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Hacker claims BOA hid mortgage errors

by admin on March 15, 2011

Smart Real Estate News & Commentary by Chris McLaughlin March 14, 2011

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Hacker claims BOA hid mortgage errors

A hacker organization known as Anonymous released on Monday a series of e-mails by a former Bank of America (BOA) employee who claims they show how a division of the bank hid foreclosure information. The bank unit, Balboa Insurance, which deals in force-placed coverage, was acquired by BOA when it bought the mortgage lender Countrywide in 2008, and the e-mail messages involve removing information linking loans to certain documentation. The e-mails dating from November last year reveal a correspondence among Balboa employees in which they move to hide the record of certain documents “that went out in error.” The documents were tied to loans by GMAC, a BOA client, according to the e-mails. “The following GMAC DTN’s need to have the images removed from Tracksource/Rembrandt,” an operations team manager at Balboa wrote. DTN refers to document-tracking number, and Tracksource/Rembrandt is an insurance-tracking system.

The response he receives: “I have spoken to my developer and she stated that we cannot remove the DTN’s from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans.” Removing the loan numbers from the documents, according to the e-mails, was approved. A member of Anonymous said in an interview Monday that the purpose of his Web site was to bring attention to the wrongdoing of the banks. “The way the system is, it’s made to cheat the average person,” he said. A BOA spokesman told Reuters on Sunday that the documents had been stolen by a former Balboa employee, and were not tied to foreclosures. “We are confident that his extravagant assertions are untrue,” he told the news service.

More loan modification options coming

Six months after the Federal Housing Administration (FHA) announced an $11 billion refinancing initiative for these “underwater” borrowers, nearly two dozen lenders have agreed to take part in a new loan modification program. The FHA program — called Short Refi — requires major concessions from lenders, which must agree to write off at least 10 percent of the principal balance, and from investors, who, if they own the mortgage, must also agree to the deal. To qualify, homeowners must be current on their monthly mortgage payments and not already have an FHA loan. The size of the new primary loan cannot be more than 97.75 percent of the current value of the property; refinanced loans for homeowners whose properties carry second liens cannot exceed 15 percent of the property value. The Department of Housing and Urban Development, which oversees the FHA, said this month that 23 lenders had signed on to the Short Refi program, though it will disclose only the names of the five lenders that have already restructured a total of 44 loans. They are: Wall Street Mortgage Bankers of Lake Success, N.Y.; 1st Alliance Lending of East Hartford, Conn.;Nationstar Mortgage of Lewisville, Tex.; E Mortgage Management of Haddon Township, N.J.; and Glacier Bank of Kalispell, Mont. HUD estimated that 500,000 to 1.5 million borrowers could be eligible for the program.

Even so, it faces challenges in Congress; on Thursday, the House of Representatives voted to end it. One mortgage expert, John Diiorio, the owner of 1st Alliance Lending, said that big banks were taking part behind the scenes, by referring homeowners to third-party lenders that could restructure their mortgages. He added that 1st Alliance had “several hundred FHA Short Refi” loans in the pipeline. Because the FHA announced the program only last September, and because such loans take three to four months from start to finish, Mr. Diiorio said, the number of refinanced loans should increase in coming months. He said that, on average, 1st Alliance had negotiated a principal reduction of $86,000 on a $256,000 loan, a 33.5 percent cut, to $170,000. But he said lenders and investors had agreed to reduce principal for only half of the loans he had worked on. The refinanced borrower, Mr. Diiorio said, had to pay a slightly higher fixed rate, typically 6 or so percent. But he added that the financial impact was the same as a 5 percent rate on a higher-balance loan of $100,000, with less principal forgiven. “It seems counterintuitive,” he said, “but the economics work both for the consumer and for the lender.”

