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Poll: Home prices to drop 2.3%

admin — Thu, 03 Mar 2011 20:19:42 +0000

Smart Real Estate News & Commentary by Chris McLaughlin March 3, 2011

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Poll: Home prices to drop 2.3%

US home sales will soon hit a wall as foreclosures are dragged out, creating a supply overhang that will push prices down 2.3% this year before beginning a slight recovery in 2012, according to the median forecast of the 26 economists who gave a price outlook in the Reuters poll. A rise in “distressed” home sales at depressed prices has helped clear the path for a recovery. But economists doubt the bounce will last as the pace of foreclosures drags out. By the fourth quarter of 2011, the pace of US existing home sales will only edge up to a 5.48 million annualized rate from the 5.36 million pace in January, according to the poll. The rate has recovered from 3.86 million units in July last year, following a slump that was caused by the expiry in April of federal home buyer tax credit incentives.

The total price drop from the peak of the housing market in 2006 will be 35%, they said. Purchases of distressed homes from troubled borrowers, or those in or near foreclosure, are seen as an important way to absorb the almost four years’ worth of inventory that may hit the market, economists said. Foreclosures will at least begin to subside in 2011, according to 18 who gave an outlook in the Reuters poll. “Price expectations are probably more important than foreclosures at this time,” said Donald Ratajczak, Morgan Keegan’s Atlanta-based consulting economist. He noted that prices are rising in San Diego, where foreclosures make up a big portion of sales, and falling in Atlanta, where foreclosures are below average. The difference, he said, is that San Diego buyers see foreclosures as an opportunity, and Atlanta buyers see them as a problem.

Jobless claims at 3 year low

There were 368,000 initial jobless claims filed in the week ended Feb. 26, the Labor Department said Thursday. That was down 20,000 from the week before, and the lowest since May 2008. Economists surveyed by Briefing.com had expected initial claims to rise to 400,000 in the latest report. The 4-week moving average of initial claims, which aims to smooth out volatility, also improved, falling to 388,500 from the previous week’s revised average of 401,250. The four-week average for applications, a less volatile figure, fell last week to 388,500. That’s the lowest level since July 2008, the last time the four-week average was below 400,000. Economists say applications that remain consistently below 375,000 tend to signal declines in the unemployment rate. Applications for benefits peaked during the recession at 651,000.

The downward trend in applications suggests that companies are easing the pace of layoffs now that the economy is gaining momentum. During the recession, companies slashed work forces, cut or froze workers’ pay and took other aggressive steps to reduce costs. Companies are expected to increase hiring in the month ahead. Employers probably added 175,000 new jobs in February, economists predict. That would mark an improvement from an anemic 36,000 in January when snowstorms and bad weather hurt job gains. The government releases the employment report for February on Friday. At the same time, economists think the unemployment rate edged up to 9.1 percent in February as more jobseekers — perhaps feeling better about their prospects — stream into the labor market looking for work.

Double dip or not?

Home prices are at near their post-bust lows. January saw a double-digit dip in the number of new homes sold. Then Robert Shiller, Yale economist and co-founder of the S&P/Case-Shiller home price indexes, dropped this bomb: “There’s a substantial risk of home prices falling another 15%, 20% or 25%,” he said. On a national level, Shiller and other economists compare home price changes with income growth over the years. Before the bust, home prices had been outpacing earnings since the late 1990s. Just to get that back to a normal ratio — which we last saw in 1998 — home prices would have to drop another 15%, according to Anthony Sanders, a director of Real Estate Entrepreneurship at George Mason University. “Even after the bubble burst, the ratio of income to home prices is still way too high,” he said. Many disagree with these assessments. Karl Case, who co-founded the home price index with doom-sayer Shiller, believes that the market will “bounce along the bottom all year.” If that’s the case, buyers who take the plunge now shouldn’t expect big profits if they sell in the next few years, but they shouldn’t have to take a major hit either.

Besides, a home purchase is more than a potential investment, especially for families planning to stay put for a while. The big plus for them is the pleasure of living in their own homes. “People should base their decision on affordability, lifestyle choices and home preferences, not on investment,” said Lawrence Yun, the National Association of Realtors’ chief economist. Some stable areas, such as Texas and the Midwest, will probably not experience price plunges at all, but other markets, such as Seattle, Portland and inland California, could still fall substantially, according to Baker. And buyers may take heart from some positive recent indicators, such as an up tick in the sales of existing homes in January; a drop in vacant rental homes; and more investors snapping up properties. There’s also been an upswing in the number of high-end homes — those costing more than $750,000 — being sold, according to Yun. The wealthy buyers of these properties have lots of choices of where to place their money and many are investing in real estate. “The smart money is making their move,” said Yun.

Mini-budget cuts signed

President Obama signed a budget cutting stop-gap spending bill yesterday after it was passed by the Senate by 91 votes. The bill terminates eight government programs, for savings of $1.24 billion, while an additional $2.7 billion in earmarks are eliminated. On the chopping block were eight programs involving broadband access in rural communities, education, highway construction and the Smithsonian Institution. All eight had been identified by both parties as wasteful and unnecessary. The programs that were cut fall into two umbrella categories: ineffective or duplicative. The bill eliminated $75 million in election assistance grants, which are funds allocated to help states upgrade voting machines and voter rolls.

Since 2002, Washington has pumped $3 billion into the program, but states have only found ways to spend $2 billion. And that rural broadband program? The Agriculture Department’s inspector general uncovered “abuses and inconsistencies” as well as “a lack of focus on the rural communities it was intended to serve.” The four education programs total $468 million, and are being eliminated for being outdated, ineffective or duplicative. The highway funds, $650 million in total, were originally budgeted as a one-time payment for 2010 but never cut. The remaining $2.7 billion in cuts cover almost 50 different earmark programs that will no longer be funded because House Republicans have instituted a new rule banning that type of spending.

What penalties are coming for the mortgage mess?

Disputes are emerging over how much to punish the banks as well as exactly who should benefit from a settlement. The newly created Consumer Financial Protection Bureau is pushing for $20 billion or more in penalties, backed up by the attorneys general and the Federal Deposit Insurance Corporation. But other regulators, including the Office of the Comptroller of the Currency, which oversees national banks, and the Federal Reserve, do not favor such a large fine, contending a small number of people were the victims of flawed foreclosure procedures. If only victims of problems at the servicers are helped in a settlement, that would cover a small portion of homeowners who are in default and even fewer of those whose homes are valued at less than they owe. All the regulators declined to comment publicly on just how close they are to wrapping up a global settlement that would be presented to the banks. But signs of the differences have emerged in public testimony as well as in private conversations with government officials.

The acting comptroller of the currency, John Walsh, testified last week that while there were widespread problems with documentation and oversight of law firms and other crucial links in the foreclosure chain, only a “small number of foreclosure sales should not have proceeded.” Despite skepticism on the part of the comptroller’s office, other regulators would like a broader plan to help pay for modifications of mortgages that are delinquent or in default, even if homeowners cannot point to a specific example of wrongdoing on the part of servicers. In other cases, the money might be used to help mortgage holders whose loan principal exceeds the home’s current value. One possibility, industry insiders and banking lobbyists suggest, is that homeowners might deliberately become delinquent on their loans to get a principal reduction. Housing activists counter that homeowners seeking modifications are often told by their lenders to stop payments, and then end up in foreclosure. The debate reflects some degree of weariness with foreclosure, as the administration’s signature mortgage modification program is under attack by both House Republicans and housing activists as a failure. “There has been a tension in this country during the financial crisis,” said Michael S. Barr, a former Treasury official now at the University of Michigan Law School. “People want those who are in economic trouble to get a fair shake. But they don’t want them bailed out for making their own mistakes, like buying too big a home.”

