mortgage applications

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Push Button Deals: How to Partner with a Proven Investor

On this webinar we’ll show you the following:

#1: You will be set-up with 30 different and unique strategies
that bring deal leads to you every single day.

#2: Once this information is gathered, you “push a button”
(click your mouse) and all this information is instantly sent
to our buddy Phill who has done over 1,200 deals!

#3: Once Phill’s office receives this information, he and his
team get to work on the deal and when it’s completed, the
two of you split it and you’ll receive a check for 50% of the
profits!!!

#4: Repeat.

You gotta see this to believe it …and we’re holding a FINAL ENCORE tomorrow (Saturday):

When: Saturday, March 20th at 3:00 PM ET, NOON PST:
https://www2.gotomeeting.com/register/179556515

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

Olick – Private Loan Mods Outnumbering Government Mods

Diana Olick notes that The Hope Now Alliance, “the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors,” says “99,499 homeowners received proprietary loan modifications for the month. Combined with the United States Treasury’s recently released Home Affordable Modification Program (HAMP) data that showed 50,364 HAMP modifications for January, the total number of loan modifications is almost 150,000 for the month.  Most significant in the data is the fact that 74% of proprietary loan modifications done in January involved reductions of principal and interest payments – more than 73,000 loans. Also, it should be noted that proprietary non-HAMP solutions outnumbered HAMP modifications almost two to one; further proof that the industry is looking at a breadth of solutions designed to keep families in their homes.“  Olick notes that proprietary loan modifications are those done outside of the government’s $75 billion Home Affordable Modification Program, and that those mods are being done at a rate of twice the HAMP mods. 

According to Faith Schwartz, Executive Director of the Hope Now Alliance, the reason is this:  “We know approximately 25% of foreclosures (on paper documented) are investor properties—Also note, for many loans, the occupancy may have become the issue, even if originally owner occupied. So, on paper they look like occupied but addresses are different and they no longer live there. So that would also translate to mods that fall outside of the Government programs—jumbo’s, and then of course, the many mods that do not document properly to get government assistance. That is a big number.  I think we need to pay more attention to the fact that all the non-HAMP mods are NOT government subsidized, and that is also a good thing.”  What?  You mean we wasted $75 Billion on a program we didn’t need?

Merrill Lynch Warned Regulators About Lehman

It turns out that Securities and Exchange Commission and Federal Reserve officials were warned that Lehman Brothers was incorrectly calculating a key measure of its financial health months before its collapse in 2008.  Former Merrill Lynch officials said they contacted regulators about the way Lehman measured its liquidity position for competitive reasons.  The Merrill officials said they were coming under pressure from their trading partners and investors, who feared that Merrill was less ­liquid than Lehman.  Anton Valukas, the Lehman bankruptcy court examiner, found that Lehman had used questionable financing tools to flatter its balance sheet before its September 2008 collapse.  “We started getting calls from our counterparties and investors in our debt. Since we didn’t believe the Lehman numbers and thought their calculations were aggressive, we called the regulators,” says one former Merrill banker, now at another big bank.   In response, Merrill debated changing the way it calculated its liquidity. “Lehman was telling the world that it had excess liquidity and we knew they couldn’t be better than we were,” one said.  The SEC declined to comment beyond saying that the senior people at the unit that oversaw Lehman had left the regulator.

DSNews.com – Fannie Mae Introduces Alternative HAMP Modification

In February, the number of mods in the permanent column increased 45% compared to January. But the bitter truth is that some homeowners won’t qualify for long-term relief even after successfully making their trial payments – whether it’s because of insufficient documentation during the final application process or because once income is verified, their debt-to-income ratio pushes them out of the qualifying bracket.  To offer these homeowners another option, Fannie Mae is instituting the “Alternative Modification” (Alt Mod) and requiring all its servicers to evaluate a borrower for the new solution before proceeding with foreclosure.   In a letter to lenders Thursday, Fannie explained that the Alt Mod is “an alternative to the HAMP modification for those borrowers who were eligible for and accepted into a HAMP trial period plan but were subsequently not offered a permanent HAMP modification because of eligibility restrictions.”