Stopgap bill on track

On Friday Congressional officials in both parties said that the House and Senate are on track to pass a three-week stopgap measure to buy more time for negotiations between the Obama administration and Capitol Hill Republicans on a longer-term budget bill. A spokesman for Senate Majority Leader Harry Reid says the measure would include $6 billion in spending cuts as the price for the extra time for talks. Those cuts are expected to be relatively non-controversial and include tapping accounts that would have been used for lawmakers’ home state earmarks that were already banned. Other cuts are likely to be programs already targeted by Obama for big cuts or outright termination. “We’re still in talks with the House on a three-week CR with $6 billion in cuts, most of which have already been proposed by Democrats,” said Jon Summers, a spokesman for Reid, D-Nev. The stopgap continuing resolution would keep the government operating at 2010 levels through April 8, which means there is one month to wrap up slow-moving talks on bigger legislation to fund the day-to-day operating budgets of government agencies through the Sept. 30 end of the budget year.

Oil down again

Oil prices are sliding as analysts gauge how much the disaster in Japan will affect world energy demand. Japan, the third-largest oil consumer, was hammered by Friday’s devastating earthquake and tsunami. Some parts of northeastern Japan are still without electricity. Three of five major oil refineries have shut down, and authorities are still trying to stabilize a damaged nuclear plant. Analysts expect the country’s energy demand will fall in the short-term. But Japan will likely compensate for the shutdown of nuclear power plants by running other generators with oil, boosting crude imports. Benchmark crude fell 73 cents to $100.43 on the New York Mercantile Exchange. It fell below $100 earlier. Meanwhile, gasoline jumped in the U.S. for the 27th straight day to a national average of $3.56 per gallon.

Big cities grow economies – problems linked to housing

According to a study by the Brookings Institute released today, the economies of the biggest U.S. metropolitan areas began to grow again by the end of last year, but the recovery was “slow, uneven and inconsistent” and failed to spur much jobs growth. The housing market collapse, the financial crisis and subsequent economic recession ravaged states’ and cities’ revenues, limiting their ability to help newly unemployed citizens and fix problems associated with abandoned homes. All of the 100 largest metropolitan areas had growth in output in the fourth quarter, and more than half saw output grow in each quarter of the year, Brookings said. And while house prices dropped in the fourth quarter of 2010 from same quarter of 2009 in all major metropolitan areas except Honolulu and San Jose, California, foreclosures also fell in 86 of the 100 areas. According to Brookings, three years after the start of the recession, the 100 largest metropolitan areas combined had lost 6.2 percent of their jobs. That compares to the 1.6 percent of the workforce they lost during the 2001 recession and 0.1 percent during the 1990-91 recession.

By the end of 2010, only one metropolitan area had completely recovered all of the jobs lost during the recession — McAllen, Texas. Brookings also ranked the 20 strongest-performing metro economies and the 20 weakest and found that Texas had the highest concentration of high-performing cities — five. Florida had the highest concentration of low-performing metropolitan economies, also five. Nearly all the metropolitan areas whose economies have suffered the most since the recession began “are ones that experienced a large house price boom and bust or that depend heavily on auto or auto parts manufacturing,” Brookings said. Those that have fared the best have economies dependent on the government, healthcare, education or oil and gas sectors.

JP Morgan downgrades housing market

Late, Friday investment bank JPMorgan Chase downgraded its expectations that housing prices will improve. The researchers now say their base home price forecast now shows at peak-to-trough a 34% decline for the Standard & Poor’s/Case-Shiller national index. That marks an additional 3% to 4% drop from fourth quarter to a bottom by the first half of 2011. “This is the first downgrade to our forecasts in the past 10 months, driven by bigger-than-expected price declines in recent months and increasing uncertainty around the supply-demand imbalance,” said analysts from the JPMorgan U.S. Fixed Income Strategy division. The revision indicates that after some gains in housing, the market may double dip. The researchers add that home prices are expected to continue a downward trend in the spring, but they do expect to see moderate improvements in the summer, leaving overall home prices down 2% to 3% in 2011. The researchers say recent changes to the National Association of Realtors‘ home sales data may overstate actual home sales. NAR is expected to revise its figures, and JPMorgan analysts will adjust their forecasts accordingly. The glut of housing supply, mixed with tighter lending criteria mean that home prices will likely not begin to improve until more jobs are created.