Community banks push back on mortgage reforms

Community bank leaders warned a House Financial Services Committee yesterday about the risks their institutions face from excessive Wall Street regulation. The Independent Community Bankers of America (ICBA) said thousands of smaller banks could be chased out of the mortgage market if lawmakers end up redefining the qualified residential mortgage too narrowly, leaving the ball in the court of large banks. ICBA said in a statement that “regulators should exempt portfolio loans held by banks with assets of less than $10 billion from a new requirement that first-lien mortgage lenders establish escrow accounts for the payment of taxes and insurance.” Without an exemption, it’s feared smaller banks will not have the mechanisms to compete.

Bankers who gave testimony said increased regulation is another concern since smaller players with smaller capital reserves lack the funds to hire compliance staff for the handling of new regulations. Rep. Blaine Luetkemeyer (R-Mo.) warned the panel that “we are regulating ourselves out of the recovery.” Albert Kelly Jr., chairman-elect of the American Bankers Association and CEO of SpiritBank, agreed, saying “managing the anomaly of regulation” is overwhelming for a bank that has only 37 employees.

Olick – Obama defends housing bailout

“The Obama Administration is vigorously defending its mortgage bailout programs, from the Home Affordable Modification Program (HAMP) to the Neighborhood Stabilization Program to the FHA Short Refi. They’ve taken to the blogosphere, the reporter conference call and to a hearing room in the House of Representatives, where Republicans are bent on scrapping it all. Interestingly, the Administration also released the ‘Monthly Scorecard’ for the programs today. The HAMP in particular offered some pretty lackluster results. While totals continue to rise, the number of trial and permanent modifications made in January were fewer than the number made in December. New volume has been falling steadily. Neil Barofsky, the Special Inspector General for the TARP, opened today’s hearing with strong criticism of the Treasury’s transparency, or lack thereof, in reporting the number of borrowers who can be helped. He called it ‘disturbing,’ ‘shameful,’ and ‘inexplicable.’ When the vote to abolish these programs was announced last week, and Administration spokesperson blasted, ‘If enacted, this legislation would close the door to struggling homeowners seeking relief in the face of the worst housing crisis in generations.’

FHA Commissioner David Stevens, who unfortunately had to answer for the Treasury, wouldn’t opine as to whether the government’s mortgage bailout programs were successful, but did admit, ‘the HAMP numbers have not been what they were originally forecast. We are clearly concerned.’ But he added that proprietary modifications by the big banks, while more abundant than HAMP mods, don’t reduce payments as much and have higher re-default rates. Last week I was in Portland, OR at a Wells Fargo modification event. The organizers had sent over three thousand letters to troubled Wells Fargo borrowers and received about 300 RSVPs. Fewer than 300 showed up. I was told that they usually have between a five and seven% response rate. There were at least 100 Wells agents sitting at booths, waiting to work; many of them twiddling their thumbs. The excuse? I was told many borrowers think these events are a scam. Reality? Many have either gone already or don’t want to go through a modification on a loan that is worth more than the home. They know they’ve got at least a year before any sheriff comes knocking.”

Now for our real estate education section…

Facebook Secrets to Real Estate Success

Okay short sale investors and agents…listen up because today we are going to end the week on a high note with some truly innovative ways to use Facebook. These are NOT your run of the mill tips but rather the same insider secrets used by the “big boys” of business but available to anyone with the wit to put it into practice.

Let’s begin with a little refresher on those “like” buttons…you know the ones with the little thumbs up that are proliferating across the web like a wild fire. Most social media users take them for granted but insiders understand the true power of these innocent little likes to radically transform the way you make contact with clients. For instance, if you have a company website then most clients will either “like” you or not…so far so good. But what if you put a “like” button on information feeds for each zip code in your area or specific types of houses, financing arrangements or other commonly sought after information. Now prospective clients can “like” different segments of your site that specifically align to their own interest areas.

Not only does this present a distinct advantage over the generalized “like” for the entire site, but it also provides a way to communicate only the most relevant information directly to the persons most likely to act on it. For example, let’s assume you have a “like” button for upcoming investment properties in a specific zip code…rather than receiving a general update covering the entire city or county, they will only receive listings that conform to that specific area, type of building or other specified information.

Another very powerful method is to embed a “Like” button into press release(s) and other newsworthy items. Once again, it allows viewers to quickly make contact and sign up to receive additional information from a recognized source.

To get started, simply publish a “Like” button for each page of information or category on your personal website or blog by entering the admin area and indicating “Use Facebook as Page” option. Then simply post updates via the publisher like you would any other FB page. Now all news feeds will automatically display the name of each individual “Like” button along with the referring page and “via” link.

See you at the top!

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

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)

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About the author:

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

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

closed 2,786 sides for a closed sales volume of

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

admin — Fri, 18 Feb 2011 02:08:13 +0000

Smart Real Estate News & Commentary by Chris McLaughlin February 17, 2011

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Mortgage servicing crackdown expected

U.S. banking regulators are close to finalizing new national guidelines that will impact mortgage servicing shops after an interagency investigation revealed “significant weaknesses in mortgage servicing related to foreclosure oversight and operations,” said John Walsh, the Acting Comptroller of the Currency, in prepared statements to be delivered before a Senate Banking panel today. “In general, the examinations found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third-party law firms and vendors,” Walsh said. “These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole.” Walsh said even though the process of outlining new guidelines for servicers is at its early stage, regulators intend to address some of the pressing issues they discovered while investigating the servicing process — namely a lack of national standards for the foreclosure process and borrower confusion over whom to contact in foreclosure cases due to uncertain protocols.

Walsh’s report on the investigation of loan servicing firms comes on the heels of a major announcement from the Mortgage Electronic Registration System, or MERS. MERS, which is an electronic registry of mortgage records, informed members late Wednesday that they are now prohibited from foreclosing on residential loans using the MERS name. MERS has long been the target of foreclosure defense attorneys and consumer advocates for creating a foreclosure process that fails to create transparent oversight and protocols. Walsh said as part of their comprehensive examination of servicing shops, regulators examined Lender Processing Services Inc. (LPS), MERSCORP, the parent company of MERS, and MERS itself. After reviewing the servicing shops and examining bank self assessments, as well as 2,800 foreclosure cases, Walsh said investigators concluded that there were “significant weaknesses in mortgage servicing related to foreclosure oversight and operations.” He said regulators have yet to finalize their proposed guidelines, but that will be the next step in the process.

Jobless claims back up

There were 410,000 initial jobless claims filed in the week ended Feb. 12, according to the Labor Department. That was up 25,000 from the week before, and slightly more than the 408,000 claims economists surveyed by Briefing.com had expected. Continuing claims — which include people filing for the second week of benefits or more — rose by 1,000 to 3,911,000 in the week ended Feb. 5, the most recent week available. The 4-week moving average of initial claims, which aims to smooth out volatility, rose to 417,750 from the previous week’s revised average of 416,000. The overall decline in jobless claims comes as the economy continues to show signs of strength. The Federal Reserve raised its forecast on Wednesday for economic growth this year, however the unemployment rate is expected to remain near 9%.

Olick – time to believe in housing again

“It’s hard to know what to believe in the housing market today, with so many conflicting data reports, some analysts claiming the market has hit bottom, and others seeing further doom. The home builders themselves can’t seem to find anything to be optimistic about; their sentiment index has been stuck at the same lackluster level for four straight months. It’s not as hard, however, to believe in housing. By that I mean that as the economy improves, and consumers start to feel better about their personal finances, they are starting to think about investing in their homes again. Too much price uncertainty in the market turns them off trading up, so they are looking around their current home instead. Yesterday I met with an architect in suburban DC who says that in just the past two months the phone has been ringing off the hook. ‘It’s ringing with people saying, you know I want the $200,000 addition, which is the family room/kitchen or I can afford my screen porch now,’ says Michael Bruckwick of Katinas Bruckwick Architecture. Just last year, clients told Bruckwick a very different story. ‘Their biggest concerns was simply where is the world going ? The world that we live in. Is it to continue going down?’