For mortgage loans in active HAMP trials initiated prior to March 1, 2010, all Fannie Mae-approved servicers must consider the Alt Mod prior to the initiation of foreclosure for all eligible borrowers who were not offered a permanent HAMP modification after making all required trial payments.  In addition to HAMP evaluation and fulfillment of trial payments, one of the following is required for eligibility:

- The monthly mortgage payment ratio based on verified income was less than 31%.

- The target monthly mortgage payment ratio of 31% based on verified income could not be reached using the standard HAMP modification waterfall.

- The borrower failed to provide all income documentation required for a HAMP modification but meets the streamlined income documentation requirements outlined by Fannie.

Auto sale forecasts up

Helped by higher customer incentives, sales by Ford, Nissan, and even Toyota showed dramatic increases in the month’s first two weeks compared with the same period a year ago, said dealers and industry analysts.  J.D. Power & Associates, an auto-research firm, is now forecasting March U.S. sales will reach an annualized pace of 12 million cars and light trucks, the highest level the industry has seen in 18 months except for last August, when “cash for clunkers” rebates spurred sales.  “Buyers are starting to feel better,” said Jeff Schuster, J.D. Power’s director of forecasting. “While the incentives helped this month, we are looking for strong sales to continue throughout the year as access to credit and leasing continue to grow.”  J.D. Power expects U.S. sales to reach 11.7 million vehicles. It had previously forecast 11.5 million. In contrast, annual sales exceeded 16 million before the recession.  In Albany, N.Y., Don Metzner, president of Armory Automotive, which owns Chrysler and Nissan franchises, said he can sense demand is picking up.   “The stock market is going up, the good weather especially in the Northeast has been a psychological boost and people seem more cautiously optimistic instead of pessimistic,” he said.  Rob Gatchell, sales manager at Brighton Honda in Michigan, said he has seen an increase in activity on his lot and that more people are choosing to purchase rather than lease.

Projected 2010 Mortgage Originations down

Fannie Mae cut its projection for 2010 mortgage originations for the second month after new and existing home sales dipped sharply in January.  Fannie said in the March outlook report that the housing setback, although temporary, underscores the fragile recovery seen so far in the economy.  The housing market should rebound later in the year, the outlook states, but at a lower rate than previously projected.   Doug Duncan and Orawin Velz of Fannie’s economics and mortgage market analysis group reduced their projection for purchase-only mortgage volume “somewhat” to $716 billion on lower projected home sales. They estimate total mortgage originations for 2010 to come in at $1.31trn, down from $1.97trn in 2009, with a refinance share of 44%.  The overall origination projection was slashed again from $1.34 trillion in February’s outlook report, which also lowered the projection from $1.35 trillion in January. The March projection is now below the $1.32 trillion level estimated in December 2009.  “Unfortunately, despite the high hopes associated with the extended and expanded homebuyer tax credit, housing activity appears to have faced a setback that went beyond the impact of adverse weather conditions,” Duncan and Velz wrote in the March report. “Continued recovery in housing is the key to a durable economic recovery, and a renewed decline in activity adds downside risks to that outlook.”

Now on to our real estate investing educational section…

Friday File – 15 Minute Resolution

Today’s 15 minute short sale resolution concerns how to eliminate distractions and avoid the most common causes of Twitter failure. Use this helpful checklist to take inventory of what needs work…remember, anything on this list is a sure sign you need professional help with a Twitter account.

1. Using the standard provided background. Not only does it show you don’t care but also that you lack creativity and imagination….not a strong sign for buyers  or sellers.

2. Lack of Updates. Don’t expect people to follow you with zero updates. Closely related is protecting updates: People want proof that it is worth their time before signing up…show them what they can expect by doing business with you.

3. Stale News or Repeat Information. Provide Relevant Information. People are searching for timely tips and relevant information…not just news they can get from anywhere else. In the same vein, don’t repeat the same information – it quickly becomes annoying. Keep it fresh and meaningful.

4. Dead Links. Test links before sending them out! It might sound like common sense but sooner or later it will happen. Try to keep it to a minimum by testing one last time before sending out the news.

