Home prices post their first monthly gain in 3 years

Real Estate News & Commentary by Chris McLaughlin, July 28, 2009

http://www.shortsalesriches.com

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

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night…it will be full webinar so grab your spot now:

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Home prices post their first monthly gain in 3 years

The Standard & Poor’s/Case-Shiller index, which measures movement of home prices in 20 major U.S. cities, rose 0.5% in May from April, the first monthly gain since June 2006. Analysts say that the housing market is showing signs of stabilization. “The housing market looks like it has found a floor and we may be on the way to some kind of gradual improvement,” said Ken Mayland, president of ClearView Economics. “After three years of this nasty housing recession, I think we’ve got to be pleased with such an improvement in a relatively short period,” said Harm Bandholz, economist at UniCredit Research.

Analysts feel that unless there is improvement in employment, home prices will not rebound. According to the Federal Reserve, household net worth dropped by $13.9 trillion in the first quarter of this year on account of drop in home prices and stocks. Homebuyers’ confidence has been hit and many have deferred their decision to purchase homes. “We are preparing for this recovery to take a while to pick up steam,” said Frits van Paasschen, chief executive officer of Starwood Hotels & Resorts, the third-largest U.S. lodging company.

Lenders prefer foreclosure to loan modification in certain cases

The government program for preventing foreclosures is not in the best interest of lenders in all cases. If a borrower is likely to default even after participating in mortgage modification program, the lender is better-off opting for foreclosure. Michael Fratantoni, vice president at the Mortgage Bankers Association, said: “There is going to be this narrow slice of borrowers for which modifications is the right answer.” Fratantoni said it is tough to estimate the size of that slice and “the industry and policymakers have been grappling with that.” According to a study conducted by the Federal Reserve Bank of Boston, about a third of the borrowers who miss 2 payments can get back on track without help from their lender.

“These are the people who will get a second job, borrow from their family to keep up,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston. “From a cold-blooded profit-maximizing standpoint, these are the people the banks will help the least.” Michael Barr, assistant Treasury secretary for financial institutions, while commenting on the mortgage modification program, said: “We will continue to refine the program as new data becomes available. We are committed to studying the effectiveness and efficiency of the program, and we welcome outside analysis.”

Government mulls more housing sops for troubled homeowners

With foreclosures rising, the Obama administration officials are set to meet this week to discuss new initiatives to help homeowners. Rising unemployment is impacting the effectiveness of the administration’s current foreclosure prevention program. “Unemployment is making the job of doing loan modifications more difficult,” William Apgar, a Housing Department senior adviser, told a congressional committee last week. “We are exploring other options related to how to provide assistance to unemployed folks.” According to RealtyTrac, over 1.5 million homes received at least one foreclosure filing in the first half of 2009.

Unemployment accounts for a large number of foreclosures. The loan modification program introduced by the administration has not been effective so far for a variety of reasons including operational problems. “Loan modifications will not reduce by any sizable amount the number of homes going into foreclosure,” said Morris Davis, an assistant professor at the Wisconsin School of Business. Experts feel that a new foreclosure prevention program may not find favor with lawmakers given the low success rate of existing program. “Any measures taken to help people avoid foreclosure will only prolong the pain by using taxpayer money to prop up unsustainable mortgages,” said Kurt Bardella, press secretary for California Rep. Darrell Issa. “The best thing we can do for the unemployed is adopt policies that will create jobs,” Bardella said.

Were senators given special mortgage deals by Countrywide?

In a secret testimony to Congress, an official of Countrywide Financial Corp. has said that Senators Kent Conrad (D-N.D.) and Chris Dodd (D-Conn.) received favored treatment from Countrywide. Dodd, who heads the Banking Committee, got 2 mortgages from Countrywide in 2003, while Conrad, who heads the budget Committee, got 2 Countrywide mortgages in 2004. “You don’t say ’no’ to the VIP,” Robert Feinberg, the Countrywide official, told Republican investigators for the House Oversight and Government Reform Committee.

Both senators were part of the “friends of Angelo” program. Angelo Mozilo, the former chief executive of Countrywide, has been charged with civil fraud and illegal insider trading by the Securities and Exchange Commission. Feinberg could face criminal prosecution if his statements are found to be incorrect. Feinberg’s testimony is at odds with the senators’ assertions that they did not receive any special treatment from Countrywide. The ethics committee would determine whether the senators violated standards of conduct. The committee could recommend a censure vote by the Senate, if it finds the senators’ conduct inappropriate.

