mortgage applications

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Diana Olick – Home Buyer Tax Credit Snafu: No USDA Loans

“The federal mortgage program from the U.S. Dept. of Agriculture for rural home buyers, guarantees low and even no down payment, low interest loans to rural buyers, but the lines between rural and urban were getting a bit vague. The tight mortgage lending conditions today have pushed thousands more buyers into the program. In 2006, the USDA program backed about 31,000 loans or $3 billion worth. In 2009, that had grown to 133,000 loans worth $16.2 billion. The good news is the standards are tight and the default rates far better than the FHA. The bad news is the program wasn’t meant to handle that many loans, and it ran out of money. Congress is in the process of appropriating more money for the program. The House passed a bill sponsored by Congressman Paul Kanjorski (PA).

The Senate passed a bill out of the Appropriations Committee, as part of agriculture appropriations. It was sponsored by Sen. Michael Bennet (CO). But you still can’t get a loan now. There is a far smaller program for direct loans from the USDA, but it is barely a blip compared to the guarantee program. So we’re all sitting here waiting for Congress to get the program more money, and it’s all expected to pass, but that still presents a big timing problem: The home buyer tax credit. Buyers have to close by June 30th, and many of them were depending on USDA loans. They signed contracts by the end of April, and now they’re stuck. Despite the promise of the funds, big lenders are holding off until the new appropriations are a done deal. Keith Wilcox of 1st American Home Loans says by the time the Congress passes the new funding, there will be such a backlog of borrowers, they’ll never get the loans done by closing June 30th. He’s not the only mortgage broker lighting up my phone this week. So not only are these borrowers missing out on the USDA loans, they’re also missing out on the opportunity to get the tax credit and at the very least lock in today’s nearly historically low interest rates. In other words, the government is holding up its own housing stimulus.”

Countrywide Picks Up Pace Resolving Troubled Loans: Barclays

Liquidation and modification rates on Countrywide-serviced residential loans have edged higher in the past few months, with a larger percentage of mortgage restructurings encompassing principal forgiveness, according to a study just released by Barclays Capital. The research firm examined loans within residential mortgage-backed securities (RMBS) serviced by Countrywide, now Bank of America Home Loans, and found that while historically, Countrywide-serviced deals have claimed lower-than-average mod rates and long liquidation timelines, that has begun to turn around in the past few months. Barclays reports that constant default rates (CDRs) on pools of mortgages serviced by the once-subprime leader have improved, primarily due to faster roll rates, as well as rejections from Home Affordable Modification Program (HAMP) trials, which allow the loan to proceed to foreclosure.

Analysts at Barclays expect Countrywide’s liquidation rates to continue to increase as more HAMP trials are resolved in the coming months. Many of these resolutions, though, do include transitions to permanent loan restructurings. Barclays says HAMP conversions have also boosted modification rates for Countrywide, and the research firm found that debt forgiveness mods now make up 10 percent of the servicer’s modified loans, up from 0 percent in January. The research firm says it as seen “continuous improvement” in current to delinquent rolls and falling 60-plus day delinquencies. Barclays says there have been important changes in servicer behavior in the Countrywide camp.  HAMP rejection rates for Countrywide loans have shot up in the past few months and now constitute 36 percent of all resolved trial mods.  According to the Treasury’s latest HAMP progress report, Countrywide/Bank of America is servicing approximately 215,000 active trial mods and has finalized nearly 57,000 permanent loan restructurings.

Wall Street hopes to dodge two reform bullets

Wall Street may still escape two of the harshest elements of Washington’s reform efforts. The two measures, included in the Senate bill passed last week, take direct aim at some of the more risky — and profitable — parts of banks’ business. One proposal would require financial firms to spin off their trading desks that deal in derivatives. The other, would ban banks from wagering with the firm’s own money, what the industry calls “proprietary trading.” Firms would also be restricted from investing in or sponsoring private-equity funds or hedge funds. The restrictions, if included in the final bill, would hit bank profits.

