mortgage rates

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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 tomorrow,

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

 

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

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

Number of bank failures this year: 22 and counting

Last week, regulators closed 2 banks, bringing the number of bank failures to 22 so far this year. The banks which were shut down are Carson River Community Bank, based in Nevada, with $51.1 million in assets and $50 million in deposits as of Dec. 31 and Rainier Pacific Bank with $717.8 million in assets and $446.2 million in deposits as of Dec. 31. The Federal Deposit Insurance Corporation (FDIC), which insures up to $250,000 per account at member institutions, will take a hit of over $100 million on account of the 2 failures. FDIC says the number of troubled banks jumped to 702 in the fourth quarter from 552 in the earlier quarter. Nearly one in every three banks reported a loss in the latest quarter. Amid recession and a rise in delinquent loans, the pace of bank failures has been rising, from 25 in 2008, to 140 in 2009, and to 22 in just the first 2 months this year. Banks are likely to incur as much as $300 billion in losses on Commercial property loans in the near-term, according to a recent report by the Congressional Oversight Panel, the watchdog that monitors financial bailout. With the economy not showing any signs of sustained recovery, the FDIC’s insurance fund is expected to take a hit of over $100 billion in the next four years.

Construction spending falls 0.6%

According to the Commerce Department, construction spending in the U.S. fell for a third straight month by 0.6% to $884.13 billion in January; construction spending dropped 1.2% in December. Nonresidential buildings in the private sector dropped 0.9% in January, while state and local government construction dropped 0.7%. Federal construction spending rose 1.9% to a high of $30.68 billion in January, increasing for the fifth straight month. Spending on private home buildings rose 1.3%. While housing starts rose 2.8% in January from December, construction permits, an indicator of future projects, dropped 4.9%. New home construction which rebounded strongly in the third quarter of 2009 seems to have lost some momentum. The economy was pushed into its worst slump since 1930s on account of the housing collapse. “We haven’t really seen much improvement in housing,” said Michael Englund, chief economist at Action Economics. “Residential construction is still weak. On the non-residential side, builders are hesitant to go along on new projects and banks are reluctant to provide the capital.”

Will Simon’s bid for General Growth attract antitrust?

Simon Property Group, a large owner of malls presented last month a $10 billion offer to buy General Growth Properties, another mall operator. Simon has offered to pay $7 billion towards General Growth’s unsecured debt. In addition, Simon would pay $6 per share to General Growth’s shareholders and spin off General Growth’s residential-development division, which Simon values at $3 per share. The deal, if it goes through, would create a single entity which would control about 520 malls in the U.S. While analysts wonder if the bid would invite antitrust concerns, David Simon, the Chief Executive Officer of Simon, said such concerns are unwarranted. “No way. Not even close,” said Simon. “Retail real estate is so diverse. There are so many options for retailers. We’re competing with the Internet. You have Wal-Mart [Stores Inc.], big-box retailers, department stores. I just don’t see it being a big issue. But there’s an education process I think the industry is going to have to go through.” General Growth is not interested in accepting Simon’s bid and has countered Simon’s bid with a plan to receive funding from Brookfield Asset Management Inc., a Canadian property investor.

HARP gets extension for 12 months

The Obama administration introduced the Home Affordable Refinance Program (HARP) last year to help about 4 to 5 million borrowers who have little or no equity in their homes. The program, administered by Fannie Mae and Freddie Mac, refinanced 190,180 mortgages in 2009 with loan-to-value between 80% and 125%. The program which was set to expire June this year has been extended by 12 months. Edward DeMarco, acting director of the Federal Housing Finance Agency, said the program has been extended to June 2011 in order to “support and promote market stability and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios to 125%.” Analysts have been critical of the program and say it has had a limited impact so far. “The overall volume last year was an embarrassingly small amount. I don’t think it will make a big difference” to have the program extended, said Thomas Lawler, a housing consultant.

Bankruptcies drop in the U.S.

BankruptcyData.com says only 5 public companies filed for Chapter 11 or Chapter 7 bankruptcy protection in February, compared to 19 in the same period in 2009. In January, 12 public companies filed for bankruptcy while 11 public companies went under in December. Bankruptcies of large companies — with more than $1 billion in assets — have slowed down. In 2009 about 25% of the companies that filed for bankruptcy had assets over $1 billion while so far this year only 19% percent of the total 16 bankruptcy filings have had more than $1 billion in assets. The improved economic situation and buoyancy in capital markets are helping companies stay afloat. Analysts however warn that the scenario is not entirely rosy and more bankruptcies can be expected. “Last year was like a tsunami, but this next phase will be more like a rising tide; consistent and steady,” said William Snyder, a managing partner with CRG Partners. Analysts feel capital restructuring can help companies only to a limited extent. In the long run, what really matters is operational efficiency. Alan Cohen, chairman of Abacus Advisors, a turnaround and restructuring firm, said: “You can correct a balance sheet by manipulating debt into equity, or reducing debt, but unless the entity focuses on improving operations, they’re going to have a tough time.”