And it’s not just in the DC area, which has the benefit of lower unemployment thanks to government jobs. A remodeling index from Texas-based BuildFax shows a national surge in remodeling work toward the end of the year, which appears to be continuing now. It’s returning, but cautiously. ‘Inquiries for new project activity has fared a bit better recently, although many residential architects report that households are much more nervous than usual about proceeding on projects,’ notes Kermit Baker in the American Institute of Architect’s Q3 Home Design Trends Survey. The survey finds most activity is in smaller infill projects near major metro areas or remodeling to create multi-generational households. The trend has definitely moved away from major new housing developments. While the market is still quite weak in comparison to better economic times, remodeling remains pricey. ‘Consumers are often assuming that project costs will be much lower given the market slowdown—expectations that many residential architects feel are unrealistic,’ adds Baker. Bruckwick disagrees, claiming it’s still ‘a buyer’s market’ for contractors and subcontractors. That will likely change as demand increases and contractors start to get more work. Lending is still extremely tight, and appraisals difficult and often low if you’re looking to pull out equity for the job, but homeowners are slowly becoming less daunted. A common line to Bruckwick: ‘My portfolio has come back up, so I can afford it where I couldn’t a year or two ago.’”

Fed raises growth forecast

The Fed estimates that the nation’s gross domestic product will rise between 3.4% to 3.9% in 2011, up from its November estimate of an increase of 3.0% to 3.6%. The minutes of the most recent meeting attribute the change to stronger than expected data on production and spending. But the Fed said the acceleration in growth will mainly be limited to the short-term, as growth estimates for 2012 and 2013 were only slightly adjusted. The Fed also revised its unemployment estimates for 2011 as well as the next two years. But its new forecast of a jobless rate between 8.8% and 9% at year’s end is only slightly lower than the current unemployment rate of 9% in January.

Fed members did express some doubts about consumer spending though. According to the minutes, some policymakers noted that while consumer spending, especially on automobiles, was strong in the fourth quarter, those levels may not be sustainable. At the same time, the Fed noted that if consumer spending levels remain elevated, domestic demand could rebound more quickly than anticipated and “a considerably stronger economic recovery could take hold.” The Fed sees a few other problem areas lurking in the economy as well. Members expressed concerns about possible spillover effects from the banking and fiscal worries in Europe. The Fed also cited budget problems for state and local governments and continued weakness in the housing market negative factors.

PMI sees home sales increase in 2011

PMI Mortgage Insurance Co. (PMI) expects existing home sales to rise 8.3% to 5.31 million units in 2011 with new home sales increasing 29% to 415,000 units. Analysts at the Walnut Creek, Calif., firm said projections for 2010 of 5.56 million existing home sales and 648,000 new home sales came in off the mark because the large number of distressed properties hurt both metrics. Declining home values and low household formations also hindered new home sales, PMI said. The firm projects total mortgage originations to decline to about $1.29 trillion this year from $1.54 trillion in 2010. The company then sees originations bouncing back next year to $1.44 trillion, which would representing a 12% gain driven by higher purchase volumes due to rising rates. PMI sees the average rate for a 30-year, fixed-rate mortgage hitting 5.5% by the end of this year and increasing to 6.5% by Dec. 31, 2012. Analysts had estimated the average rate for a 30-year, fixed would reach 5.5% by the end of 2010.

They admittedly missed the actual average of 4.68% and said financial crisis in the Euro zone hurt the forecast, as “these sorts of shocks tend to be inherently unforeseeable.” The firm expects the purchase origination share of the overall mortgage market to rise to about 61% in 2011 from 32% a year earlier, as interest rates move away from the historically lows reached in 2010. If interest rates are rising due to a recovery in the overall economy, then the consequent jobs growth “should more than offset” the higher rates and boost home sales, according to PMI. But if rates are climbing because of higher inflation or a declining value of the U.S. dollar, jobs growth won’t come and home sales will decline this year. “At this point, it is more likely that mortgage rates are rising because of strong economic growth than for other reasons — or at least mostly for growth reasons,” PMI said.

CPI up

The Bureau of Labor Statistics said today that the U.S. Consumer Price Index (CPI), a key measure of inflation, increased 1.6% over the past 12 months ending in January, up from 1.5% in December. Surging gasoline and food prices helped drive the number higher, accounting for two-thirds of the increase. Over the past 12 months, the food index has risen 1.8%, its fastest pace since 2009, and gasoline prices have soared 13.4%. But economists also look at core inflation, which strips out the volatile food and energy components. That number rose just 1% during the 12-month period, showing overall price pressures still remain tame. Commodities have surged over the last several months, driving up the costs for raw materials, food and energy. But amid high unemployment, businesses are still trying to avoid passing on all those costs. Clothing prices increased 1% in January. While that may not sound significant, it is a large jump from December, when apparel prices rose only 0.1%. And airline fares increased for the fifth month in a row, rising 2.2% in January alone. On a monthly basis, the overall CPI rose 0.4% in January, unchanged from the previous month. Economists surveyed by Briefing.com had expected a 0.3% rise in January. Core CPI rose 0.2% for the month, up from a 0.1% rate in December.

DSNews.com – delinquencies slow

TransUnion has released its findings and analysis on mortgage delinquency for the fourth quarter of 2010, which found that the national mortgage loan delinquency rate dropped to 6.41%. This statistic, which is traditionally seen as a precursor to foreclosure, reflects a decrease of 0.47% from the company’s third quarter reading of 6.44%. The Chicago-based credit bureau’s findings confirm consecutive quarterly drops for U.S. mortgage delinquency in 2010, and almost a 7% decline year-over-year. On the surface, “[t]his is great news…but not so fast,” says a TransUnion spokesperson. The final quarter in 2010 marked the smallest decline in mortgage delinquency since the recession ended in the summer of 2009. What should be inferred from this deceleration and what can the industry expect for 2011? Falling real estate values, the ending of the homebuyers’ tax credit, and the influx of foreclosures on the market are influencing factors in TransUnion’s projection that we could see mortgage delinquency rates edge up in the beginning of 2011. Commenting on the latest results, Tim Martin, group vice president of the U.S. housing market in TransUnion’s financial services business unit, said, “The current deceleration in falling mortgage delinquency rates is indeed concerning.”

Martin noted that although the increase in January’s consumer confidence index is good news, “real estate prices as reflected by the Case Shiller Home Price Index have been consistently falling since the end of second quarter. What we hoped was a temporary third quarter price adjustment due to the ending of the homebuyer tax credit appears now to be more systemic,” he said. According to Martin, while a variety of factors, such as household income and interest rates, impact the housing market, real estate values are perhaps the most important. He explained that property values have reflected a negative correlation with mortgage delinquency of more than 80% since the recession began at the end of 2007. Add to the mix, the glut of foreclosures already on the market and the sizeable number of defaulted loans coming down the foreclosure pipeline, and experts are forecasting home prices to slip anywhere from 5 to 10% further this year. With the large volume of distressed homes, TransUnion believes that if the home prices for existing residential real estate continue to slide, mortgage delinquency rates may start to tick upwards. The company says it has already adjusted its econometric models using a less optimistic assumption about future house prices.