As the bill now moves to negotiations between key leaders of both the Senate and the House, there is a growing belief that both those proposals run the risk of getting derailed. Experts believe that the amendment aimed at regulating derivatives, will be left on the cutting-room floor or watered down substantially. Both the White House, as well as most Republicans, have come out strongly against the proposal, partly out of fear of what kinds of unintended consequences the new rule could have. Lawmakers already missed an opportunity to strengthen the proposal after choosing not to vote on an amendment which would prevent banks from trading for their own benefit rather than for the sake of their customers. Experts suggest that the Senate bill does not do a good job of explicitly defining what businesses banks should, and should not be involved in, positioning the topic as a subject of intense debate among lawmakers.

Top stories from HousingWire over the weekend

Federal prosecutors will not bring charges against the executives of the American International Group (AIG) for company’s collapse, according to a Saturday story in the New York Times. The story cited two unnamed sources. Joseph Cassano, and other executives at the AIG Financial Products unit, which insured $80bn in mortgage securities, have been investigated for possibly misleading investors. But no charges will be filed. In the past, modifying or pushing these loans through the foreclosure and ultimately, REO process, was slower than average, but the pace is picking up. According to Barclays, liquidations rates of Countrywide loans should increase as more trial modifications through the Home Affordable Modification Program (HAMP) are resolved.  The board of directors of the Federal Deposit Insurance Corp. (FDIC) approved settlement of the bankruptcy case of Washington Mutual, the holding company of Washington Mutual Bank, which was closed in September 2008.

The agreement also settles claims between Washington Mutual and JPMorgan Chase (JPM: 40.05 0.00%), which acquired the failed bank. The Minnesota Department of Commerce closed Pinehurst Bank in St. Paul, Minnesota. It was the only closing last week. Coulee Bank, based in Wisconsin, will assume all $58.3m in total deposits and will purchase essentially all $61.2m in assets. The FDIC estimated the cost to the Deposit Insurance Fund (DIF) to be $6m. Leaning on revenue from rental properties, Triple Crown Corp., a real estate firm in Harrisburg, Penn., reported it has weathered enough of the housing downturn to begin increasing its property holdings. Effective immediately, institutions wanting to apply as Ginnie Mae or Federal Housing Administration (FHA) issuers must use separate forms. Those wishing to apply to Ginnie must use the new Form HUD-11701, titled “Application for Approval – Ginnie Mae Mortgage-Backed Securities Issuer.” Those wanting to become FHA lenders must use Form HUD-92001-A, “FHA Lender Approval Application.” The old form will no longer be available for use.

Ratings Shopping’ Lives as Congress Debates a Fix

Real-estate investment firm Redwood Trust Inc. approached two credit-rating firms early this year to rate a new mortgage-bond offering. One of the firms, Standard & Poor’s, expressed reservations about parts of the deal. Redwood chose Moody’s Investors Service—and in April sold more than $200 million of bonds carrying Moody’s top rating of triple-A, without a hitch.  In a commentary about the bond offering last month, S&P indicated the deal wouldn’t have met its standards for a triple-A rating. A Moody’s spokesman said the firm “conducted a thorough review of the deal,” according to criteria it strengthened since the mortgage crisis. S&P, owned by McGraw-Hill Cos., declined to comment on its discussions with Redwood.

In the wake of the financial crisis, the companies that rate bonds have been lambasted for being asleep at the switch and for assigning rosy ratings to questionable mortgage bonds in order to win business. Those ratings companies have made numerous changes, but one thing remains the same: Issuers still “ratings shop” among firms for the most favorable opinions on deals. Some in the industry say ratings shopping may even have gotten easier in the wake of the financial crisis. S&P, Moody’s and Fitch Ratings are no longer as dominant in the business of rating bonds as they were, in part because they have pulled back partially from the mortgage market.  The financial-regulation overhaul bill passed by the Senate on Thursday would limit the ability of bond issuers to pick firms to rate their securities. But the House version of the bill contains no such provision, and some key lawmakers have raised concerns about the idea. It remains to be seen whether the proposal will survive as the two chambers begin efforts Monday to reconcile their differences.