5. Obscure or Irrelevant Descriptions. Make it memorable but keep it professional.

6. No Photos. Like the saying, a picture is worth a thousand words. Make it visually interesting.

7. Failure to Connect. Ask questions. Answer question. Get connected! That is the entire idea behind social media marketing so start working it.

8. Auto Responding Overload. By now everyone is beginning to equate auto responders with “old school” marketing; you know the ones, impersonal pleas for your attention (and pocketbook). Keep it real and learn to use auto-responders prudently for the best success.

9. Failure to Find out Who is Following You! It’s essential to understand who is actually following you on Twitter and who is simply sending spam or beaming down via bots. It’s easy to un-follow someone (but use this application wisely) once you have property identified non-reciprocating tweeps.

10. Monitor Results. Every marketing tool should be monitored for results – including social media sites like Twitter. Find out what works and what doesn’t. Better yet, learn from others who have already tested and tried out a system that yields proven results.

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

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

Integrate the 4 Hour Workweek into Your Real Estate Business:

How to make a 6-figure income working less than 60-minutes a day

How NOT to do the things you don’t like in your business (like making phone calls to sellers, buyers, Realtors, etc.)

How to do ONLY the things you like and are good at so you become more profitable

How to find $2 per hour virtual assistants who do a bang-up job than most $20 per hour “professionals”

Join us TONIGHT at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/569093555

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

Mortgage applications continue to rise

According to the Mortgage Bankers Association (MBA), its seasonally adjusted index of mortgage applications – which includes both purchase and refinance loans – rose 0.5% for the week ended March 5. The rate on 30-year fixed-rate mortgages, excluding fees, rose 0.06% from the previous week to an average of 5.01%. Analysts expect mortgage rates to rise as the Federal Reserve stops buying mortgage securities end March. “The Fed will likely take a step back to see if the private sector steps up and starts purchasing the bonds,” said Bill Emerson, CEO of Quicken Loans. “If they do not, mortgage rates could move significantly higher.” Home prices may not rise significantly any time soon given the inventory overhang in the market. Emerson said the housing “inventory will pressure prices, so, many people are sidelined right now, waiting for prices to fall further.” The MBA’s seasonally adjusted index of refinancing applications decreased 1.5% last week. The refinance share of mortgage activity dropped 67.2% from 69.1% the previous week. The fixed 15-year mortgage rate averaged 4.32%, up from 4.27% the previous week.

Foreclosures rise 6%, the smallest annual increase in 4 years

According to data released by RealtyTrac, foreclosures increased 6% from the year-ago level in February; this is the smallest annual increase in 4 years. Over 308,000 households with loans received a foreclosure filing in February; this was a drop of over 2% from January. Analysts say the drop in foreclosure rate does not necessarily mean that homeowners are seeing any better times. “This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity,” said James J. Saccacio, RealtyTrac Chief Executive Officer. Nevada saw the highest foreclosure rate in February with 1 in 102 households receiving a filing. Nevada was followed by Arizona, Florida, California and Michigan. Can we expect to see a further drop in foreclosure in the coming months? “It’s premature to declare victory just yet,” said Rick Sharga, a senior vice president for RealtyTrac.

Borrowers unable to refinance at lower rates

Credit Suisse, an investment bank, says about 37% of all borrowers with 30-year fixed rate mortgages pay 6% or higher on their mortgage. The mortgage rates are currently at 5%. If only the borrowers can refinance their mortgage, they would save 0.50% to 0.75% on their mortgage cost. Given the outstanding loan amount of $1.2 trillion on mortgages with rates of 6% or more, the potential savings run into billions of dollars. “Traditionally, these borrowers would be aggressively refinancing,” said Mahesh Swaminathan, senior mortgage strategist at Credit Suisse. But given the negative home equity (over 25% of mortgage holders are currently “underwater”) prevailing in the housing market, tightening of lending norms by banks, unemployment and declining incomes, homeowners are unable to take advantage of the fall in mortgage rates. Some analysts say hike in loan fees imposed by Fannie Mae and Freddie Mac after delinquencies rose has also deterred homeowners from going for refinancing. Alan Boyce, a mortgage-securities-market expert, says loan fees are partly “responsible for why there’s been no refi boom.”