Precipitous drop in private equity deal flow

From $131 billion in the first half of 2008, deal size in the private equity industry dropped to just $24 billion in the first half of 2009; this is the lowest since 1996. Large players such as KKR, Blackstone and Bain Capital have been quiet in the last 6 months. According to private equity research firm PitchBook, private equity players have $400 billion available for investment. Then why aren’t investments happening? Experts say that the industry is still digesting deals executed in the past and do not have appetite for new deals.

“The business has changed radically,” says John Howard, head of Irving Place Capital. “What was essentially a business of creating financial options is becoming more concerned with growth and enhancing profitability.” Two-thirds of players in the industry believe there will be no improvement in the environment till next year. “The environment has changed, and the holding period is expected to be a lot longer,” says James Quella, Blackstone’s senior managing director. ”

Now on to our real estate investor education section…

Top 10 Reasons Realtors Hate Short Sales & Why You Should Love Them!

Many realtors hate short sales but like the old adage – one person’s problem is another’s opportunity. Once you learn the inside secrets to short sales success, these top ten reasons most realtors avoid working with short sales will become your best opportunity to build wealth. Learn, Listen and then take steps to act…

1. Waste of Time. The majority of realtors have never taken the time to truly learn how to properly handle short sales. They typically spend a lot of time and effort on one property only to see the deal fall through. Of course, information is power especially when it comes to short sales. Educate yourself and learn how to work smarter not harder.
2. Government Involvement. Once again, the perception of ‘red tape’ frightens away those without a system in place to process all that paperwork.  Fortunately, our short sale system provides exactly the system you need to tackle red tape with ease.
3. Legal/Attorney Involvement. Because legal fees must be paid whether the property sells or not, this is a cost most brokers shun. Fortunately, it works both ways. Our short sales package was designed by a legal mind – making it less likely you will encounter extensive legal fees or consultations. Why recreate the wheel when you can have it all right from the start?
4. Hours on the Phone. Plain and simple if you are spending all day long on the phone trying to deal with lenders, you simply don’t have the right tools or information. Again, let misinformation and failure to properly plan or invest into short sales education work FOR – rather than against – you while others run away from the profit potential of short sales.
5. “5 times the work for half the pay”. Some brokers have been at the short end of an unpleasant surprise when lenders discount commission’s right before closing. If sloppy paperwork is your problem then get the help you need to seal the deal rather than walking away from nearly half of all properties on the market today.
6. Don’t like to play tough or “be the bad guy”. When times are great and properties go for full price, selling is simple. You show the property and viola’…instant income. However, some realtors and others are uncomfortable actually negotiating. It separates the “men from the boys” so start negotiating or sit on the sidelines while others rake in the profit.
7. Bank woes. Yes, by now we all know the bank might misplace paperwork or require additional documentation but once again, that is why it is essential to have a time tested process in place before making your first offer.
8. “Buyers get frustrated and walk away”. Well heck yes – especially if they are dealing with a realtor who spends months on one property, takes hours each week to deal with paperwork that should be automated, doesn’t like to negotiate and then eventually doesn’t close on the deal!
9. Stuck in the middle…once again, this is what realtors do…those that do it best go on to reap the rewards of learning how to communicate and negotiate a ‘win-win’ for all involved. Sellers, buyers and banks each are important stakeholders that require different needs to be met for the deal to work. Learn how to structure the deal for success straight from the start.

10.  Feeling of helplessness. Many agents believe there is nothing they can do to speed up the process. While it’s not possible to control every step along the way, there certainly are many things that can be done to assure a successful outcome and smooth purchase. Get informed and don’t fall for the common fallacies keeping millions of realtors from profiting from short sales.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

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

About the author:

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting 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
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

 

Real Estate News & Commentary by Chris McLaughlin, April 16, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and flipping short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar tonight where

we explain it all Thursday @ 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/344712594

———

Loan modification program starts

The Treasury Department announced that the first six participants to sign up for President Obama’s loan modification program are JPMorgan Chase, which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo, $2.9 billion; and Citigroup, $2 billion.  The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.  A statement issued by Wells Fargo said, “We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership.”  Left unsaid is the fact that now the second wave of foreclosures will begin, as banks decide which loans are worth trying to save and which are not.

 

Details of the loan modification program

Only loans where the cost of the foreclosure would be higher than the cost of modification will qualify.  The modification plan calls for the bank to reduce interest rates so that the monthly obligation is no more than 38% of a borrower’s pre-tax income, and the government would then kick in money to bring payments down to 31% of income.  Mortgage servicers (banks and mortgage companies) can also reduce the loan balance to achieve these affordability levels, and the government will share in the cost of the reduction, up to the amount the servicer would have received if it had reduced the interest rates. 