Now on to our real estate investing education section …

Commercial Calamity Calming

Although the state of commercial properties continues to show serious stress, according to Fitch Ratings, the rate of default is beginning to slow despite reaching a record 7.48% delinquency rate. The report goes on to provide a break-down of delinquencies by type including:

Hotels: 18.42%

Multi-family: 13.60%

Retail: 5.83%

Industrial: 4.6%

Office: 3.87%

The Good News

In addition to slowing default rates, areas outside of the Sun Belt and Rust Belt are showing signs of stability. The rate of credit worsening is also slowing as the level of liquidity loss as well as ability of mortgage holders to pay-off or close their loans demonstrated some positive signs.

The Bad News

Although the number of defaults is beginning to slow, experts believe the situation will continue into the foreseeable future as credit and lending standards continue to tighten in the commercial arena. Unlike residential real estate which is typically financed using 15 to 30 year loans, commercial loans frequently use short durations from five to ten years making them especially prone to a lack of liquidity associated with tighter lending standards. Net lending activity is down over 7.5 percent from the peak in 2008 with commercial giants like Wells Fargo projecting continued losses to peak by the end of the 2010.

The Bottom Line

What does this mean for prospective commercial short sale investors? Plain and simple…opportunity. Commercial short sales may be just the ticket to move your portfolio from a part-time investment to full-time career or long term asset. Whether you own a business of your own or simply desire a method to maximize profits, commercial short sales provide many of the same benefits enjoyed by those that work in residential real estate concerns with meaningful returns. Tune in to one of our webinars or sing-up to receive more information about investing in commercial short sale opportunities.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

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

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

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

FIX A FLIP OPENS SATURDAY AT 3 PM ET, NOON PST!

We’re bringing it back! Fix-a-Flip funding will re-open

up this Thursday with even more updated fast-flipping

strategies and new partnerships with capital

providers.  And we’ll be sold out again in record time.

 

Go here to get what you’re missing out on in a fr-ee

webinar Saturday at 3 PM ET, NOON PST:

https://www2.gotomeeting.com/register/899839235

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

Mortgage Rates Hit New Lows in Two Weekly Surveys

Mortgage rates dropped again this week, setting new records in two weekly surveys, the result of investor flight from European investments. The Freddie Mac weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.84% with a 0.7 origination point for the week ending May 20, down from last week’s average of  4.93%. A year ago, the 30-year FRM averaged 4.82%. The 25-year-old Bankrate.com weekly survey of large banks and thrifts put the average rate for a 30-year FRM at 4.96% with a 0.5 origination point, the lowest in the history of the survey.

Despite the end of the Federal Reserve mortgage-backed securities (MBS) purchase program, mortgage rates are at their lowest point all year. As Europe responds to the Greek debt crisis, the euro is plummeting compared to the dollar. Investors are turning to American investments that, for the moment, seem safer. However, some argue that debt levels in the US are also as risky as in Europe. “People rush to us for ’safety,’ although we’re Greece — we just haven’t gotten there yet,” Anthony Sanders, distinguished professor of real estate finance at George Mason University, told Bankrate.com.  Sanders added US interest rates will rise once European and Chinese economies recover. Freddie said the 15-year FRM averaged 4.24% with an average 0.7 point, down from last week’s average of 4.3% and a year ago, when the average was 4.5%.  Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.91% with a 0.6 point, down from last week’s average of 3.95% and a year ago, when it averaged 4.79%. It’s the lowest average rate for the product since October 2004, when it averaged 3.96%.

Senate Passes Finance Bill

The Senate on Thursday approved the most extensive overhaul of financial-sector regulation since the 1930s, hoping to avoid a repeat of the financial crisis that hit the U.S. economy starting in 2007. The legislation passed the Senate 59 to 39 and must now be reconciled with a similar bill passed by the House of Representatives in December, before it can be sent to President Barack Obama to be signed into law. The controversial measure, supported by the Obama administration, sets up new regulatory bodies and restricts the actions of banks and other financial firms. It is designed to try to make order of the cascading regulatory chaos that ensued in 2008 when mammoth banks and some unregulated financial firms collapsed, and public funds were used to save them.