WSJ – GOP set to dismantle Fannie and Freddie

Republican lawmakers are preparing this week to introduce a series of legislative proposals to gradually reduce the role of Fannie Mae and Freddie Mac. The effort represents a tactical shift from the comprehensive approach for a speedier wind-down of the mortgage-finance giants that Republicans backed during last year’s negotiations on the Dodd-Frank Act. That legislation would have started cutting the government’s ties to the mortgage giants or begin winding them down in two years. The bill’s sponsor, Rep. Jeb Hensarling (R., Texas), has said he still plans to reintroduce his legislation later this year, and leading House Republicans say they are still committed to the goal of winding down Fannie and Freddie and handing their role over to the private sector. The decision to take a piecemeal approach with individual bills reflects the challenge in forging a political consensus—even among Republicans—around overhauling the nation’s housing-finance infrastructure. And as the housing market continues to be vulnerable, deep caution greets any proposal that might pass on higher borrowing costs to consumers. If Republicans advance individual bills, that could offer more opportunities for cooperation with the White House than if they advance a single bill outlining a more immediate wind-down of Fannie and Freddie. Rep. Scott Garrett (R., N.J.), who heads the House subcommittee on capital markets, plans to unveil some of those bills on Tuesday. One measure would accelerate the wind-down of the firms’ combined $1.5 trillion mortgage portfolios, which are already set to decline by 10% annually. Other bills would eliminate the firms’ federal affordable-housing goals and gradually raise the guarantee fees that Fannie and Freddie charge lenders, a decision now made by the firms and their federal regulator.

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

      $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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Mods led to foreclosures say suits

by admin on November 8, 2010

Smart Real Estate News & Commentary by Chris McLaughlin November 8, 2010

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Mods led to foreclosures say suits

Treasury statistics show that only about one-third of the nearly 1.4 million homeowners accepted into the government’s payment reduction program over the past year have had their reductions made permanent. Several federal lawsuits filed in Boston accuse major lenders of breach of contract under the government’s Home Affordable Modification Program, in which banks agreed to participate as part of the bank bailout. The lawsuits say the banks agreed under HAMP to grant permanent mortgage modifications to borrowers who make all payments during trial modifications. Attorney Shennan Alexandra Kavanagh said several of the plaintiffs lost their homes after their payments reverted to their original sums that they were unable to pay. She said she believes tens of thousands of borrowers in Massachusetts alone could be covered by the suits if they get class-action status.

One of the lawsuits, against Bank of America Corp., was consolidated earlier this month with similar complaints in five other states, Kavanagh said. Bank of America spokeswoman Shirley Norton said in an e-mail that the lender will continue aggressively defending itself against the cases. Joseph R. Mason, a professor at Louisiana State University’s business school who has written widely on the subprime lending debacle, said he suspects the loan modification disputes are a legacy of the federal government’s rush to stem the flow of foreclosures before it had adequate plans in place. “These policymakers said, just go out and do this and don’t let us worry about the details,” he said. “These details are now what are coming to the fore in these modification cases.”

Fed’s asset buying limited

In an opinion column for the Wall Street Journal, Kevin Warsh, a board governor, said last week’s decision by the U.S. central bank to buy an additional $75 billion of long-term Treasury securities per month through the second quarter of 2011 was not made unconditional or open ended. “I consider the FOMC’s action as necessarily limited, circumscribed and subject to regular review,” he wrote. “Policies should be altered if certain objectives are satisfied, purported benefits disappoint, or potential risks threaten to materialize.” He said risk-free rates and higher equity prices could raise confidence in the strength of the economy. But equally the dollar’s weakness and run-up in commodity prices could pose a risk if passed along into final prices. “In such a case — even with the unemployment rate still high — we would have cause to consider the path of policy. This is truer still if inflation expectations increase materially,” he wrote. Warsh urged the adoption of pro-growth economic policies in the United States, and said to counter the creep of trade protectionism “the U.S. should signal to the world that it is ready to resume leadership on trade.”