According to TransUnion’s latest report, mortgage borrower delinquency rates in the fourth quarter of 2010 continued to be highest in Nevada (14.76%) and Florida (14.50%), while the lowest mortgage delinquency rates continued to be found in North Dakota (1.72%), South Dakota (2.22%), and Alaska (2.73%). Unlike recent quarters, many states (33) showed increases in delinquency from the previous quarter, with North Dakota (+13.16%), Vermont (+10.87%), and the District of Columbia (+7.4%) experiencing the largest increases. TransUnion says analysis of later-stage mortgage delinquency, such as the ratio of borrowers 90 or 120 or more days past due, suggest that a possible deceleration in foreclosure rates is underway.

Now for our real estate education section…

Y – Worry

This week we have spent a considerable amount of time discussing the needs, wants and desires of what is commonly called “Generation Y” or the Echo Boom generation. As a cohort, they are different than their parents especially in terms of motivation, desires, ambition and real estate trends. But there are other meaningful differences that every real estate agent and investor needs to know in order to successfully work with Gen Y including the best methods of marketing and how to actually reach them.

Gen Y is all about relationships! It might seem strange to say that an entire cohort known for their tech savvy and mobility is stuck on relationships but it’s true. Just don’t expect those relationships to take place in person. The most meaningful relationships are often those that take place online or in the virtual world. They are the first cohort of persons to be raised exclusively online and all of their information comes from that source; according to researchers, over 40% obtain all their insurance, financial, real estate and other important fiscal planning tools online. They are more comfortable obtaining online information than making a phone call and even prefer it to the advice of friends and family.

Real estate should take a note from the world of financial advisors who are actively targeting and recruiting Gen Y; a quick glance at the IPO Monitor indicates more than 25 US patents have been filed with the SEC in recent months…exclusively targeting Generation Y. Marketing experts compare it to the 90′s all over again but with the caveat that this cohort is much more savvy when it comes to authenticity.

So, where are financial planners, banks and brokers heading to herd the masses of Gen Y? LInkedIn is one destination. LInkedIn filed for a $!75 million IPO with Merrill Lynch, JP Morgan and BoA. It goes without saying that Facebook is a “must” for reaching out with information and educational marketing messages. Unlike former generations that wanted to be “sold”, Generation Y wants hard data, information and a ‘how to’ that allows them to get up to speed quickly. While Generation Y may not be the most successful cohort on the books, the small but highly successful 3% that have hit it big are a referral goldmine for anyone in the real estate, financial services or any other field apt to benefit from “word of mouth” marketing.

Their level of influence in nearly unprecedented especially given the combination of youth, networking and future earning potential. Like one marketing pro put it “If you can get one you can get the others”.

See you at the top!

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

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.

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

closed 2,786 sides for a closed sales volume of

Foreclosures falling – not

admin — Thu, 10 Feb 2011 20:56:11 +0000

Smart Real Estate News & Commentary by Chris McLaughlin February 10, 2011

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Foreclosures falling – not

The number of homes receiving foreclosure filings, default notices, auctions, and repossessions, fell 17% in January compared to a year earlier, RealtyTrac reported today. But that’s still 261,333 properties and a 1% increase compared to December. Even with the slowdown, more than 78,000 borrowers lost their homes in January, easing off the record 102,000 that was reached last September. Besides, it’s less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.

“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman. “If we don’t get that, it could mean that the foreclosures are being pushed back even more and that the time needed for recovery will be prolonged.” There was a bit of a shakeup among the individual states at the top of RealtyTrac’s hardest-hit states. Florida, which had been outpacing all others for years, fell to ninth place in January, with a rate of one in ever 409 homes receiving a filing. Year-over-year, filings are off by 54% in the Sunshine State. Now, the seven states with the highest rate of foreclosure filings in January were all in non-judicial states, where foreclosure auctions can be scheduled and homes repossessed without any court hearing. Nevada led the states for the 49th consecutive month; Arizona was second and California third. Idaho and Utah filled out the top five worst-hit states. Among metro areas of more than 200,000 residents, Las Vegas had, as usual, the highest foreclosure rate.

Jobless claims down

There were 383,000 initial jobless claims filed in the week ended Feb. 5, the Labor Department said today. That was down 36,000 from the week before, and much better than the 410,000 claims economists surveyed by Briefing.com had expected. It was also the lowest level since July 5, 2008, when 371,000 first-time claims were filed. Continuing claims — which include people filing for the second week of benefits or more — fell by 47,000 to 3,888,000 in the week ended Jan. 29, the most recent week available. The 4-week moving average of initial claims — a measurement used to smooth out week-to-week volatility — is viewed as a more accurate representation of job market conditions. That number fell by 16,000 to 415,500. The report comes less than week after a January jobs report fell far short of expectations, showing only 36,000 jobs added during the month. However, the unemployment rate slipped to 9% from 9.4% in December.

NAR – GSE’s should maintain public involvement

According to the National Association of Realtors’ recommendations for restructuring the government-sponsored enterprises (GSEs), continued government participation in the secondary mortgage market is essential to ensuring affordable and available home mortgages to qualified consumers when private lenders withdraw from the market. NAR’s recommended plan is to restructure the entities as government-chartered, non-shareholder owned authorities that protect taxpayers and ensure continued access to affordable mortgages for consumers who are willing and able to assume the responsibilities of the American Dream of home ownership. NAR believes the previous structure of Fannie Mae and Freddie Mac with private profits and taxpayer loss must never recur; however, without some level of government backing of the most basic, simple mortgages – such as the 30-year fixed rate product – interest rates and mortgage fees will be notably higher for consumers and could severely restrict access to credit, especially during down or disruptive markets. The recent economic downturn, for example, caused private capital to flee the marketplace; government backing of residential mortgages was critical in providing capital to borrowers and without their support the financial crisis could have been far worse. NAR encourages private market solutions and innovations such as covered bonds for less traditional mortgages. However, a full privatization across all mortgage products will inevitably put taxpayers at risk. Given the very high concentration in the banking industry, the market will be vulnerable to tacit collusion and too-big-to-fail mistakes. The restructured GSEs under NAR’s plan would guarantee or ensure a wide range of safe, reliable mortgage products such as 15- and 30-year fixed rate loans. Sound and sensible loan underwriting standards would need to be established. NAR’s plan would require the entities to be fully self-financing and subject to tight regulations on product, revenue generation and usage in a way that ensures they can accomplish their mission and protect taxpayer dollars.

US Postal Service in trouble

The US Postal Service (USPS), a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier. The agency has been suffering from an ongoing decline in mail volume, which has undercut revenues, while retiree health care costs have been straining its reserves. Excluding costs related to retiree benefits and adjustments to workers’ compensation liability, the Postal Service said it had net income was $226 million in the first quarter, which ended Dec. 31. The agency said it will be forced to default on some of its financial obligations this year unless Congress changes a 2006 law requiring it to pay between $5.4 and $5.8 billion into its prepaid retiree health benefits each year. The Postal Service has taken a number of steps to increase revenue, including marketing initiatives and price increases. The agency raised rates an average of 3.6% in January.

It is also perusing more dramatic changes. Last year, the USPS submitted a request to the Postal Regulatory Commission, which oversees the agency, to eliminate Saturday mail service. The commission has yet to respond to the request, but a spokesman said it is in the “final phase” of making its decision. The USPS has also cut back on hours to save money. The agency expects to eliminate 40 million work hours this fiscal year as part of a plan to save $2 billion. However, the service is currently negotiating new contracts with the American Postal Workers Union and the National Rural Letter Carriers Association, which will probably object to cutting hours. On the bright side, the Postal Service said improving economic conditions suggest the “worst of the precipitous volume decline during the recession is over.” But mail volume continues to be anemic, rising only 1.5% in the first quarter as economic growth remains sluggish.