Among other things, the legislation would: a)Establish a new council of “systemic risk” regulators to monitor growing risks in the financial system, with the goal of preventing companies from becoming too big to fail. (b) Create a new consumer protection division within the Federal Reserve charged with writing and enforcing new rules that target abusive practices in businesses such as mortgage lending and credit-card issuance. (c) Empower the Federal Reserve to supervise the largest, most complex financial companies to ensure that the government understands the risks and complexities of firms that could pose a risk to the broader economy. (d) Allow the government in extreme cases to seize and liquidate a failing financial company in a way that protects taxpayers from future bailouts. (e) Give regulators new powers to oversee the giant derivatives market, increasing transparency by forcing most contracts to be traded through third-parties instead of only between banks and their customers. “It will inevitably contract credit,” said Sen. Judd Gregg (R., N.H.), who says the Senate bill “is probably undermining the system, probably making for a weaker system.”

Sen. Gregg was one of 37 Republicans to vote against the 1,500-page bill. Now Congress will need to reconcile the Senate bill with a companion House package adopted in December on a 223-202 vote, with 27 Democrats joining unanimous Republican opposition. The outlines of the two bills are largely the same. But there are more than a dozen notable differences that will need to be reconciled during negotiations that are expected to start within days. Despite the differences, the Senate passage virtually ensures that some type of financial regulatory reform will be finalized by this summer.

Diana Olick – US Housing Prices to Rise Slightly in 2010: Poll

“U.S. house prices will manage a small gain in 2010 after the worst crash since the Great Depression but gains in coming years are likely to come slowly, a Reuters poll found. Home sales and prices may retreat in the near-term after government tax credits to homebuyers as large as $8,000 ended on April 30, economists and property market analysts said.  But that trend will be countered by historically low mortgage rates and the fact that housing affordability is now near the best it has ever been, likely putting prices back on a slow upward path.

Three-quarters of the economists polled May 14-19 said it was possible that average house prices would return to where they were in 2006 before the crash — which would require a rise of more than 40 percent — but that it would take a long time. Home prices as measured by the Standard & Poor’s/Case-Shiller 20-city index should rise 1.4 percent this year and 3 percent next year, breaking three years of sharp declines, according to the median forecast.  “The recovery is likely to be longer and more arduous than many expect,” said John Silvia, economist at Wells Fargo. The homebuyer credit, which the government expanded and broadened to include repeat as well as first-time buyers, stole many future sales as buyers rushed to lock in deals before the April 30 deadline.

Buyers put away their checkbooks in the first weeks after the credits of $6,500 for repeat buyers and $8,000 for first-time purchasers expired. But there are reasons to be optimistic. Most economists say the recovery now can be sustained without government help and that home prices are fairly valued. But banks still need to put the record supply of repossessed houses on the market, which will keep prices from recovering very quickly. “A toxic combination of weak demand and high supply will generate a double-dip in prices now  that the tax credit has expired,” said Paul Dales, U.S. economist at Capital Economics, who expects a 4 percent fall in prices next year.”

What’s in the Wall Street Bill

The Senate’s final version of Wall Street reform runs close to 1,600 pages. It takes a broad swipe at the rules that govern the financial sector. It aims to prevent future financial crises. It establishes a new consumer regulatory agency. It throws down new rules on complex financial products and creates a new way for the government to take over failing financial firms. The bill, which the Senate passed Thursday night, must now be reconciled with a similar measure the House approved last December. Here’s a breakdown of key measures in the Senate legislation. Among others, the bill creates a new process for unwinding big financial firms. Banks would be taxed to pay for unwinding banks after a collapse. Also, the Federal Reserve would be able to make emergency loans only to banks that are otherwise healthy and just need credit to get by. The bill gives regulators strengthened powers to break up financial companies that have grown too big and threaten to destabilize the financial system.

