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We all know Jeff Watson from his legal expertise advising short sale investors …
and in particular, he’s been on lots of webinars explaining the latest with Freddie Mac.
And while he can help you make a lot of money, all his efforts are for not if you end up losing it.
Learn how to protect your wealth with Jeff Watson this Thursday.
On this webinar, you’ll learn:
* The 3 best ways in 2010 to protect yourself from frivolous lawsuits.
* 4 ways to protect yourself from paying excess taxes, and 2 common tax loopholes.
* 2 ways to avoid “heat seeking” missile technology to become “invisible” to lawsuits
So join us tonight at 8:30 PM ET, 5:30 PM PST to learn how to protect yourself:
https://www2.gotomeeting.com/register/822515859
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Fitch – CMBS defaults will pass 11% by 2011
Commercial mortgage loan defaults look likely to rise through the end of the year, with another 4.4% likely in 2010 and the overall default rate expected to pass 11% among securities rated by Fitch Ratings, the credit-rating agency said today. New CMBS defaults increased more than five-fold last year, totaling 1,464 loans worth $17.75bn, Fitch said. “Fourth-quarter default rates reached their highest ever levels both in principal balance and number of loans with no clear signs of stabilization,” said managing director Mary MacNeill, in an e-mailed statement.
Large loan defaults also increased “dramatically” last year, with 56 loans worth more than $50m defaulting in 2009 compared with only five in 2008. Most of the defaulted loans came from 2006-2008 vintages. Among all vintages, 2007 deals led defaults in 2009, accounting for 35.6% by principal balance. Fitch predicts 10-year cumulative defaults rates on ‘07 Fitch-rated CMBS to reach 27%. For the first time in five years, multifamily was not the property type with the most new defaults, Fitch said, as that distinction fell instead to retail properties that accounted for 32.3% of new defaults. Multifamily took 22.1% of new defaults, while office properties took another 20.2% of new defaults.
House sales forecast to rise in March
Economists polled by Thomson Reuters claim the National Association of Realtors will report that sales of previously occupied homes rose last month to a seasonally adjusted annual rate of 5.28 million, up from 5.02 million in February. “The spring selling season will be a success and probably the most active we’re seen in years,” said Stuart Hoffman, chief economist at PNC Financial Services Group. Sales declined over the winter, eroding gains made last fall and summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector. The government is offering a $8,000 credit for first-time buyers and a $6,500 credit for current homeowners who have lived in their property for the past five years.
But now time is running out. Buyers must sign contract offers by April 30 to qualify, and real estate agents say that’s spurring sales. Still, some housing market experts predict the market will take a dramatic “double-dip” once the government’s supports are gone. But others argue that there is enough pent-up demand to keep the market chugging. And prices have fallen dramatically since the boom years — as much as 50% in some places. So buyers can pick up bargain-priced foreclosures.
Jobless claims fall
There were 456,000 initial jobless claims filed in the week ended April 17, down 24,000 from a revised 480,000 the previous week, according to the Labor Department’s weekly report. Economists surveyed by Briefing.com had expected new claims to fall to 450,000 in the latest week, and analysts polled by Reuters had expected claims to fall to 455,000. The data covered the survey period for the government’s closely monitored employment report for April, which will be released on May 7. The number of new claims was the lowest since the 442,000 reported in the week ended March 27. The number of people filing continuing claims totaled 4,646,000 in the week ended April 10, the most recent data available. That figure was down 40,000 from the preceding week’s revised 4,686,000 claims, and slightly above the 4.6 million economists expected, according to Briefing.com. The four-week moving average of new claims, which irons out week-to-week volatility, rose 2,750 to 460,250.
While initial claims and the four-week average are still above levels viewed by analysts as in line with job market stability, anecdotal evidence indicates employment is creeping up. Last month, the economy recorded its largest jobs gain in three years, largely driven by private sector hiring as employers started to warm up to the economy’s recovery—which is showing signs of gathering momentum. Analysts expect the hiring trend continued in April, also supported by recruitment for the 2010 census. The number of people still receiving benefits after an initial week of aid fell 40,000 to 4.65 million in the week ended April 10, the Labor Department said. However, it was less than market expectations for a fall to 4.60 million and the prior week’s figure was revised up. The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, slipped to 3.6 percent in the week ended April 10 from 3.7 percent the prior week.
Olick – green building not valued
“Home builders and green product manufacturers say [a lack of valuation for green renovations and building] is one of the major roadblocks in the green building movement. If appraisers don’t add green value in the form of cash, consumers aren’t going to invest the upfront costs. Anyway, Resch is obviously a huge green supporter and has modeled his home accordingly, with solar panels, energy efficient lighting and appliances, a rainwater collection tank and some kind of water-saving landscaping that I didn’t really understand. He upgraded his home four years ago and admits that today those same upgrades would have cost him about 40 percent less, largely because of tax incentives. I’ve always kind of turned my nose up at the tax incentives offered for green upgrades, because while they’re at 30 percent, they’re largely capped at $2000, which anyone who’s ever remodeled their home knows is chump change in a major upgrade. What I didn’t know was that solar is the exception. R esch informed me that in October of 2008, as part of the Emergency Economic Stabilization Act, the $2000 cap on “qualified solar electric property expenditures” was removed. So take 30 percent off all your solar expenditures.