Olick – toxic mix

“First came the surge in negative home equity, now a surge in mortgage interest rates. Add it up, and it throws a big pail of underwater on the hope for a big spring housing surge. At face value on their own, the two reports out today shouldn’t cause too much concern, but the effect they have on consumer confidence is bigger than both of them. The average rate on the 30 year fixed rate mortgage is now over 5%, which when you think historically is really a great rate, but that was then, and this is now. Consumer confidence and jobs are the two biggest drivers in the housing market. ‘Because we had rates as low as 4.25% last year, any increase — particularly to above 5% — is likely to reduce loan applications as borrowers adjust to a higher interest rate environment,’ says Guy Cecala of Inside Mortgage Finance.

The biggest effect of course is in refis, which dropped over 7% last week, according to the Mortgage Bankers Association’s weekly survey. Last year refis accounted for two thirds of all mortgage originations, so that will clearly change with the new rates. The question is how the rates affect home purchases. Purchase applications also dropped last week, but just by 1.4%. ‘We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis,’ says the MBA’s Michael Fratantoni. Higher rates will make loans a little bit more expensive, but not all that much. The bigger driver of mortgage cost will be the new regulatory rules on the horizon and potential changes to Fannie Mae and Freddie Mac loan limits and fee structures. But rising rates also put a bigger burden on those trying to modify or refinance troubled loans, especially those underwater. The new report from Zillow notes that the foreclosure freeze from the ‘robo-signing’ scandal put an artificially high number of borrowers in the underwater pool because many were supposed to be foreclosed and weren’t.

Still, as I Tweeted yesterday from Laurie Goodman of Amherst Mortgage Securities, ‘Home equity is the single most important determinant of mortgage default, not unemployment.’ Zillow’s chief economist, Stan Humphries, agrees: ‘Once you get above 125-130% loan-to-value ratios, that means that you’re 25 to 30% underwater on your house, at that point really you start to see a higher rate of strategic default, that’s people actually feeling a sense of futility about making their mortgage payments and they walk away from the mortgage.’ And how high will rates go? ‘I think if the 10-year Treasury yield remains at around 3.70%, mortgage rates will head to 5.25% over the next two weeks,’ opines Peter Boockvar of Miller Tabak. Again, that’s still historically low. ‘Realistically, long-term mortgage rates in the 5-6% range over the next few years would be affordable enough to support a ‘normal’ housing market all things being equal,’ claims Cecala. Unfortunately nothing in today’s housing market is normal or even approaching equal.”

GOP reveals savings list

House Republicans released a dramatic budget proposal yesterday that would result in sweeping cuts to federal agencies and government services. The resolution would fund the government for about the next seven months at $74 billion below President Obama’s 2011 budget request, and singles out non-security discretionary spending, which is less than 15% of the budget, for a massive cut of $58 billion. In total, cuts of more than $1 billion would be made in eight program areas, including the unit that manages federal real estate, a Department of Energy loan program, job training programs, community health centers and the agency focused on physical science research. The cuts touch nearly every corner of the discretionary budget. Amtrak would see its funding fall by $224 million, and funding for high-speed rail programs would decrease by $1 billion. Funding for the National Institute of Health would be cut by $1 billion and the Centers for Disease Control and Prevention would lose $755 million. The list goes on, naming 70 specific cuts. Some politically sensitive areas, like education funding, are left untouched. In its current form, the resolution stands little chance of surviving the Senate and President Obama’s veto, but the measure will become part of Washington’s debate on spending. Over the next couple months, Congress will have to decide whether to raise the debt ceiling, how to fund the government for the remainder of fiscal year, and start work on the 2012 budget.

HAMP to be cut?

The House Financial Services Committee (HFSC) is meeting today to discuss and “markup” its oversight plan for the 112^th Congress. On the docket of proposed federal budget cuts are 12 different housing programs, with only one being replaced. The most well known of the programs the committee wants to curtail are the Making Home Affordable Programs, established about a year ago. House members on the committee wrote they have been underwhelmed by the $75 billion mammoth known as Home Affordable Modification Program (HAMP)and its counterpart Home Affordable Refinance Program (HARP) that were supposed to assist nine million borrowers at risk of foreclosure. Since HAMP’s launch in March 2009, about 579,659 permanent modifications have been completed, according to Treasury data. Also under this segment is a $200 billion commitment to purchase Fannie Mae and Freddie Mac preferred stock. “HAMP’s foreclosure mitigation initiatives have failed to help a sufficient number of distressed homeowners to justify the program’s cost,” the plan said. “Accordingly, the Committee recommends rescinding unspent and unobligated balances currently committed to these programs.” The Federal Housing Administration Refinance Program is also on the chopping block because of its less than impressive performance in the first two months it was implemented.

The $8 billion program, designed to offer underwater borrowers a refinance, received only 35 applications between Sept. 7, 2010 and the end of October that same year, according to the HFSC. The committee is aimed to discontinue NeighborWorks America, a government-charter, nonprofit corporation with a national network of affiliated organizations that focus on community reinvestment activities such as mediation counseling. The program, an allocated cost of $195 million, overlaps the functions of the Department of Housing and Urban Development (HUD) and “are duplicative of existing HUD programs and can be consolidated,” the oversight plan says. Only HOPE IV will be replaced. The program uses funds to convert distressed or dangerous public housing developments into mixed-use housing and costs $200 million annually. The committee is proposing to replace it with Choice Neighborhoods, an existing program that serves the same function and costs $140 million less. Among other programs the committee also wants to abolish are Rural Housing and Economic Development, which currently receives $25 million annually to provide grants to non-profit organizations for capacity home building in rural areas, and the Neighborhood Stabilization Program, which gives federal funds to states and local governments with high concentrations of foreclosed homes, subprime mortgage loans and delinquent home mortgages. Approximately $1 billion was allocated for NSP.

Now for our real estate education section…

Value

The concept of value is a lot like beauty…it tends to be in the eye of the beholder. But as millions of agents and investors have learned, value also has some cold-hard numbers to contend with when it comes to signing off on a loan. Yesterday we spent some time talking about man versus machine and how it impacts the entire process of buying, selling and financing a property. Without a doubt, one of the most important aspects of that process is determining value so today we are doing to break it down in a way you probably haven’t encountered before.

Machine Value

The machine or database will tend to apply certain value estimates to any given piece of property. These tend to be automated or based upon collective data such as square footage, comp sales in the area or taxation levels. Contrary to popular opinion, machine value is not more or less objective but rather more quantifiable. It is much easier to place a value on a house based upon square footage because computers make it easy to generate a cost based upon labor and materials. However, even that isn’t fool proof; quality of workmanship can vary tremendously as do the types of materials used in a home.

Human Value

Of course, a property is more than simply a collection of the individual parts. Like the Gestalt theory, a house becomes a home by virtue of the location, neighborhood, sense of community and other individual aspects unique to that parcel…in short, it is more than the sum of its parts. Level of maintenance, quality of construction, crime rate, amenities and other social or environmental “intangibles” are much more difficult to quantify and therefore, considered subjective forms of value. However, these subjective forms of value are often the most highly prized and therefore valuable considerations among those buying and selling a property. For example, a good school district alone is able to fetch upward of 10% on the average property.

Shared Value

There are a few frequently overlooked items that dramatically contribute to the value of a property yet go unmentioned (and un-noticed) by a significant portion of the population. One of the most common examples is the value of the mortgage itself. Yes, you read that right. Today a mortgage is increasingly becoming a commodity in its own right. Does the house qualify for FHA financing making it easier to sell? Is the mortgage assumable? What terms and rates dictate the underlying asset? Now more than ever, a well structured mortgage is a function of both machine and human value. Real estate agents and investors must learn how to identify a good mortgage from a bad based upon the terms of value to target the most competitive properties possible.

See you at the top!

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

http://www.shortsalesriches.com
http://www.shortsalescoach.com
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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.