According to the bill, an independent Consumer Financial Protection Bureau housed inside the Federal Reserve will be established. Bank fees fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It attempts to control complex financial products called derivatives that many blame for bringing down American International Group and Lehman Brothers. It supposedly limits the size and scope of banks’ investment activities, barring banks from trading on their own accounts, though it gives regulators the power to modify the ban. Banks are also prevented from trading derivatives, even for their clients’ accounts. Banks would be forced to spin off their swaps desks that make these trades. Now Congress is allowed to order a one-time Government Accountability Office review of Fed activities, including loans made during the financial crisis.

With this, the President gets new powers to appoint the head of the New York Fed. Currently, banking sector leaders play a big role in choosing who runs the New York Fed. Shareholders get to have a say in curbing executive pay packages, and makes it easier for investors to have a say in choosing who is on the ballot to run for the board of a publicly-traded company. It also adds that agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would appoint a panel to figure out how to independently match ratings agencies with firms that need securities rated. Now ‘liar loans’ get banned as lenders would have to document a borrower’s income before originating a mortgage and verify a borrower’s ability to repay the loan. The bill also forces ’skin in the game,’ by forcing firms that sell mortgage-backed securities to keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk.

DSNews.com – Survey: 59% of Borrowers Would Not Walk Away if Underwater

A survey released Thursday by Trulia.com and RealtyTrac shows that only 1 percent of homeowners with a mortgage say walking away would be their first choice if they were unable to make their payments. If their mortgage were to go underwater – meaning the property value drops below the amount still owed on the loan – 41 percent would at least consider a strategic default, while 59 percent would not consider walking away no matter how much their mortgage was underwater. Pete Flint, Trulia’s co-founder and CEO, says the new survey results show that,

“While it may not make the most sense to keep paying for this undervalued asset, many homeowners, at least for now, are holding on.”

He says only 5 percent of those surveyed say they would opt for a short sale as their first choice, while 69 percent would pursue a loan modification to save their home. The study conducted by the two California-based companies also found that while the stigma around owning a foreclosure has subsided, interest in purchasing a foreclosure is significantly down compared to a year ago. Currently, 45 percent of U.S. adults age 18 and above are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to 55 percent this time last year, the survey results showed. “For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes,” said Flint. “It now seems clear that government programs will not reach the overwhelming majority of homeowners in trouble,” leading to a larger number of foreclosed homes on the market, he explained. “We anticipate that there will be an increased number of both REO purchases and short sales throughout the rest of the year as the most active buying segments – first-time homebuyers and investors – continue to look for bargains,” said said Rick Sharga, SVP for RealtyTrac.

NAR Offers Congress Ideas to Strengthen a Successful VA Home Loan Program

The National Association of Realtors® offered some suggestions to Congress today toward making a good Veterans Affairs Home Loan Guaranty Program even better.  Testifying before the House Subcommittee on Economic Opportunity, NAR First Vice President Moe Veissi, broker-owner of Veissi & Associates Inc., Miami, praised the VA program that encourages private lenders to offer favorable home loan terms to qualified veterans. “The program is most effective when it provides veterans who are unable to qualify for a conventional loan with favorable loan terms,” Veissi said. “VA’s strong, yet flexible, underwriting helps veterans purchase a home of their own without depleting their savings.” 

To date, VA has guaranteed almost 19 million loans to American veterans, with a total value of more than $1 trillion in guaranteed loans. Eighty percent of veterans are homeowners, which is significantly higher than the national average at 67.2 percent. More than 90 percent of VA home loan borrowers have used the zero-downpayment option, Veissi said.  “And their track record is fantastic – the default rate and delinquency rate for VA loans are far better than subprime, better than FHA, and even better than prime. Despite all the talk these days of ‘skin in the game,’ this program shows that solid underwriting is the key to sustainable homeownership,” Veissi said. He also noted that the VA has never guaranteed subprime loans. As a result of the subcommittee’s work and the passage of the Veterans’ Benefits Improvement Act of 2009, veterans have been able to refinance their distressed non-VA loans into safe, affordable VA loans.