Unemployment hits a record high in some states

The Labor Department says the jobless rate hit a record high in five states —California (12.5%), South Carolina (12.6%), Florida (11.9%), Georgia (10.4%) and North Carolina (11.1%) – in January. All told, 30 states and the District of Columbia saw a rise in jobless rate in January over the previous month. Nine states reported a decrease and 11 states had no change in unemployment. In January, fewer states showed an increase in unemployment rate compared to December, when 43 states showed an increase in jobless rates. “It shows that the labor market is virtually frozen,” said Nick Colas, chief market strategist at the ConvergEx Group. Colas said that “there has not been any dramatic change in these past six weeks.” The states with the highest jobless rate were Michigan (14.3%), Nevada (13%), Rhode Island (12.7%), South Carolina (12.6%) and California (12.5%). North Dakota had the lowest jobless rate at 4.2%, followed by Nebraska (4.6%) and South Dakota (4.8%). States which have a high industrial activity seem to be benefiting from a rebound in overseas demand. The “most stable economies are those more exposed to manufacturing,” said Steven Cochrane, director of regional economics at Moody’s Economy.com. “This is a recovery that’s really kind of concentrated.”

TARP watchdog finds fault with GMAC bailout

The Congressional Oversight Panel for the Troubled Asset Relief Program has questioned the Bush administration’s decision to rescue GMAC, the auto and home lender, in December 2008. The panel said GMAC received significant bailout money from the government though it was “a company that apparently posed no systemic risk to the financial system, that did not seem to be too big to fail, too interconnected to fail, or indeed, of any systemic significance.” The government now owns about 56.3% stake in GMAC and analysts estimate that the company may never repay $6.3 billion the company received as part of the bailout package. The panel also said that the Treasury Department treated GMAC with lot more lenience than it did General Motors and Chrysler. The panel said that “half-hearted attempts at saving an institution from insolvency that lack coordination among regulators” might be more costly than a full bailout or bankruptcy. The Treasury has defended its decision to rescue GMAC, saying it was “the least costly and least disruptive of all the options available.

Now on to our real estate investing educational section…

Fiscal Survival of the Fittest

Survival of the fittest applies to economics as well as biology – in fact, some would argue the concept is better applied to the financial arena than any other area of study. Unfortunately, it’s a fact few Americans want to face head on…it goes against the steady diet of “American ingenuity” and the (false) belief that any child born in the good old USA can grow up to be anything they want. While there are exceptions to every rule, survival of the fittest is an economic trend currently undergoing the equivalent of an ice-age extinction as one era gives rise to an entirely new one. Research by consulting firm McKinsey found a few unsettling statistics that demonstrate the depth of the problem:

Over 70 percent of currently employed Americans work in jobs for which there is low or declining demand. This includes both blue collar and white collar. Competition for jobs that cannot be shipped overseas (healthcare for example) has created high competition which is driving down wages and promoting part-time, per diem and other “job sharing” situations.

Mainstream stores are doing double-takes as consumers shift spending habits. Not only are brick and mortar stores under heavy competition from online retailers like Amazon but the bleak economy is finally taking a toll. Violating one of the core marketing principles ‘never undercut your own product’, heavy weight’s ranging from Proctor & Gamble to Macy’s are rolling out discount versions of their more expensive popular items. Cost of Tide got you down? Don’t worry, you can now buy Tide Basic…a discount version. Research shows 1/2 of Americans have already reduced spending and 1/3 plan to do so permanently with 18 percent of consumer switching from name brands to generics in the past two years alone.

So, how are Americans spending their money both today and into the near future?

1. Nearly 34 percent of the average household income goes toward housing. Expect this trend to continue as people downsize into affordable housing options.

2. Just over 19 percent goes toward entertainment and/or miscellaneous items…however, as a discretionary item this is subject to volatility.

3. Roughly 17 percent goes toward transportation – a number experts expect to hold steady as people opt for more affordable options.

4. Just under 13 percent goes toward food; a necessity to be sure but one that is subject to “replacement” purchases as people opt for hamburger instead of steak during tough times.