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

closed 2,786 sides for a closed sales volume of

Foreclosures spread

admin — Fri, 28 Jan 2011 15:09:09 +0000

Smart Real Estate News & Commentary by Chris McLaughlin January 27, 2011

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Foreclosures spread

According a report released Thursday by RealtyTrac, one out of every 9 homes in Las Vegas received some kind of default notice in 2010. But there is a silver lining: The foreclosure rate is actually dropping in Vegas, down 7% compared to the end of 2009. In fact, rates fell in all top 10 foreclosure markets of 2010. In No. 2 Cape Coral, Fla., for example, filings dropped 28%. In third place Modesto, Calif., they fell 13%; and forth place Phoenix dipped 7%. But even as foreclosures fell in the worst-hit areas, they rose in 72% of the 206 metro areas covered by RealtyTrac’s report. Foreclosures have spread beyond the original bubble cities as the economy melted down. Unemployment rates spiked nearly everywhere, and people out of work can’t make their mortgage payments. As a result, there is now a cohort of metro areas that didn’t enjoy the housing boom but are now enduring double-digit foreclosure spikes.

For example, Houston foreclosures grew by 26% — the biggest jump by any of the 20 largest metro areas — to one for every 62 households. The city suffered from a bleak job picture, with unemployment rising to 8.6% in November from 8.1% a year earlier. Atlanta rose to 25th place with a 21% jump in 2010 filings following a 42% spike in 2009. And Salt Lake City filings ballooned by 30% in 2010, good for 27th place. Bubble state cities still dominate the top of the list, however, accounting for 19 of the 20 top markets. And the easing in these worst-hit markets may be temporary, said Rick Sharga, spokesman for RealtyTrac. He forecasts a foreclosure rise again in the Sand States this year as banks restart their engines. Overall, he thinks, foreclosures should plateau and stay at about the same level throughout 2012. “Until jobs come back, we won’t see much of a change,” he said.

Initial jobless claims higher

There were 454,000 initial jobless claims filed in the week ended Jan. 22, the Labor Department said today. That was up 51,000 from the 403,000 claims filed the week before, and much worse than the 410,000 claims economists surveyed by Briefing.com had expected. Jobless claims have bounced around for months, dipping below the 400,000 mark four weeks ago. Soon after, they began rising again. Since the weekly figures can be volatile, economists look at the four-week moving average to smooth out the week-to-week choppiness. That figure rose 15,750 to 428,750 from the previous week, showing a slightly worse job market. Continuing claims — which include people filing for the second week of benefits or more — rose to 3,991,000 in the week ended Jan. 15, an increase of 94,000 from the week before.

Olick – what’s behind the new sales surge?

“No, I’m not about to throw a huge bucket of water on a really nice monthly stat that is infusing a modicum of hope in the housing market. I just want to put it all in perspective. New home sales surged 17.5% in December, month-to-month, according to the Commerce Department, and that brought inventories way down to a 6.9 month supply (the total number of new homes for sale also fell to the lowest level since 1968). Prices of new construction actually bumped up significantly as well, up 8.5% year over year. It’s important to remember that this particular data series is based on contracts signed in December and not closings, as the Existing Home Sales survey from the National Association of Realtors is. So what happened in December? From the last week in November, into December, the rate on the 30 year fixed mortgage surged more than half a%age point, briefly touching 5%.

That clearly had the effect of pushing some fence-sitters to the buy side, worried that rates might go even higher, and they would be priced out of the market. Rates have since flattened below 5% with not much going on. The urgency is gone. To put all this in perspective, while 17.5% seems like a big number, the actual number of homes that sold in December was 22,000, with November being revised down to 20,000. ‘So December is the second worst month in recorded history behind November,’ notes JT Smith of Aristar Funding. He also notes that 23% of the sales were of vacant lots. The strange number in the report is a huge 72% jump in sales month to month out West, ‘strangely where most of the excess existing home inventory is,’ says Miller Tabak’s Peter Boockvar. I’m wondering if the surge out West isn’t due to the fact that foreclosure sales were halted, so buyers turned to new construction. ‘Net-net, housing continues to bounce along the bottom, as we’re well aware that a bubble of the extend we had takes many years to work through,’ adds Boockvar. It will be telling to see if this sales pace can hold on and improve, as banks ramp up foreclosures and start putting them back on the market.”

Deficit hits $1.5 trillion

New budget estimates released yesterday predict the government’s deficit will hit almost $1.5 trillion this year, a new record. The daunting numbers mean that the government will have to borrow 40 cents for every dollar it spends. The new Congressional Budget Office estimates will add fuel to a raging debate over cutting spending and looming legislation that’s required to allow the government to borrow more money as the national debt nears the $14.3 trillion cap set by law. Republicans controlling the House say there’s no way they’ll raise the limit without significant cuts in spending, starting with a government funding bill that will advance next month. The CBO analysis predicts the economy will grow by 3.1% this year, but that joblessness will remain above 9% this year. Dauntingly for President Obama, the nonpartisan agency estimates a nationwide unemployment rate of 8.2% on Election Day in 2012.

The latest figures are up from previous estimates because of bipartisan legislation passed in December that extended Bush-era tax cuts, unemployment benefits for the long-term jobless and provided a 2% payroll tax cut this year. That measure added almost $400 billion to this year’s deficit, CBO says. The deficit is on track to beat the record of $1.4 trillion set in 2009. That figure reflected huge outlays from the Wall St. bailout. The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year. “The fiscal challenge confronting us is enormous. To solve this problem, it will require real compromise and a great deal of political will,” said Budget Committee Chairman Kent Conrad, D-N.D. “We need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground.”

Google to get out of real estate

Massive search engine, Google, will take down real estate listings from Google Maps on Feb. 10. Brian McClendon, vice president Google Earth and Maps, broke the story on the company’s LatLong blog yesterday and said the real estate listing feature is simply not popular enough to justify its existence. Google first announced the tool in July 2009. Surfers using Google Maps gained the ability to find properties for rent or sale when searching locations. “We’ve learned a lot and been excited to see real estate companies use Google Maps in innovative ways to help people find places to live,” McClendon said…yet we recognize that there might be better, more effective ways to help people find local real estate information than the current feature makes possible. We’ll continue to explore this area.” Four months after Google launched its real estate listing services, HousingWire broke that the Web firm planned to launch a mortgage pricing tool, the fate of which remains unclear. Competition also pulled too much traffic from the tool, McClendon added. Indeed, Web-based real estate information company Zillow is reporting record-breaking traffic, by logging more than 13 million unique users in the traditionally slow real estate month of December.

Now for our real estate education section…

Cash Buyer Myths

One of the most persistent myths in the real estate business involves the concept surrounding a cash buyers. In fact, even seasoned real estate agents and other professionals often succumb to these same myths and misperceptions. Today we are going to spend some time sorting out the facts from the fiction surrounding cash and shed some light on this elusive topic.

Myth #1 – Cash buyers are all rich. WRONG! Cash buyers come in all shapes, sizes, gender and income brackets so stop limiting your client roster due to an out of date mindset. The reality is that many buyers with average incomes are able and willing to pay cash. Common examples can include the sale of a prior property, inheritance, 401k or other withdrawal and even cash advances from other sources including signature loans or credit cards. Don’t place restraint on buyers by assuming cash is out of the question.

Myth #2 – Cash is King. Well, this certainly holds true in many instances but not always. For example, in some situations a seller may actually wish to hold a note as when providing owner financing over a long period of time. In fact, early pay-off is considered a risk to this type of portfolio due to the reduced interest earnings over the lifetime of the loan.