NAR believes that VA should give borrowers the flexibility to negotiate fees as a normal part of home purchase transactions. Veissi pointed out that, while NAR supports VA efforts to limit fees paid by veterans, a high percentage of sales in his home state of Florida are foreclosures or short sales. “Since there is no seller to pay the fees,  veterans are completely shut out of this market, which often includes the most affordable homes,” he said. To step up its efforts to educate Realtors® about the program’s value, NAR partnered last year with the VA to produce “Unlocking the Future,” a VA toolkit for Realtors® and homeowners that is comprehensive and informational.

Now on to our real estate investing education section …

Friday File: 15 Minute Resolution…Finding Killer Kindle Apps for Real Estate Agents & Investors

According to Amazon.com, Kindle remains the most wished for item on the website since the original release. For those that have been searching for a reason to purchase a Kindle but can’t justify the purchase as a business write-off…here’s a bit of a good news. These killer Kindle applications combined with the cost effective purchase of business books and syndicated news make the newest Kindle a “must have” gadget well within your price range.

Best Business Books on Kindle

Kindle makes ordering business books simple; one quick click and the newest release is instantly ordered and loaded…usually for $9.99 or less. Older books, public domain, classics and limited-time promotions are often free making the Kindle a great way to go green and save money at the same time. Currently the top three real estate investing books on Amazon include:

Investing in Real Estate by Gary W. Eldred

Rich Dad’s Advisors-: The ABC’s of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss by Ken McElroy

The Complete Guide to Investing in Real Estate Tax Liens & Deeds: How to Earn High Rates of Return – Safely by Jamaine Burrell

Most Heavily Highlighted

Ever wonder what really makes an impact on people while they are reading? Searching for emerging trends to capture attention? Now you can find out with this great little tool. Simply click on the following link to find out what books are grabbing attention with the most highlighted passages:

http://kindle.amazon.com/popular_highlights/books

For those that are curious, this week’s most heavily highlighted books include:

Switch: How to Change Things When Change Is Hard by Chip Heath, Dan Heath

The 4-Hour Workweek, Expanded and Updated: Expanded and Updated,

With Over 100 New Pages of Cutting-Edge Content by Timothy Ferriss

Rather know the actual passages rather than the book? Visit

http://kindle.amazon.com/popular_highlights/highlights

This week’s passages include: 

…the more money they made the next day on the streets. Those three things—autonomy, complexity, and a connection between effort and reward—are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make that ultimately makes us happy between nine and five. It’s whether our work fulfills us.

Outliers: The Story of Success by Malcolm Gladwell

No matter what the setting, there are five discrete stages that we go through as we deal with our work. We (1) collect things that command our attention; (2) process what they mean and what to do about them; and (3) organize the results, which we (4) review as options for what we choose to (5) do. This constitutes the management of the “horizontal” aspect of our lives—incorporating everything that has our attention at any time.

Getting Things Done by David Allen

See you at the top!

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

 

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

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

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

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

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Sorry -  You Thought Wrong…”

 

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low-ball price with the bank, and sells them to investors

without you doing anything more than signing the papers.

 

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Big cities buck the foreclosure trend, for now

A few of the country’s worst-hit spots in the first three months of 2010 have shown decline in foreclosure filings, but it is still a long way before healing happens.  Foreclosure filings declined in 14 of the top 20 cities year-over-year, most of which are concentrated in the Sunbelt “bubble” states of California, Arizona, Florida and Nevada. But the improvement during the first quarter, compared with 12 months earlier, may have been a statistical glitch, not evidence of a real trend. Plus, those improvements bucked the market’s general trend: Nationwide foreclosures rose 16% during the quarter. Much of the improvement may be attributed to government-led foreclosure prevention programs, especially a new program encouraging banks to facilitate short sales. Banks have figured out that short sales are less costly to them than foreclosures because they save on a long list of expenses, including legal fees, taxes and maintenance, and brokers’ commissions.

