive Fee

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

About the author:

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

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
    * Join my Fan Page: http://www.mclaughlinchris.com
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* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

* Join my Fan Page: http://www.mclaughlinchris.com

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

HAMP destined to fail

As Amherst Securities Group LP’s Laurie Goodman told Congress, the U.S. loan modification program is “destined to fail” because it doesn’t confront the real problem of negative home equity that is driving foreclosures.  The three-year housing slump has wiped at least 28 percent off home values nationwide, government and industry data show. Almost 23 percent of homeowners in the third quarter owed more than their properties are worth, according to First American Core Logic, a real-estate data company in Santa Ana, California.  “The phenomenon of underwater mortgages is one of the most troubling aspects of the entire housing market collapse,” Julia Gordon, senior policy counsel at the Center for Responsible Lending, told the committee. “Homeowner equity position has emerged as a key predictor of loan modification re-default, more so than unemployment or other facts.”  

Fewer than 1.5 million of the 3.2 million homeowners targeted by the Obama administration for mortgage relief are likely to qualify for the Home Affordable Modification Program, Herb Allison, the U.S. Treasury Department’s assistant secretary for financial stability, told the committee.   Banks have said they are rushing to meet a new deadline announced by the Treasury on Nov. 30 to permanently convert more than half of the 650,994 loans that were in trial modifications at the end of October into permanent reductions by year’s end. A mortgage “cram-down” bill that stalled in Congress earlier this year will also be attached to the broader financial regulatory legislation and voted on this week, Frank said today. The cram-down provision would let federal judges lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court, even if the lender objects.

Cash for caulkers

President Obama proposed a new program yesterday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.  No one is quite sure how it would work, but Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s helping write the bill, said a homeowner could receive up to $12,000 in rebates.  The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.  Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.  Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible.

That would mean a household could spend as much as $24,000 on upgrades and get half back.  Homes that take full advantage of the program could see their energy bills drop as much as 20%, he said. The program is expected to cost in the $10 billion range. “Not only will [such legislation] increase our energy security and transform our energy infrastructure to a modern, clean and efficient one,” Senate Energy Committee Chairman Jeff Bingaman, D-N.M., wrote in a recent op-ed column in the Hill, a Capitol Hill newspaper. “But it also will position the United States to lead in the development of clean energy technologies.”

Mortgage applications up

According to the Mortgage Bankers Association (MBA), the  Weekly Mortgage Applications Survey for the week ending December 4, 2009 increased 8.5 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 54.0 percent compared with the previous week, but it was a shortened week due to the Thanksgiving holiday.   The Refinance Index increased 11.1 percent from the previous week and the seasonally adjusted Purchase Index increased 4.0 percent from one week earlier.  The unadjusted Purchase Index increased 41.7 percent compared with the previous week and was 18.8 percent lower than the same week one year ago. 

The increase in purchase applications reflected a 10.0 percent increase in Government Purchase applications and a 0.2 percent decrease in Conventional Purchase applications, both on a seasonally adjusted basis.  The four week moving average for the seasonally adjusted Market Index is up 1.5 percent.  The four week moving average is up 2.3 percent for the seasonally adjusted Purchase Index, while this average is up 1.6 percent for the Refinance Index.  The refinance share of mortgage activity increased to 74.4 percent of total applications from 72.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.7 percent from 4.8 percent of total applications the previous week.  The average contract interest rate for 30-year fixed-rate mortgages increased to 4.88 percent from 4.79 percent, with points increasing to 1.17 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This ends a six week run of declining 30-year fixed rates which may have triggered the increase in refinance applications.

Shoveling more money

President Barack Obama wants to spend even more with an expansion of his $787 billion stimulus plan, unveiling job-creation proposals that build on the initial package, including a hiring tax credit that his own party jettisoned as unworkable and some business owners deemed ineffective.  An additional $50 billion would go toward infrastructure spending, ramping up Treasury Department lending to small businesses through the Troubled Asset Relief Program, extending tax credits for business investment and offering state and local governments a fresh lifeline.  Other ideas that weren’t in the February stimulus legislation include a tax credit that rewards companies for hiring workers and tax rebates for individuals who make their homes more energy efficient.  New infrastructure spending would include funds for roads, bridges, airports and water systems, even though tens of billions of dollars from the original stimulus plan remain in the pipeline.