Myth #3 – Cash Can’t Compete with ROI. In the past this was often the case but with real ROI”s in the low single digits, cash deals have investors squealing with delight. For example, let’s assume an investor pays $50,000 cash for a house that rents for $500 per month. Setting aside 2 months worth for taxes and insurance, this investor still recognizes a 10% annual return excluding appreciation! Not a bad investment considering the alternative of leaving it in the bank earning two to three percent.

Myth #4 – It Takes a Lot of Time to Save Enough Cash. While it is true that trying to save up enough cash to buy a property for cash can take years, it is equally true that it doesn’t have to. The key is to set your sights on what will provide quick cash and then use the profits to fund future endeavors. One of the most critical mistakes made by novice investors is trying to shoot for the stars the first time out. Better yet, rather than trying to fund the purchase of a property all on your own, seek out a partner or provide bird dog services for other investors. Not only will it allow you to earn extra income to pay down bills and pad your investment portfolio, but you will also obtain valuable insight and experience without having to take on excessive risk.

Myth #5 – Cash Kills the Tax Advantages. Buying for cash may not allow some buyers to obtain a mortgage interest deduction but most of the other meaningful tax advantages are still available. Even more importantly, the streamlined time and cost associated with a cash purchase is often more than worth the savings. After all, it doesn’t make a lot of financial sense to spend a dollar in order to save 35 cents. For those that are using real estate as a method to make money, maximizing profits while minimizing expenses is the clear leader in tax strategies; cash allows that plus much more.

See you at the top!

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

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
–

Jobless claims hit new Record Low

Chris McLaughlin — Thu, 14 May 2009 15:37:29 +0000

Jobless claims hit new record

Real Estate News & Commentary by Chris McLaughlin, May 14, 2009

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Jobless claims hit new record

The US Labor Department released figures showing that 637,000 people filed new claims for jobless benefits in the week ended May 9, up 32,000 from an upwardly revised 605,000 in the previous week. The number of people filing claims on an ongoing basis rose to a record high for the 15th straight week. The 4-week moving average of initial claims, which smoothes out volatility in the measure, rose 6,000 to 630,500. The most recent data available shows 6,560,000 claims filed on a continuing basis — the highest number since the Labor Department started tracking the data in 1967 and an increase of 202,000 from the previous week. Most of the increase was due to auto layoffs — Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing and General Motors has said it will temporarily shut 13 factories beginning later this month, potentially affecting 25,000 workers.

Banks were forced to take TARP

Documents obtained by the conservative legal watchdog group Judicial Watch, through the Freedom of Information Act (FOIA), show that the CEOs of nine major banks were given no choice but to take TARP funds. According to a document marked “CEO Talking Points” prepared for then-Treasury Secretary Henry Paulson, “if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance …” and warned, “We don’t believe it’s tenable to opt out because doing so would leave you vulnerable and exposed…We plan to announce the program tomorrow and that your nine firms will be the initial participants. We will state clearly that you are healthy institutions, participating in order to support the U.S. economy.” The Treasury Department had no comment.

Mortgage loan originations down

The Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows that commercial and multifamily mortgage loan originations continued to drop in the first quarter of 2009 to the point that they’re 70 percent lower than during the same period last year and 26 percent lower than during the fourth quarter of 2008. According to Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association, “In the first quarter of 2009 we saw the effects of the continued recession coupled with little demand from borrowers and a constrained supply from lenders as a result of the credit crunch. The net result was low levels of new originations.”

The 70 percent overall decrease in commercial/multifamily lending activity during the first quarter was driven by decreases in originations for all property types. When compared to the first quarter of 2008, the decrease included an 88 percent decrease in loans for hotel properties, an 80 percent decrease in loans for health care properties, a 76 percent decrease in loans for retail properties, a 66 percent decrease in loans for office properties, a 61 percent decrease in multifamily property loans, and a 50 decrease in industrial property loans.

Producer Price Index up

According to a report by the US Labor department, the Producer Price Index climbed 0.3 percent after declining 1.2 percent in March, driven by the biggest increase in food prices since January 2008. Excluding food, the headline PPI would have increased 0.1 percent. However, compared to the same period last year, prices received by producers tumbled 3.7 percent, the biggest decline since January 1950, keeping the risk of deflation alive. Core producer prices, excluding food and energy costs, rose 0.1 percent in April. The core PPI was unchanged in March.

Now on to our real estate investor education tips section …

SWOT for Short Sales

A SWOT analysis is typically considered an academic way to analyze the pros and cons of any given strategy but short sale investors should not overlook this powerful yet simple tool. It’s easy, elegant and ever-so powerful when combined with real estate investments.

SWOT Stands For…

SWOT stands for strength, weakness, opportunities and threats.

You should quickly notice that there are helpful and harmful aspects as well as external and internal factors that impact each category. Let’s use a short sale property to demonstrate; property X is ten years old, located in a good school district and is priced right. It’s located on a somewhat busy street with high visibility. The county is considering expanding the road in the future which could impact the potential sale of the property. Cosmetic upgrades are needed including an overgrown lawn, paint and general deferred maintenance. The owner is highly motivated but has little to no savings to help relocate.

Using the above information it is possible to quickly analyze the property using SWOT…

Strengths:

· Priced Right.

· Minimal Repairs – easily managed

· Good schools/desirable area

· Motivated owner

· Easy advertising due to visible location

Weakness:

· Busy street – may not go commercial and could detract from desirability in short term

· Owner has few/no resources and may need help

· Not ready to rent or sell-will require input

· Ten years old – higher insurance and holding costs/mature

Opportunities:

· Potential to turn commercial at some point in the future?

· Consideration to rent/hold strategy?

· Re-sale right away to right buyer

Threats:

· Bank or other investors may spot future potential as early acceptable risk.

· Road expansion could result in destruction of property value depending upon residual space remaining.

· Imminent domain?

Consider adding a SWOT analysis to your investment tool box; not only is it a great way to get a handle on the major issues surrounding any given property but it helps clarify and identify both risk and reward scenarios.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html

P.S.

Don’t miss our webinar tonight at 8:30 PM ET, 5:30 PM PST:

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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

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 flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest Real Estate firms, running 4 different
offices, supporting nearly 450 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
* On twitter: http://twitter.com/mclaughlinchris
* On facebook:
http://www.facebook.com/addfriend.php?id=709199143

Short Sales Excuses – and Why they are All Wrong

Chris McLaughlin — Thu, 05 Feb 2009 19:37:18 +0000

Real Estate News & Commentary by Chris McLaughlin, February 5, 2009
http://www.shortsalesriches.com/welcome.html

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https://www2.gotomeeting.com/register/583681653

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CNBC reported today that the White House plans to announce next week that it is moving away from having the government buy up trillions of troubled assets and putting them into a bad bank, rather it is more interested providing insurance and guarantees of the troubled assets in a “ring fence” concept. The current plan will likely involve the remaining $350 billion of TARP money, and rumors of several trillion are now apparently not in the cards.

In economic news today, the US Department of Labor reported that adjusted initial jobless claims for a 4 week period were 626,000, an increase of 35,000 over the prior week’s revised figure. Most analysts had expected 585,000 new claims, so the 626,000 number surprise many. The number of jobless claims is now at a 26-year high. Ouch.

Now, on to our real estate investing section…

Short Sales Excuses – and Why they are All Wrong

If you have been sitting on the side-lines thinking about investing in short sales but haven’t yet taken the plunge then chances are you have a few of the following short sales excuses to blame. Learn how to overcome the fear of failure and instead focus on the path to profit by informing yourself why all the facts you think you know are actually wrong.

Excuse #1. You need a lot of extra time and money to get started.

Fact: It sure doesn’t hurt but one of the great things about short sales investing is the ability to begin with very little out of pocket funds. Unlike starting your own business that requires immense up-front capital as well as most of your free time, short sales investing uses leverage and can be started in your spare time.