5. Approximately 11 percent on retirement and personal insurance.

6. Nearly 6 percent on healthcare.

Even a precursory look at where Americans spend their money tells the average investor where to spend theirs…housing, entertainment, transportation, food, financial products and healthcare. Those are the big six that run the American economy. Now stop and consider which are available to the average “little guy” investor…stocks and bonds for healthcare, insurance and finance have been decimated in recent years. The auto industry? Please! Now that’s it’s been nationalized you can count on the same efficiency that brought you the driver license office to run the auto industry. Food is notoriously volatile and forget direct intervention unless you have an unusual level of gardening know how. No, the answer remains the same today as it did 100 years ago…real estate. It’s not easily outsourced, it’s not subject to the market manipulations of stocks and bonds nor is it entirely dependent upon your ability to work yourself into an early grave. It simply requires a willingness to adapt to the new economic environment like all other species that learn to thrive or barely survive.

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’re not allowed to release her name. Because she used to

work for the enemy.  And she knows all their dirty little

tricks.  Just call her the Short Sale Sensei…

 

This gal used to be well respected by banks.  She processed

nearly 10,000 short sales for lenders too big to name here.

 

She was one of them.  She attended their office parties.

She’s sat down to dinner beside them.  Socialized and went

to sporting events with them.

 

If there’s a tactic or strategy the bank’s kept hidden from

investors, she knows it.

 

And she’s ready to spill the beans in an ENCORE TODAY,

Thursday, at 3 PM ET, NOON PST, on a fr-ee webinar, right here:

 

https://www1.gotomeeting.com/register/815788648

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

Mortgage applications rise as interest rates fall

According to the Mortgage Bankers Association (MBA), its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, rose 14.6% for the week ended February 26, from the earlier week. The Refinance Index rose 17.2% from the previous week while the seasonally adjusted Purchase Index increased 9.0% from one week earlier. The increase was due to a drop in loan rates — the rate on 30-year fixed-rate mortgages dropped to 4.95%. “Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent,” said Michael Fratantoni, vice president of research and economics at MBA. “Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.” Analysts say the surge in mortgage applications is not an indication of long-term recovery, given the current levels of foreclosure and unemployment. “We are seeing positive signs of some form of life, but it is not significant and the recuperation period is going to be significant because these are dramatic declines” in housing, said Vickie Lester, president of mortgage servicing at RoundPoint Financial Group.

Home prices rise 5%

Clear Capital, a provider of real estate data, says home prices climbed 5% nationally in February from a year ago. The prices grew 2.3% in January on an annual basis. Among metropolitan areas, Providence, Rhode Island saw the highest rise of 6.1% from the earlier quarter. California had 5 of the 15 highest performing markets. The rise in prices is likely to be sustained as the tax credit deadline approaches in April. “If the increase in demand that preceded the end of the last tax credit is any indication, home prices may dip only slightly into negative territory before getting an added boost before the April tax credit deadline,” said Alex Villacorta, senior statistician at Clear Capital. The firm has expressed optimism despite the likely impact of REOs – properties that go back to the mortgage company after an unsuccessful foreclosure auction – on home prices in the coming months. “Although many markets have seen a slow down in price gains, I’m encouraged that prices have remained positive through the first two months of the year despite all the negative economic news and threat of more REOs hitting the markets,” Villacorta said.

Hovnanian returns to profitability

Hovnanian Enterprises, a real estate development company, posted a profit of $236.2 million for the quarter ended January 31, compared with a year-earlier loss of $178.4 million. The result includes a $5 million write-down on land and other items, compared with $132 million in write-downs a year earlier. This is the first quarterly profit since 2006. Hovnanian operates in 18 states, including California, Arizona and Florida, the worst-hit states. The company’s net contracts, excluding unconsolidated joint ventures, decreased 5% while the average price grew 14%.

The company’s contract backlog as of January 31 was 1,593 homes, down 4%, with a value of $505.4 million. The cancellation rate dropped to 21% from 31%; this was the company’s lowest cancellation rate since the second quarter of 2005. Ara Hovnanian, Chief Executive of Hovnanian, sounded cautiously optimistic about the company’s prospects for the near-term. “We are pleased to see the market for new land deals begin to thaw out a bit and we continue to diligently pursue new land opportunities where we can make normalized returns based on today’s home prices and sales absorption levels,” said Hovnanian. “I’m not trying to brush off concerns in the marketplace. There are risks, and the risks are real.”