Obama might compromise on tax cuts

President Obama Obama told CBS’ “60 Minutes” in an interview to air Sunday night that his top priority was making sure taxes did not rise on Americans making less than $250,000 a year when Bush-era tax cuts expire at the end of the year and that a Republican proposal to extend tax cuts to wealthier Americans for two years represents a “basis for conversation” and he sees a potential for compromise heading into negotiations. The battle over the tax cuts represents the first major challenge facing Obama and resurgent Republicans, testing both sides’ willingness to compromise. In the interview, Obama was asked about a proposal from Republican John Boehner, who is in line to replace Democrat Nancy Pelosi as House speaker, to extend the tax cuts for two years and roll back domestic government spending outside of entitlement programs to 2008 levels. “I think that when we start getting specific like that, there’s a basis for a conversation,” Obama said. “I think that what that means is that we can look at what the budget projections are. We can think about what the economy needs right now, given that it’s still weak. And hopefully, we can agree on a set of facts that leads to a compromise,” he said. The conciliatory tone comes after Obama argued fervently for months that the country could not afford to keep tax rates low on high-income earners, contending it would cost the budget $700 billion over a decade. I guess the “facts” change when you take a shellacking.

Growing risk at Ginnie Mae

Barclays Capital notes that the amount of previously delinquent and now-cured mortgages in Ginnie Mae pools are raising investor concerns because of higher probability of redefaults and spotty performances from individual servicers. Ginnie Mae does not buy or sell loans or issue mortgage-backed securities. It guarantees investors a timely payment of principal and interest on MBS backed by Federal Housing Administration and VA loans. The BarCap analysts estimate that as much as 12% to 13% of new production Ginnie pools are backed by reperforming loans — meaning servicers worked with the borrower to turn the mortgage from delinquent to current either through a modification or some other form of loss mitigation. Analysts added that 45% of these reperforming loans will redefault over the next two years, which would boost prepayments.

Who services those loans often determines the delinquency rates and is a clear sign of risk, according to Deutsche Bank analysts. According to a recent report on Ginnie delinquencies, mortgages serviced by Countrywide – since bought by Bank of America – hold a 1.94% 90-day delinquency rate in the Ginnie Mae I program of pools. That’s 63 basis points higher than for all other pools in the program. Countrywide holds a 3.2% 60-day delinquency rate, nearly double the rest of the program. “Countrywide serviced pools continued to exhibit high delinquency rates despite the heavy buyout activity at the end of last year,” writes Steven Abrahams, the head of securitization analysis for Deutsche Bank. Ginnie put in new policies and holds servicers to strict delinquency limits to mitigate the risk in its pools. It recently increased the base net worth requirement for participants in its single-family mortgage loan program. The minimum net worth will move from a $1 million base net worth requirement to $2.5 million in 2011. The number of loans in 60-plus day delinquency or foreclosure must be less than 7.5% of the total number of loans from the issuer. The rate limit on 90-plus day delinquent loans is 5%. With Countrywide less than two percentage points from the 60-day delinquency limit, Deutsche Bank analysts urged investors to pay attention to who is servicing those loans.

Now for our real estate education section…

Who Wants to Be a Millionaire?

Dream of becoming a millionaire? Perhaps you are already well on your way. Whatever your current economic status, real estate has traditionally been one of the most sure-fire ways to reach the millionaire status…but it’s not the only one. In fact, there are several ways to become a millionaire – each with its own pro’s and con’s. Today we are going to examine each in order to decide if real estate, or perhaps another method, is the best route to riches for your individual situation.