White House economist Jared Bernstein said worthy projects not deemed “shovel ready” in the initial funding applications now will see money, implying that federal stimulus spending could stretch well beyond 2010.  Some beneficiaries of the latest plan expressed skepticism about its payoff. Philadelphia Mayor Michael Nutter, a Democrat, said the initiatives might spur job growth indirectly, but he would prefer a less circuitous route. He said the Obama administration needs to do more direct hiring, to create jobs programs aimed at high-unemployment urban centers like Philadelphia, where unemployment stands at 11.2%. Ralph Braun, chief executive of Braun Corp. in Winamac, Ind., said a tax credit is meaningless for a producer like him. “If you’re just going out to hire someone just for a tax credit, what kind of job will you put them in that has any longevity to it?” said Mr. Braun, whose 730-employee company produces wheelchair lifts and other equipment. “You have to have a customer for that employee to serve — so I’m confused how a tax credit would stimulate anything.”

Fewer prices declines

A total of 22 percent of houses on the market as of December 1 have lowered prices at least once, down from 25.6 percent in November, marking the lowest share since Trulia started tracking reductions in April.  In real numbers, home sellers slashed $24.7 billion from asking prices for houses listed as of Dec. 1 nationwide, down 12 percent from $28.1 billion the prior month.  “The tax credit extension has provided sellers with a much bigger window of opportunity, creating significantly less pressure to sell now,” Pete Flint, chief executive of San Francisco-based Trulia, said in a statement.  The Trulia report showed price cuts are fewer in areas hardest hit by foreclosures, showing a floor is starting to be reached after deep discounting. These regions will be the first to return toward fair market value, Trulia said.  The South and West regions, which include some of the cities hardest hit by foreclosures, had the lowest level of price cutting in the latest report. Nineteen percent of listings in the South and 20 percent in the West had price cuts, compared with 22 percent in the Midwest and 25 percent in the Northeast.  The luxury market continues to pay a high price in the housing bust. Homes listed at $2 million or higher have slashed prices by an average of 14 percent from the original asking amount.  These houses represent less than two percent of all current listings on Trulia, but are responsible for 26 percent of the $24.7 billion in home price reductions.

Now on to our real estate investing educational arena …

The High Price of Mortgage Modification

Short sale investors frequently encounter homeowners that believe a simple mortgage modification or refinance will solve all their financial woes – tragically that is rarely true. In fact, recent research released by the federal government seems to indicate it is merely postponing the day of reckoning. Rather than delaying the inevitable it’s important to explain the high price of mortgage modification to distressed sellers.

All Pain – No Gain

Research shows more and more distressed homeowners are falling behind even after obtaining a mortgage modification but this only presents half the problem. Homeowners become so focused on remaining in their property they forget the long term cost of carrying a mortgage they cannot afford. The result is the loss of financial security for years to come; college savings, retirement accounts and lifestyle are sacrificed for a home they cannot afford. It’s imperative for homeowners to ask several important questions to determine if they are making the right decision for their financial future:

1. How much is the home worth today versus how much is owed?

2. How long do you intend to keep the property?

3. How much would you save by downsizing or purchasing a different property?

4. How much are you able to set aside for college, retirement and savings while servicing the mortgage?

5. What can you expect to make on the property if you needed to rent/lease it?

6. How long will it takes you to break even on the property if you were to sell it?

7. How much will be added to the price of the loan after legal fees, overages and other costs?

8. How many additional years will you need to pay the loan if fees/other are capitalized?

9. Is the interest rate, PMI, HOA and escrow subject to change? If so, will you be able to afford the new rates in the future?

10. Is your spouse willing to become financially responsible in the event of a loan modification? Remember, even if the original mortgage was purchased only in one name, most modification programs require both spouses to assume financial responsibility in order to obtain a modification agreement.

11. Will the property need to be repaired or brought up to a certain standard in order to qualify for the mortgage modification – if so, can you afford it?

12. What rights and responsibilities are required should you sell the property at a later date?

See you at the top!

Chris McLaughlin

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Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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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
    * Add me on Facebook: http://www.facebook.com/mclaughlinchris
    * Join my Fan Page: http://www.mclaughlinchris.com
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