Service sector’s best performance since December 2007

The Institute for Supply Management (ISM) said its index tracking the service sector rose to 53.0 in February from a reading of 50.5 in January. This is above the estimate of 51.0 made by economists. A reading above 50 indicates economic expansion while a reading below 50 denotes contraction. The February reading is the highest since December 2007. The services sector accounts for about 70% of America’s economic activity. “We’re starting to see a broadening of the economic recovery,” said Richard DeKaser, chief economist at Woodley Park Research. The data “are encouraging, to say the least.” Dean Maki, chief U.S. economist at Barclays Capital, said: “Spending by consumers and businesses is growing again, though not at the pace prior to the financial crisis. Generating service-sector employment is quite critical to the broader economy.” Unemployment is the biggest concern. Given the current unemployment level, it may take years and not months for the sector to recover in a sustained manner. “Business feels better, there is no question about it,” said Macy’s Chairman and Chief Executive Officer Terry J. Lundgren. “We still have high unemployment, and I still see tight credit on consumers.” Nine industries, including information technology, arts, transportation and retailing, saw growth in February while 8 industries saw a fall in output.

Planned layoffs drop in February

According to a report released by Challenger, Gray & Christmas, a consultancy, planned job cuts announced by U.S. employers dropped 41% to 42,090 in February, from the 71,482 layoffs recorded in the previous month; this presents a 77% drop from 186,350, a year earlier. The report states that job-cut total in February is the smallest since July 2006. Analysts believe it will take some time before hiring starts to grow. John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said: “Employers have shifted away from downsizing and are poised to start adding workers. It may be a couple of more months before hiring begins to surge.” Pharmaceutical companies, with 17,687 announced cuts, and government and non-profit agencies, with 4,628, led all industries in reductions in February. The economy is limping back from its worst downturn since the 1930s, but economists are concerned about the unemployment rate which is expected to average close to 10% this year.

Now on to our real estate investing educational section…

Whole Life Financing For Dummies

Have you been sitting on the sidelines waiting to accumulate cash to start investing in short sales? There are faster, easier and more efficient ways to raise needed funds but one that is gaining a great deal of support is the use of whole life insurance as a finance vehicle for short sale investing.

Whole life insurance is often considered a “bad buy” among traditional investment guru’s including notables such as Dave Ramsey and Suzy Ormon…indeed, for the average American struggling just to get by, any form of life insurance is often viewed as a luxury rather than necessity. However, those with the foresight plus a little time on their hands to crunch the numbers soon realize a whole life policy isn’t always a bad investment…in fact, held long-term it can be the most economically viable option. Beyond the basic death benefit, there are other very real rewards to be gained from a whole life policy including the use of low-cost financing.

Basically it works like this; once a participating whole life policy is purchased and capitalized or funded, the dividends eventually cover the cost of the policy itself. Additional paid in full riders can greatly increase the initial funding of the account to grow the cash balance to a desirable level. At this point, the policy can be borrowed against for any desired purpose…including the purchase of real estate. A contract is established that delineates the “interest rate” to be charged on the loan and the time period in which it is to be repaid.  Meanwhile, the policy continues to receive dividends based upon the complete cash value of the policy essentially creating an exceptionally low cost source of funds. In fact, the policy owner benefits in several ways since the payments (with interest) are paid directly back into the whole life account. Interest can be used as a write-off for the real estate expenses while simultaneously, excess payment amounts paid back into the whole life policy are used to purchase additional paid-in-full premiums thereby increasing the death benefit and available source of future cash value in the account.

Not only does the account continue to grow, pay dividends and collect the full payments back into the account but insurance is considered a protected asset in many states and taxes are deferred until the withdrawals exceed the amount paid into the policy. Because dividends are considered a ‘return of premium’ rather than distribution of profits, they are not subject to typical taxes.