Appraisers argue that the marketplace isn’t really demanding upgrades like solar panels, and that’s why the industry is not adding appraised value to homes with them. Resch admits that in DC, he’s not likely to see much of an increase on his home’s value today, but if he lived in California, he says he would. That’s because environmental upgrades are far more commonplace there, and so consumers tend to expect/demand them more. DC will surely follow suit, but it will take a few years, especially since the nationwide housing collapse set green building back a bit. Once homeowners come up for air and start to see their home values increase, experts believe they will be willing to go greener, and appraisers will then respond.
GM pays back $5.8 billion
General Motors has made a final payment of $5.8 billion to the U.S. and Canadian governments, paying off the last of its $6.7 billion in loans, the company said Wednesday. “I am very pleased to announce that, as of today, General Motors has repaid, in full and with interest, the loans made last July by the U.S. Treasury and Export Development Canada,” said GM chief executive Ed Whitacre, speaking at a plant in Fairfax, Kan., where GM builds Chevrolet Malibu and Buick LaCrosse sedans. But the loan money is only a fraction of the financial support that the federal government gave to GM over the past 12 months to stop it from going out of business. Overall, GM received $50 billion in federal help. In return, the government got $2 billion in preferred stock and 61% of the company’s privately held common shares. Taxpayers could recoup money from a possible sale of GM stock to the public in the future.
A White House report issued shortly after GM’s announcement was upbeat on the progress that both General Motors and Chrysler have made since coming out of bankruptcy but noted that the government would likely not make a profit on the funds it had invested. “Overall, the investments made by the prior and current administration in GM, Chrysler, and GMAC will likely result in some loss, but the U.S. Treasury anticipates it to be much lower than forecast last year,” the report said. Funny how this administration always includes “the former administration” in the bad news but completely neglects it when the good news is being announced, huh?
California Defaults Drop 4.2% in Q110
According to the San Diego-based research firm MDA DataQuick, defaults on California homes dropped 4.2% in Q110 from record levels in 2009. The firm measured 81,054 notices of default (NODs) at county recorder offices in Q110, down from 84,568 in Q409 and down 40.2% from the 135,431 in the first quarter of 2009. “Several factors are at play here and it’s hard to know how they play into each other right now. A year-and-a-half ago the subprime loan mess was the black hole,” said MDA DataQuick president John Walsh. “Now, playing catch-up, is the financial distress households are experiencing because of the recession. Add to the mix shifting policy decisions, both by lending institutions and in public policy.” Walsh added there are signs of the worst trouble moving from the hard-hit entry-level markets to the more expensive neighborhoods.
California’s more affordable markets, which represent 25% of the state’s housing inventory, accounted for 47.5% of all default activity last year. In Q110, that number fell to 40.9%. Those percentage points would most likely to have migrated to the mid- to high-end housing markets, but the concentration of default activity remained relatively low. ZIP codes with median sales prices of more than $500,000 saw mortgage defaults rise 1.5% in Q110 but dropped 19% from Q109. “We’re also seeing some lenders become more accommodating to work-outs or short sales, while others appear to be getting stricter about delinquencies. It’s very noisy out there,” Walsh said. On average, DataQuick reported, the foreclosed homes spent 7.5 months in the foreclosure pipeline, compared to a year ago, when it was 6.8 months. “The increase could reflect, among other things, lender backlogs and extra time needed to pursue possible loan modifications and short sales,” according to the report. REO sales accounted for 42.6% of all resale activity in Q110, up from 40.6% in the previous quarter but down from 57.8% last year.
Now on to our real estate investing education section …
Six Reasons Foreclosure Investing Will Make You Rich
1. Inflation – Past, Present & Future. The historic rate of inflation is roughly 3 percent but double digit inflation has taken place during periods of economic volatility and expansionary monetary practices such as those embraced by the current administration. Experts ten to believe we may encounter inflation in the 8 or even 10 percent rate within the next three to five years leading to high rates of nominal returns among all physical assets including real estate.
2. Demographic Demands – Immigration, escalating birth rates among minority populations and longer lifespan for elderly citizens all adds up to a rapidly expanding number of people seeking shelter and basic homes.
3. Declining Inventory – The media makes much ado about excess inventory but savvy short sale investors will also notice the simultaneous reporting of a ‘shortage’ of affordable housing. Can both situation be true? Yes. While the absolute number of housing units available may currently exceed demand, the actual number of affordable and desirable units is much more restrictive. For example, pier construction, energy efficiency, zoning regulations and other mandates often result in a lack of affordability even if the primary mortgage is acceptable. As units become functionally obsolete, the demand for safe, convenient, inexpensive homes will grow.
4. Leverage – Real estate benefits the small investor via the use of leverage; few other investments have the advantage of leverage combined with physical assets and alternative sources of income; it’s a winning combination that provides maximum flexibility and minimal personal risk when properly structured.
5. Taxing Tribulations – Budget shortfalls and aggressive social support obligations are stressing federal and state budgets to the maximum. Earned income taxes, estate taxes and even a newly proposed VAT tax are likely to take a big bite out of average taxes for middle class Americans. Shifting from higher taxed earned income to lower taxed Capital Gains is a quick way to reduce the overall tax burden by 10 to 15 percent.
6. Short vs Long Term Strategy. The age old adage to “buy and hold” stocks, bonds or even real estate for the long haul has come under increased scrutiny in the wake of fiscal irresponsibility, irregular reporting habits and unreliable regulatory agencies. The new trend is to take profits when they are available, maximize cash flow and focus on short term gains rather than the promise of long term appreciation. Short sales provide exceptional ROI without the long term risk.
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…
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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
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Loss Mitigation Training Institute LLC
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