The Number ONE Way to Become a Millionaire

There is actually a faster and easier way to become a millionaire that does NOT include real estate investing but rather a heavy reliance upon national banking. Take for instance this little recognized fact; in recent years, the nation with the highest percentage of millionaires was actually Zimbabwe. Yes, you read that right…the poverty stricken nation became the home to the largest percentage of “millionaires” thanks to hyperinflation and a corresponding currency collapse. Unfortunately, many economic experts predict heavy inflation in the United States which could certainly lead to a large number of “millionaires” here at home; sadly, when everyone else is in the same boat and the currency is worthless, the status simply doesn’t have the same meaning.

The Number Two Way to Become a Millionaire

Okay, so if you have dismissed the idea of becoming a “paper” millionaire due to hyper-inflation , the next most reliable method of becoming wealthy is via real estate investing. Not only has it held true throughout the history of this nation, but even other countries (including Zimbabwe) have a strong correlation between real wealth and the ownership of land rights. Of course, there are numerous ways to invest in real estate including flipping, rentals, leasing, owner financing, REIT’s and many others. The common ingredient is the value of land and property including real assets.

The Number Three Way to Become a Millionaire

The third most effective way to become a millionaire is via ownership of a small business. While “virtual” properties and websites or software applications have become very popular in recent years, the tried and true method of building a business placed a heavy emphasis on productivity and real assets….including real estate, plant and other property. Farm land, manufacturing, service sector rentals, retail and other endeavors were all heavily reliant upon a good location and the better the location, the better the business. While the Internet has resulted in some changes in the importance of location among many business entities, it still remains a cornerstone of success. Even more telling, a quick glance at the books of many major corporations (and small business owners) throughout the United States shows an interesting point…much of the wealth or assets of the company is held in the form of real estate!

Bottom Line – Real estate is the road to riches during good times and bad.

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
–

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What’s Better – ADR’s or Real Estate?

by admin on August 16, 2010

Smart Real Estate News & Commentary by Chris McLaughlin August 16, 2010

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TODAY at 3 PM ET, NOON PST

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Lowes shows profit

Lowe’s, the home improvement retailer, reported a profit of $832 million, or 58 cents per share, for the quarter ended July 30. That was below the 59 cents per share analysts were forecasting, but was up 9.6% from $759 million, or 51 cents a share, a year earlier, thanks to cost-cutting measures. Sales for the quarter rose 3.7% to $14.4 billion from $13.8 billion a year earlier. Analysts were expecting revenue to jump 5% to $14.5 billion. Lowe’s also gave a more cautious outlook for the year.

“Longer term, we believe improvements in labor and housing markets will be necessary to support more consistent improvement in demand for home improvement products,” said Robert A. Niblock, Lowe’s chairman and chief executive. Lowe’s is anticipating earnings per share of up to $1.45 for the fiscal year ending in January, down from $1.47 it previously projected. Total sales are expected to increase about 4%, a drop from the 5% to 7% increase the company said it was expecting at the end of the first quarter. Lowe’s stock was up 48 cents to $20.17 in premarket trading.

10 year yield down

Demand for safe-haven Treasurys dragged the yield on the benchmark 10-year note to 2.68% Friday from 2.75% late Thursday. Bond prices and yields move in opposite directions. “The belief that we’re in this stagnating growth phase, which is based on the idea that higher taxes and more uncertainty are going to limit growth, makes the Treasury market a lot more attractive,” said Larkin. The fact that the yield on the 10-year note is hovering under 3% is a very bad sign for the economic outlook, and if investors don’t become more confident, the yield could sink even lower, he said. “When yields get this low, it means trouble, and alarm bells should be going off in investors’ minds,” said Larkin. “A lot of people are betting that the economy’s not going to get enough steam, which is leading to frustration, confusion and impatience.”