If you own a whole life insurance policy, take time to carefully consider the feasibility of using a policy or cash value loan to dramatically enhance your individual real estate portfolio. By establishing favorable repayment terms and recapturing the interest rates into your own account, it’s possible to act like your own banker while building a strong real estate investment portfolio.

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

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Home prices fall

Home prices fell, but just 2.5% during the last three month of 2009 compared with the fourth quarter of 2008, according to the S&P/Case-Shiller Home Price Index. That was a big improvement over the past three years.  “As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now, said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “However, the rate of improvement seen during the summer of 2009 has not been sustained.”  The index did rise 1.6% on a seasonally adjusted basis during the fourth quarter compared to the previous three months, for the third consecutive quarter of increase.  S&P reports the national statistics quarterly and an index of 20 cities monthly. The 20-city index inched down in December, falling 0.2% compared with November. Only four cities showed improvement.  One of those was Las Vegas, where prices rose 0.2% — the first monthly gain for that city in three years.  The future of home prices remains difficult to forecast, though, as the market at some point will have to weather the withdrawal of government measures to boost home buying, Yale economist Robert J. Shiller told CNBC.  “This isn’t a forecast, but it’s a worry that home prices might drop substantially from here forward once this support is taken away,” Shiller said in a live interview after the report was released. “Mortgage rates will go up, the economy might double-dip, the expectations for housing which helped drive the market might change suddenly once people see this support being withdrawn.”

Jobs bill passes

The Senate voted Monday to push forward a $15 billion jobs creation bill that would give businesses a tax break for hiring the unemployed. The 4-prong bill will:  Exempt employers from Social Security payroll taxes on new hires who were unemployed; Fund highway and transit programs through 2010; Extend a tax break for business that spend money on capital investments like equipment purchases; and Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.  The final legislation is a scaled-down version of an $85 billion bipartisan draft bill that was crafted by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa.  However, the bill does not extend the deadline to apply for unemployment benefits and the COBRA health insurance subsidy. Some 1.2 million people will run out of benefits after Feb. 28 if the deadline is not extended. Lawmakers are looking to pass a separate, 15-day extension to give them time to enact a longer fix.  And unlike the House’s bill, the Senate measure does not provide additional assistance for states. Many governors, who are holding their annual meeting in Washington, want the Obama administration to send more federal dollars their way so they can cope with yawning budget gaps.  Labor leaders and left-leaning think tanks all say the Senate must do more to spur job creation – as if the Senate can fabricate jobs out of thin air somehow.

Commercial real estate prices up

US commercial real estate prices, as measured by Moody’s Investors’ Service/Real Estate Analytics, Commercial Property Price Indices (CPPI) increased for the second month in a row in December, rising 4.1%, as the commercial real estate (CRE) market continues to face several challenges, such as the rising tide of defaults and subsequent foreclosures.  Moody’s said the index’s improvement was the largest month-over-month increase in the nine-year history of the CPPI and followed a small, 1% gain in November. The volume of transactions also rose in December, typical for the end of the year, Moody’s added. In December, 716 transactions totaling $9bn were recorded in the month. At the end of December, CRE prices are down 29.2% from a year ago and 39.8% from two years ago. They are 40.8% below their peak values.  But, Moody’s said, it’s uncertain whether the recent price increases represent CRE passing the bottom of the market or are only the “volatility of a market in transition.”

Underemployment at 20%

According to a Gallup poll released today, nearly 20% of the U.S. workforce lacked adequate employment in January.  Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.  This is a big deal, because underemployed people spent 36% less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month.  Gallup surveyed more than 20,000 U.S. adults from Jan. 2 to 31. The results have a 1% point margin of error.  Gallup found that underemployed Americans were more likely to have a favorable view of Obama, with 55% approving of his performance as president against 49% of the wider public.  Hopefully this doesn’t give President Obama ideas for a campaign strategy – to put people out of work to increase his popularity.  The poll’s estimate of U.S. underemployment is higher than official statistics, and tends to paint a darker picture of the economy than official statistics. The Labor Department, for its part, disagrees with Gallup and claims only 16.5% of American workers were without employment or worked part-time for economic reasons in.  A Labor Department official said the government rate may be lower because it factors out temporary seasonal changes in employment to better reflect the underlying economy.