Excuse #2. You need years of experience.

Fact: No, you don’t need years of experience…you only need to tap into the know-how of someone else who has been there and done it with a track record of success. Hmmmm, now where can you find that if not right here at the shortsalesriches.com strategy?

Excuse #3. You need to have a heart of stone to deal with foreclosures.

Fact: This has nothing to do with your level of empathy or not. Properly transacted, many homeowners benefit as much if not even more than the short sale investor; you are actually doing them a favor in many cases.

Excuse #4. It’s too late to begin investing in short sales.

Fact: There are still plenty of great homes to select from and in many areas, the inventory is still growing. Don’t assume the federal bail-out or other stop-gap solutions will work for everyone or even be desirable; many people will not qualify or simply want to walk away and start over. There are still plenty of great properties to be found for those who know where to look and how to make an offer. Are you aware that there were over 1 million jobs lost in the last 2 months? What will happen to all those homes?

Excuse #5. It’s still too early to begin investing in short sales.

Fact: Although there are still plenty of great homes at ultra-affordable prices with historically low interest rates, that situation could change at any time. Even if the price of homes continued to decline, any increase in interest rates or lending standards could negatively impact today’s favorable conditions. Buy while the buying is good to lock in favorable prices and rates.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html

P.S.

This week’s webinar replay is right here…for the next 8 hours:

http://www.webinarwizards.com/custom/index.cfm?id=170879

http://www.shortsalescoach.com
http://www.shortsalesriches.com/welcome.html
http://www.youtube.com/shortsalesriches
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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 flipping of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 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

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New FHA Short Sale Guidelines for 2009

Chris McLaughlin — Thu, 08 Jan 2009 18:45:56 +0000

Market News & Commentary by Chris McLaughlin, January 8, 2009
http://www.shortsalesriches.com/welcome.html

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You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced. Come to the amazing webinar on “Recession Proof Real Estate Investing” and learn the proven strategies to making wealth in 2009. It all begins TONIGHT at 9 PM ET, 6 PM PST:

There are only 14 spots available, so jump on this now:

https://www2.gotomeeting.com/register/505377393

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The news was a little grim today about the jobs market, as continuing jobless claims rose more than expected. The Department of Labor reported that those who are continuing to claim unemployment rose by 101,000 to 4.61 million, which was well above most analysts’ expectation of 4.5 million. It also marks the highest level of jobless claims since November 1982.

And President elect Barack Obama warned today that a “bad situation could become dramatically worse” if Congress does not approve his upcoming stimulus package. But Obama did have some positive comments: “The very fact that this crisis is largely of our own making means that it is not beyond our ability to solve,” he stated.

Now on to our real estate educational section…

News You Need to Know for 2009 – FHA Short Sales Easier than Ever!

As if increased minimum wage laws and ultra-low interest rates weren’t good enough, short sale investors will be downright delirious to learn about changes to FHA laws set to begin in 2009. On December 24^th, 2008 the Department of Housing and Urban Development (HUD) released “Mortgage Letter 2008-43”….despite the inconspicuous title, this is a powerful boon to every short sale investor in the nation.

For those of you who somehow managed not to be engrossed by this less than climatic title, here are the major changes coming soon to a FHA/HUD foreclosure near you!

Elimination of the clause calling for 63 percent or greater property appraisal versus debt. Now properties can appraise at any value and still be eligible for the program.
Increased Net. Instead of the former 82 percent net based upon appraisal value the new limits will be 88 percent if sold with 30 days, 86 percent if sold within 60 days and 84 percent thereafter.
Increased Closing Costs on Short Sales. Although not a lot – FHA will now allow up to 1 percent of closing costs rather than the former zero.
Increased Seller Incentives. Again, although not a lot this will at least allow sellers a reasonable down payment toward a rental home by putting up to $1,000 in their pocket at closing.
Increased Lien Allocations. Junior liens up to $2,500 are now allowed – just one more tool that helps sweeten the pot for short sale investors interested in pursuing FHA/HUD homes.
Removal of Repair Limitations. This is one change that could potentially add up to thousands depending upon the required maintenance on the home. This opens the doors to many homes that would otherwise be ignored due to excessive damage.
Exceptions to Non-Owner Occupant Requirements. This is on a case by case basis but opens to the door to rental properties formerly excluded from the program.

To learn more or read the release for yourself visit: http://www.brokencredit.com/wp-content/uploads/2008/12/fha-pre-foreclosure-short-sale-guidelines.pdf

New Year’s Resolutions for the Short Sales Investor

Admit it. Your New Year’s resolutions look a lot like last year’s list don’t they? If you are like most people then near the top of your list is “get in shape” followed by some type of ambiguous financial goals. The trouble with most New Year’s resolutions is they fail to energize, motivate – or even make sense. When was the last time you REALLY got excited about cutting back or doing without? Rather than emphasize the negative, it’s time to create a realistic list of positive goals designed to make a lasting difference in your life. Here are some more tips designed to transform wishful thinking into reality for the coming year.

Write it Down. Researchers have discovered the mere action of taking the time to write it down increases the odds of actually putting the plan to work.
Tell it to Others. Commit to the plan of action by making it known to others; whether in person, via telephone or simply as part of an online discussion. Let others know of your goals.
Be Specific. Get into the nitty-gritty details; duration, specific amounts, locations or other pertinent information should be spelled out in as much detail as possible.
Measure Continuously. Set a schedule to measure progress on a continuous – and frequent basis.
Work toward it Daily. Make it a regular part of your routine to do at least one item toward your goal on a daily basis throughout 2009.
Dare to Dream. Don’t discount your own dreams or ability to profit…it is what excites and motivates people to take action. While the rest of America is sitting on the side-lines while the greatest buying opportunity of a generation sits in front of them, those who dare to dream of a better life are capitalizing upon it.
Get a Mentor. It is important to banish negativity from your vocabulary and personal goal’s; while a healthy dose of constructive criticism is always warranted – that is quite different from negativity. Constructive criticism is born of information and experience while negativity stems from fear. Surround yourself with knowledgeable professionals who are successful in the short sales field rather than those to fearful to take action.
Educate Yourself. Information and education are key to growing in any field. In fact, common wisdom holds it takes a minimum of 1,000 hours to become fully informed about any given topic. To put this into perspective, 1,000 hours is the equivalent of 25 weeks of full-time work. Fortunately, you don’t need to start from scratch. Benefit from the wisdom of others that have gone before you and customize it to your own situation.
Invest in Success. Perhaps one of the biggest mistakes most real estate investors make is failure to invest in success. Whether it is your time, money or simply opportunity cost required to put short sales real estate to work – the fact is you must make up your mind to invest in your own success before anyone else will follow. Go here right NOW to register for our webinar TONIGHT (Thursday) at 9 PM ET, 6 PM PST on Recession Proof Real Estate Investing:

https://www2.gotomeeting.com/register/505377393

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See you at the top!

Chris McLaughlin
http://www.shortsalesriches.com/blog

P.S.:

Are you ready to get 2009 rolling? Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar at 9 PM EST, 6 PM PST:

Only 14 spots left:

https://www2.gotomeeting.com/register/505377393

P.P.S.:

My good friend Mike Collins is dead serious about
this “Get the People Educated” mission he’s on.

He promised you hard-core real estate investment videos
to jump start your 2009.

Well, here’s the first installment – No cost and No catch.
Just go and watch it.

https://rehablist.infusionsoft.com/go/smash/NJur1

P.P.P.S.: Did you see what happened to the Seven Figure REO product? If you still MUST have this sold out and sought after product, there were 50 reserved to help make up for the webinar meltdown that occurred. Go here now to learn how to get your hands on the Holy Grail of REO:

http://www.sevenfigurereo.com