Struggling stocks, lackluster economic data and fears of a slowing economic recovery all boosted the appeal of Treasuries on Friday. A report from the Commerce Department said July retail sales edged up 0.4%, missing economists’ forecasts of a 0.5% gain. The University of Michigan Consumer Sentiment Index for early August rose to 69.6 from 67.8 the previous month, also just missing expectations. The Labor Department said its July Consumer Price Index, a key measure of inflation, edged up 0.3% in July, slightly more than the 0.2% rise economists expected.

No wind down of Fannie and Freddie

It’s probably not a big surprise that this administration isn’t about to abolish an institution that it already has its fingers in. According to officials, any credible proposal to overhaul the government-sponsored enterprises, as Fannie and Freddie are called, would need to include a “thoughtful approach” to prevent house prices from dipping lower. In all fairness, without government backing, some large investors have said they would stop buying mortgage bonds, a development that would be catastrophic both for the housing market and the broader economy, but pressure is building on the Obama administration, which has promised to submit a proposal to Congress by January, to find a solution. Since being taken over by the government in 2008, Fannie and Freddie have absorbed nearly $150 billion in aid, making them by far the costliest part of a bail-out that rescued carmakers and financial institutions. Conservatives argue that the private markets, not the government, should provide financing for home loans.

But liberals say the government should have some role. They point out that the private markets seized up during the credit crisis. “It’s clear there is no good short-term solution,” said Rajiv Setia, of Barclays Capital. Last month Mr Geithner promised that an overhaul of Fannie and Freddie would bring “fundamental change” and that they would not survive “in anything like their current form”. But he added: “I think there’s going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee so, again, homeowners have the ability to borrow to finance a home, even in a very difficult recession.” That sounds like nothing much will happen if the administration is left to tackle this alone.

New York Manufacturing grows

The New York Fed’s “Empire State” general business conditions index increased to 7.10 in August from 5.08 in July. The August reading was below market expectations. Economists polled by Reuters had expected a figure of 8.00 for August. Employment gauges showed improvement. The index for the number of employees rose to 14.29 in August from 7.94 in July. The average employee workweek index jumped to 7.14 from -9.52. The new orders index, however, fell below zero for the first time since June 2009.

The index of business conditions six months ahead fell to 35.71 in August, the lowest since July 2009, from 41.27 in July. Despite a small rise this month, the index remains well below its recent high near 32 reached in April. It’s consistent with other recent data showing the U.S. economy has slowed considerably in the past few months, though most economists say a double-dip recession remains unlikely. The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

HAHB index higher?

The National Association of Home Builders’ housing market index for August is expected to tick up to 15, according to the consensus forecast of economists surveyed by Thomson Reuters. That would be a modest improvement from July, when the monthly reading sank to 14 — the lowest since March 2009. Readings below 50 indicate negative sentiment about the market. The index is set for release at 10 a.m. EDT on Monday. The lackluster economy has made potential buyers skittish about shopping for homes.

Sales of new homes jumped in June, but it was still the second-weakest month on record. May’s sales were the worst on records dating back to 1963. The industry received a boost in the first half of the year when the government offered tax credits to homebuyers. But since they expired in April, the number of people looking to buy has dropped. That has happened even though buyers are able to take advantage of the lowest mortgage rates in decades.

House prices slow in June

National home prices rose in June from the same time in 2009, marking the fifth consecutive month of year-over-year increases, according to the latest report from real estate services and data provider CoreLogic. National prices, including distressed sales, rose by 1.4% in June from a year earlier. The yearly appreciation slowed from the 3.7% increase in May from one year earlier. The May increase was revised up from the initial 2.9% estimate.