DSNews – Subprime securities fall in value

Heightened concerns about the valuation of subprime assets backing U.S. residential mortgage-backed securities (RMBS) has manifested in an across-the-board drop for all vintages, Fitch Solutions reported last week.  The ratings agency’s U.S. Subprime RMBS Price Index fell by just under 6 percent month on month to 7.17 as of February 1, down from 7.62 as of January 1.  All vintages dropped in value, highlighting concerns about the valuation of all RMBS subprime assets. Driving the declines was the 2007 vintage, which dropped by 17.7 percent, followed by the 2005 vintage falling by 9.5 percent month on month. Recent loan level analysis conducted by Fitch Solutions on the indices’ constituents found that the 2007 vintage showed a significant jump in 90-day plus delinquencies rising from 13.7 percent to 14.2 percent.  “The rise in delinquencies is signaling a potential increase in 2007 loan defaults,” explained Thomas Aubrey, managing director at Fitch Solutions.  Further evidence of a potential rise in defaults is in the six-month constant default rate (CDR) for both 2007 and 2005 vintages, both of which fell only marginally, the company said. Fitch explained that this is in stark contrast to much larger declines in the default rates of 2004 and 2006 vintages.

Now on to our real estate investing educational section…

Fiscal Survival of the Fittest

Survival of the fittest applies to economics as well as biology – in fact, some would argue the concept is better applied to the financial arena than any other area of study. Unfortunately, it’s a fact few Americans want to face head on…it goes against the steady diet of “American ingenuity” and the (false) belief that any child born in the good old USA can grow up to be anything they want. While there are exceptions to every rule, survival of the fittest is an economic trend currently undergoing the equivalent of an ice-age extinction as one era gives rise to an entirely new one. Research by consulting firm McKinsey found a few unsettling statistics that demonstrate the depth of the problem:

Over 70 percent of currently employed Americans work in jobs for which there is low or declining demand. This includes both blue collar and white collar. Competition for jobs that cannot be shipped overseas (healthcare for example) has created high competition which is driving down wages and promoting part-time, per diem and other “job sharing” situations.

Mainstream stores are doing double-takes as consumers shift spending habits. Not only are brick and mortar stores under heavy competition from online retailers like Amazon but the bleak economy is finally taking a toll. Violating one of the core marketing principles ‘never undercut your own product’, heavy weight’s ranging from Proctor & Gamble to Macy’s are rolling out discount versions of their more expensive popular items. Cost of Tide got you down? Don’t worry, you can now buy Tide Basic…a discount version. Research shows 1/2 of Americans have already reduced spending and 1/3 plan to do so permanently with 18 percent of consumer switching from name brands to generics in the past two years alone.

So, how are Americans spending their money both today and into the near future?

1. Nearly 34 percent of the average household income goes toward housing. Expect this trend to continue as people downsize into affordable housing options.

2. Just over 19 percent goes toward entertainment and/or miscellaneous items…however, as a discretionary item this is subject to volatility.

3. Roughly 17 percent goes toward transportation – a number experts expect to hold steady as people opt for more affordable options.

4. Just under 13 percent goes toward food; a necessity to be sure but one that is subject to “replacement” purchases as people opt for hamburger instead of steak during tough times.

5. Approximately 11 percent on retirement and personal insurance.

6. Nearly 6 percent on healthcare.

Even a precursory look at where Americans spend their money tells the average investor where to spend theirs…housing, entertainment, transportation, food, financial products and healthcare. Those are the big six that run the American economy. Now stop and consider which are available to the average “little guy” investor…stocks and bonds for healthcare, insurance and finance have been decimated in recent years. The auto industry? Please! Now that’s it’s been nationalized you can count on the same efficiency that brought you the driver license office to run the auto industry. Food is notoriously volatile and forget direct intervention unless you have an unusual level of gardening know how. No, the answer remains the same today as it did 100 years ago…real estate. It’s not easily outsourced, it’s not subject to the market manipulations of stocks and bonds nor is it entirely dependent upon your ability to work yourself into an early grave. It simply requires a willingness to adapt to the new economic environment like all other species that learn to thrive or barely survive.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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About the author:

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

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