 

Treasury will not provide subsidies to reduce rates to levels below 2%.  In addition to subsidizing the interest rates, servicers will use Treasury funding to pay for incentives for themselves, homeowners, and investors.  The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current.  It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.  Homeowners will even get up to $1,000 a year for five years if they keep up with payments.  The funds will be used to reduce their loan principals.  “We’re confident we’ll have enough money,” said Treasury spokesman Andrew Williams.  Of course you will…if you run out, you’ll just print more, right?

 

Housing starts down

The US Commerce Department said housing starts fell 10.8 percent to a seasonally adjusted annual rate of 510,000 units, the second lowest on records dating back to 1959, from February’s 572,000 units.  Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto, said, “While the situation in housing and in the labor markets is not necessarily deteriorating, it’s clear that there is no real sign of recovery whatsoever…taken together, both releases will put a damp on the nascent optimism we’ve seen in the markets in the past couple of weeks.”  Analysts had expected an annual rate of 540,000 units for March. 

 

JPMorgan beats expectations

JPMorgan Chase said its net income for the first quarter was $2.1 billion, or 40 cents a share.  This was down 10% from a year ago, but still beat expectations.  According to Thomson Reuters, analysts were only anticipating a profit of $1.38 billion, or 32 cents a share.  The strong investment banking performance was driven by a revenue surge in its fixed income division, but Chase’s credit card division reported a net loss of $547 million, down from a profit of $609 million a year ago.  The bank cited a sizable increase in allowances for loan losses and higher charge-offs, or loans the company doesn’t think are collectable.  CEO Jamie Dimon expressed interest in paying back TARP funds, and unlike Gold Sacs, says Morgan can pay them back without issuing stock.  After what some call Goldman Sac’s accounting sleight of hand, and KBW’s downgrading of Wells Fargo, it will pay to watch the details in this reporting. 

 

Initial jobless claims slow, but joblessness at a record high

The U.S. Department of Labor says initial jobless claims dropped to 610,000 in the week ended April 11, but a record 6 million-plus continued to file unemployment claims during the week ended April 4, the most recent week for which data are available.  That’s up 172,000 from the prior week’s revised tally of 5.85 million.  John Lonski, chief economist for Moody’s Investors Service, said he puts more of his focus on the continuing claims number:  “That tells you that things are getting worse and we’re going to see another rise in the unemployment rate, and that’s not good news.”  He’s right of course; a sinking ship doesn’t stop sinking just because its rate of descent slows down.  The job market is one of the most important foundations of the economy, and one of the greatest causes for concern.

 

Now on to our real estate investing education section…

 

Understanding Volatility Versus Risk in Short Sale Investments

One of the most common mistakes made by novice and veteran short sale investors alike is to confuse volatility versus risk. Unlike the stock and bond market where the principle can go to zero, real estate always retains some type of inherent value. To put it another way, when dealing with stocks and bonds what goes up must come down..and when it does it can drop to zero never to return again. On the other hand, real estate can go down but rarely drops to zero. Companies can and do go out of business. Real estate is still standing. Even if the structure is totally eliminated the value of the raw land beneath remains.

 

This brings us to an important difference between volatility and risk. Risk involves loss. True loss of the type that wipes away fortunes over night. A company is here today but gone tomorrow…along with it the stocks, bonds and investments that represent a lifetime of work. Volatility is different. Volatility means prices can go up and down then up again. It is a function of time – not absolutes. Wait long enough and the inherent value of the land itself will retain some type of value. It might rise, it might fall. It might rise relative to the work able to be performed on it or it might fall related to the value of the interest rate used to finance it…but in all cases the volatility is relative. The land does not cease to exist.

 

Today there are two types of investors – those seeking a return of their capital and those still seeking a return on their capital. In large part, the difference has to do with where they have decided to invest their cash. Those that follow a traditional investment strategy (buy and hold stocks, bonds, treasury bills and keep some cash on hand for an emergency) are watching in utter dismay as they watch some of the biggest business concerns in the nation – indeed the world – drop to a fraction of their former value while others may simple cease to exist. The risk is very real and leaves traditional investors few options rather than attempting to park their cash into ‘safe’ federal treasury bills in an attempt to preserve their capital.

 

On the other hand, short sale investors are still indeed seeking actual returns on their capital – not merely a return of capital. While most are able to turn relatively quick profits, even those that made an early mistake are comforted by the fact that the long term risk is relatively minor…if in fact, even existent. While the price of a home and land may be volatile and subject to increase or decrease over any given period of time…it is equally likely to remain in existence. Unlike financial instruments where absolute loss is a very real concern, hard assets like real estate are primarily a function of time. The inherent value eventually returns.