“Home price volatility and collateral risk remain very high,” said CoreLogic chief economist Mark Fleming. “The stabilization phase and policy intervention since the spring of 2009 has run its course. Prices are expected to further moderately decline as the economy remains weak through the fall.” CoreLogic called the 2.3 percentage point deceleration from May “very large by historical standards,” with deceleration most pronounced in more expensive and distressed housing markets. Excluding distressed sales, prices rose 0.2% in June from one year earlier.

Now for our real estate education section…

What’s Better – ADR’s or Real Estate?

What’s better…American Deposit Receipts (ADR’s for short) or real estate? In recent months there has been a great deal of interest in ADR’s as a convenient way for American investors to own shares of foreign corporations without the risk associated with overseas investing. Add in the prospect of dividend paying ADR’s and you have a recipe for success…or do you? Today we will investigate the pros and cons of investing in ADR’s to determine how it measures up against real estate.

ADR’s Defined

American Deposit Receipts are a special type of stock that allows investors the opportunity to mirror the value of foreign corporation shares while retaining the convenience of purchasing just like stocks while using US dollars and without the need to use a foreign trading desk.

The benefits of an ADR are impressive; the ability to easily purchase a stake in a foreign owned corporation, dividend paying yields and many of the same protections investors have come to rely upon when investing domestically.

ADR’s Profit Potential & Pitfalls

Not only do ADR’s benefit from the currency exchange, rapidly rising economy in emerging markets and general growth trends but some ADR’s also pay dividends which can create an even more enticing profit potential.

Unfortunately, all that glitters isn’t gold especially when it comes to ADR’s. ADR’s are handled very differently when it comes to the underlying deposits on hand at the bank so it is essential to fully understand who is holding what and the reporting requirements before investing. It’s also important to note that the exchange rate may work in reverse, effectively reducing profits and yield due to exchange imbalance.

Compare & Contrast

By now it should be obvious that ADR’s certainly represent an interesting investment prospect; rising dividends, potential for capital appreciation and exchange rate returns… but how do they compare to real estate? After all, the most important aspect isn’t what the media thinks but how much profit an investment can generate for your personal portfolio.

To find out the facts, we took the time to research some of the most attractive dividend paying ADR’s currently available and found the majority provide dividends of less than 5% (most in the 1% to 3% range) yet trade at premium levels when compared to the cost of purchasing a similar product in the original nation of origin. Use of leverage may be restricted, lack of familiarity with ADR’s often results in a less robust trading floor due to decreased volume and perhaps most important of all…the real rates of returns often fall short of those enjoyed by average real estate investors just like yourself.

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.

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New record for 30 year mortgage rate

by admin on August 13, 2010

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

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

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

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

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

Grab your spot to hear The Negotiation Nanny solve all the steps for your LOAN MODIFICATIONS, short sales, deed in lieus,

forensic audits, forbearance and Lease Back Programs…

forever. You never talk to banks again!

https://www2.gotomeeting.com/register/165671459

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

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

New record for 30 year mortgage rate

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

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

Retail sales up

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

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

Lower Jumbo rates

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

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

Inflation up

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

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

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

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

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

Now for our real estate education section…

Friday File: 15 Minute Short Sale Resolution

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

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

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

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

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

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

See you at the top!

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

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.

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Smart Real Estate News & Commentary by Chris McLaughlin, February 8, 2010

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Permanent Modifications Showing Slight Improvement

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

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

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

Geithner says no double dip

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

The EU debt crisis and us

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

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

Now on to our real estate investing educational section…

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

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

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

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

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

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

See you at the top!

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

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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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.

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

Now for our real estate education section…

Friday File: 15 Minute Short Sale Resolution

Smart Real Estate News & Commentary by Chris McLaughlin, February 8, 2010

Done For You Lead Machine Unveiled Tomorrow!

RSVP here for the webinar Tuesday night at 8:30 PM ET, 5:30 PM PST:

Permanent Modifications Showing Slight Improvement

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

Geithner says no double dip

The EU debt crisis and us

Now on to our real estate investing educational section…

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