Las Vegas has been the hardest hit market, which had one foreclosure filing for every 28 households during the quarter, roughly five times the national average of one filing for every 128. Modesto, Calif., was the second hardest hit metro area, with a rate of one filing for every 34 homes, down more than 13% year-over-year. Cape Coral, Fla., was third, with one in 35, down 26% year-over year. Tied for fourth at one for every 36 homes were Riverside, Calif., (down 19%) and Stockton, Calif., (down 25%). Miami had the steepest year-over-year increase for any top 20 market. There were over 71% more filings during the first quarter of 2010 than it recorded during the same quarter in 2009. 

Senate Ends Financial-Bill Standoff

Lawmakers ended the three-day standoff holding up action on the financial-overhaul bill, leading to a new government authority to wind down failing financial firms. Democrats, in a concession, agreed to kill a proposed $50 billion fund to break up large, failing financial companies. The move gave Republicans an opening to end their opposition to moving the legislation. But in other areas, notably derivatives regulation—which will be debated Thursday—and consumer protection, the sides remain divided. Administration officials and lawmakers of both parties were already turning their attention to the coming floor debate, especially a series of populist amendments that could be difficult to defeat. 

Lawmakers from both parties have said the government needed new powers to avoid a repeat of the 2008 financial crisis, when regulators allowed Lehman Brothers to fall into a messy bankruptcy, bailed out American International Group Inc. and then asked Congress to approve a $700 billion rescue package. But there has been disagreement about how best to create a new regimen for breaking up failed companies that averts chaos in the market, and that doesn’t put taxpayers on the hook or suggest that the government will come to the aid of creditors and investors.  Other key parts of the Dodd-Shelby agreement would make it harder for top executives at failed financial firms to claim large compensation packages. It would restrict the ability of the Fed and Federal Deposit Insurance Corp. to act independently in an emergency. And it would give the government power to limit payments for certain creditors of failed firms.

More Mid-Size Banks Facing Closure

Ailing mid-size banks face closure as souring commercial real estate loans are taking a disproportionate bite into their balance sheets.   Last week, regulators shut down seven more banks in Illinois, three in Florida and two in California.  The total cost to the Federal Deposit Insurance Corp. Deposit Insurance Fund (DIF): $974m. According to the analytics firm, Trepp, the latest moves by the FDIC indicate the agency is focusing its resources toward one problematic region at a time.  According to Trepp partner, Foresight Analytics, the next region of interest could be Puerto Rico, where seven banks made it to the watch list. Through Q110, more than 2,100 banks reported quarterly financial reports, and 14 of them are considered undercapitalized, significantly undercapitalized or even critically undercapitalized. The common malady of each troubled balance sheet is toxic commercial loans.  According to Trepp, these loans account for an average of 51% of the banks’ non-performing assets – a disproportionately high percentage. 

More bank closings could be on the way. Failures in 2009 reached 140, an increase of almost 500% from 2008, according to research from Grant Thornton. At the end of 2009, the FDIC “Problem List” had grown to 702 insured institutions.  Trepp had earlier reported that problematic commercial loans spreading through commercial mortgage-backed securities (CMBS) would plague small and mid-sized banks more than the larger ones. The firm forecasts 200 of these banks will fail in 2010.

Diana Olick – Home Buyer Credits Live Past Friday

“Fannie Mae announced this week that it would extend its 3.5% seller assistance on its REO properties (foreclosures) to June 30, 2010.  It was originally supposed to expire May 1. “We are happy with the results of the program, which has helped us to sell properties quickly, thereby stabilizing neighborhoods and property values,” said Terry Edwards, Executive Vice President of Credit Portfolio Management. This program gives buyers back 3.5% of the final sales price to be used toward closing cost assistance or their choice of selected appliances.  Obviously it’s been helping Fannie unload its large load of foreclosures.  No surprise that with the home buyer tax credit expiring and foreclosures rising, Fannie would choose to extend a program that’s working like this.  Of course, remember, Fannie Mae (along with sister Freddie Mac) is under government conservatorship and is being fueled by billions of taxpayer dollars, so this program is nothing short of another government housing bailout.