 

Consider a worst case scenario for each of the following investments:

Stocks/Bonds: Worst case = cease to exist. Value drops to zero and unable to sell.

 

Cash: Worst case = cease to exist. Value drops to zero. Unable to spend (ie, confederate dollars).

 

Real Estate: Worst Case – price drops. Still can rent, sell, owner finance, plant crops or otherwise retain some form of value. Price never drops to zero as land retains an inherent value depending upon use, natural resources and other productivity.

 

See you at the top!

 

 

Chris McLaughlin

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

 

P.S.

 

Don’t miss our webinar Thursday at 8:30 PM EST, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/344712594

 

P.P.S.:

Check out one of the ShortSalesRiches students holding himself as well as us accountable to whether the system truly works!  Go here now to

watch the videos from John Michailids:

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and

http://www.willjohnmakeit.com

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

—

Real Estate News & Commentary by Chris McLaughlin, March 4, 2009
http://www.shortsalesriches.com/welcome.html

—

Did you miss last night’s amazing webinar?  All the seats were full…and we’re going to hold it again this Thursday night at 8:30 PM ET, 5:30 PM PST.  Jump on this link now to sign up:

https://www2.gotomeeting.com/register/722876237

—-
There are 697,000 reasons some Americans are fearful over their future today.  That’s the staggering number of jobs lost in the private sector for the month of February, according to ADP Employer Services.  And the trend isn’t our friend: in January there were 614,000 jobs lost, so the February number shows that more jobs are being lost, not less.  Economists had expected about 610,000 private sector jobs so the higher number was an unwelcome surprise to many.

Mortgage applications dropped for their second week in a row, according to the Mortgage Bankers Association.  The index dropped 12.6% to 649.7 last week.  Why the heck would they drop when interest rates are so low?  Many analysts point to the “fence sitters” that are waiting for further details from the Obama Administration’s $275 billion loan modification and interest rate reduction plan. 

And it looks like some form of “cram downs” will be approved by Congress.  For a quick recap: a cram down occurs when a bankruptcy court judge reduces the principal amount owed on a loan and forces the bank to accept it.  A cram down is also referred to as a judicial mortgage adjustment.  Some have argued that cram downs would increase interest rates as it brings uncertainty to the end purchaser of a mortgage backed security.  But a compromise appears to have taken place that the bank’s lobbyists can live with.

The revised method now would require proof that the borrower attempted a loan modification or short sale – they have to show that all of their financial documents were provided to the lender.  The lender would then have to show that they attempted a workable modification, which the bill currently defines as offering payments of no more than one third of the borrower’s income.  And the bankruptcy court judge would be told to deny a cram down in any case where the borrower was deemed to have been able to afford the loan. 

Now on to our real estate investor education section…

Are You a Short Sale Addict?

Just ask any long term real estate investor…short sales are fun and profitable so it should come as no surprise that people become addicted to short sale investing in much the same way they do any other “high”. The big difference is this addiction is truly rewarding in a positive way – unlike drugs or gambling that put fat profits into the hands of others while wasting away your health and wealth, a short sales addiction might be the cure to your economic blues. Find out if you are a short sales addict by taking this quick quiz:

1. Do you suffering from a conditioned response consisting of a rush of adrenaline when driving by an empty home?
2. Is your idea of fun hunting for short sale homes rather than sitting in front of the television all weekend?
3. Do you plan holidays around sales dates in order to take advantage of the best buying opportunities and fewer competitors?
4. If you haven’t closed on a short sale home in X number of days do you find yourself going through financial withdrawal?
5. Do you tend to surround yourself with like-minded short sales professionals or investors that encourage your habits?
6. Do you find yourself participating in progressively larger and larger buying opportunities?
7. Has your tolerance for short sale profits increased over time to the point that you scoff when friends or family mention their “great” market returns of 10 percent or less?
8. Do real estate listings, classified advertisements and short sales offers dominate your reading list?
9. Do you spend most of your free time thinking about driving to the bank to deposit your next big profit packed check?
10. Do you consider negotiation a team sport akin to the Super Bowl or World Series?

Fortunately, there isn’t an easy cure to short sale addiction; once you experience the high’s associated with fat profits, the adrenaline of scoring a great deal and the inevitable craving for bigger and better profits nothing else will do. Instead, learn to maximize your success and take it to the next level.   Join us on our amazing webinar this coming Thursday evening at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/722876237

 

See you at the top!

Chris McLaughlin

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

P.S.

Don’t miss this great video testimonial about short sale coaching:

http://www.youtube.com/watch?v=CFp0ylr3mQI&feature=email

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

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

—