DSNews.com – FHA’s Delinquency Rate Falls Below 9%

According to FHA’s March operations report, loans that are 90 days of more past due dropped to 8.8 percent at the end of last month – down from 9.2 percent in February.  The March rate equates to 536,858 mortgages in arrears. In February, the agency counted 553,929 mortgages that were in seriously delinquent status.  While the short-term improvement is notable considering delinquencies industry-wide are still climbing, FHA’s past due loans last month are still 1.7 points higher than the 7.7 percent delinquency rate recorded by the federal insurer in March 2009.  So far this fiscal year, FHA has paid 129,503 claims — 75,466 of which were loss mitigation retention claims, and 47,458 were claims for property conveyances.  Buyer demand for government-backed mortgages has yet to wane.

FHA said its annual application rate jumped 18.3 percent in March. The agency attributed the surge to prospective mortgagors racing to beat the planned increase in FHA’s upfront mortgage insurance premium – from 1.75 to 2.25 percent – which took effect April 5.  FHA received a total of 246,406 applications in March, up from 165,239 the previous month. This included 163,467 purchase cases, 75,541 refinances, and 7,398 reverse mortgages. Fifty-four of the refinance applications submitted to the federal agency were Hope for Homeowners (H4H) cases.  During the month of March, FHA insured 132,301 single-family mortgages for $24.1 billion, bringing the federal insurer’s total mortgages in force to 6,114,452 with a scheduled aggregate outstanding balance of $805.6 billion.

Now on to our real estate investing education section …

Google’s Sandbox & Trustrank – Online Lesson #4

This week we have focused on what it takes to get started with Google; as the leading search engine, Google is one of the most revolutionary tools used by real estate agents and short sale investors alike. Unfortunately, learning how to navigate the rapid changes required to obtain top ratings isn’t always as simple as it seems…especially for brand new websites.

It’s common knowledge among internet marketing experts that Google treats new sites very differently than older, more established websites.

This is due to the Sandbox and Trustrank protocols.

Sandbox or Sandbag?

The Google sandbox is a generic term used to describe the way Google treats new websites…some would claim a better description is “sandbag” rather than “sandbox”. Either way, it’s a slow path to nowhere for unaware newbies. Because Google wants to see quality content, organic yet steady growth and reliable marketing efforts, it tends to institute a type of “probationary” setting for new websites. Once established for 3 to 6 months, websites will begin to be indexed more frequently, resulting in faster growth. However, that doesn’t mean you can help “jump start” the efforts or overcome the Google Sandbox effect….

1. Buy an older domain name instead of a new one. The “waiting period” will be over and marketing efforts will be better received by Google.

2. Utilize PPC or Pay-per-click advertising during the initial growth stage. Don’t over-rely on this measure, instead use it judiciously while building traffic and links elsewhere.

3. Optimize your website and build links…slowly. Google doesn’t like to see large bursts of link activity that could indicate a less than desirable link relationship.

Trustrank

One method used by Google to enhance position is to achieve a higher trustrank rating. Although there are several criteria used to enhance positioning, some of the most important considerations include:

Domain age and length of domain name

Frequency of updates

Sitemap and security settings

Number of links and page rank of the websites that link to you

Absence of spam and/or linking lists

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

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

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

About the author:

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

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

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

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

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

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

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

Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches
http://www.smartrealestatenews.com (subscribe to this newsletter)
*************************************************
Finally, a blog for Real Estate professionals that want up-to-the-minute news, & how it impacts us and our market…
http://www.shortsalesriches.com/blog
*************************************************
About the author:
Chris McLaughlin is widely known as America’s top Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties

* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
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
–
Loss Mitigation Training Institute LLC
206 E. Pine Street
Lakeland, FL
33801
US