Now on to our real estate investing educational section…

Parkinson’s Law & Short Sales

Cyril Parkinson must have been an astute student of human behavior especially when it came to economic trends and traits; a British Civil service employee, Parkinson originally noted the tendency for bureaucracies to expand over time…an observation sure to be noticed by short sale buyers waiting for approval from big banks. In fact, many of the Parkinson’s observations seem to apply especially well to short sale investments including:

“The demand upon a resource tends to expand to match the supply of the resource”

Think about “easy credit”. Without easy credit and lax lending terms many people would not have bought homes they were unable to afford to begin with; it’s also why modification programs simply won’t work in the majority of situations. Despite decades of government intervention designed to make everyone a homeowner, the ratio of renters versus homeowners tends to remain the same over time. Essentially the current situation can be considered a correction back to the “mean”.

“The amount of time in which one has to perform a task, is the amount of time it will take to complete that said task”

Again, how many last minute approvals have you encountered recently? While procrastination isn’t limited to bankers or brokers, it’s certainly alive and well in today’s economic arena.

So, how can you use Parkinson’s Law to your advantage? It’s simple…

1. Expedite Deadlines…for yourself and others. Rather than wait until the last possible moment, start setting deadlines ahead of time for both yourself and others. This not only reduces stress but tends to put you back in control of sluggish situations and lagging negotiations.

2. Put a “product” back into productivity…rather than outline a “to-do” list, start measuring actual outcomes instead. For example, set a date to have all your social media marketing up and running then clearly define what it should consist of and look like. If you aren’t able to get it done by a specified date, pull in the big guns and have it done for you; remember, the objective is to  achieve a final outcome or goal rather than just “make busy work”.

3. Calculate the value of your time…then hire out others to do at least the bottom 20% of the least profitable errands and chores. By consistently doing this on a regular basis it is possible to increase your personal productivity and hourly time value by well over 20 per annum.

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

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

Done For You Lead Machine Unveiled Tomorrow!

You don’t want to miss this webinar … an all new done for you

lead machine with social media!  This is the first time that this new

concept has been unveiled — so don’t miss it!

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

https://www2.gotomeeting.com/register/340133283

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

Fannie and Freddie failing

Freddie Mac and Fannie Mae were among the first big financial institutions to receive massive federal bailouts after the financial crisis hit in 2008. Government officials have been racing to fix bailed-out car makers and banks and are pushing to reshape the financial-services industry. But Fannie and Freddie remain troubled wards of the state, with no blueprints for the future and no clear exit strategy for the government.  Nearly a year and a half after the outbreak of the global economic crisis, many of the problems that contributed to it haven’t yet been tamed. The U.S. has no system in place to tackle a failure of its largest financial institutions. Derivatives contracts of the kind that crippled American International Group Inc. still trade in the shadows, and investors remain heavily reliant on the same credit-ratings firms that gave AAA ratings to lousy mortgage securities. Fannie and Freddie, for their part, remain at the core of a housing-finance system that inflated a dangerous housing bubble.

After prices collapsed, sending shock waves around the world, the federal government put America’s housing-finance system on life support and it has yet to decide how that troubled system should be rebuilt.  On Dec. 24, Treasury said there would be no limit to the taxpayer money it was willing to deploy over the next three years to keep the two companies afloat, doing away with the previous limit of $200 billion per company. So far, the government has handed the two companies a total of about $111 billion. The government is “running Fannie and Freddie as an instrument of national economic policy, not as a business,” says Daniel Mudd, who was forced out as Fannie Mae’s chief executive in September 2008 when the government took control.  Other housing experts contend that prolonged government intervention will make it more difficult and costly to eventually wean the companies off government support. “The more aggressively we continue kicking the can down the road, the larger the losses become and the harder it becomes” to address the companies’ future, says Joshua Rosner, managing director at investment-research firm Graham Fisher & Co.  As mortgage delinquencies rise, Fannie and Freddie are required to set aside more capital to cover anticipated losses. Each quarter, if their revenues are insufficient to meet those financial needs, the Treasury has to kick in more money.  With delinquencies still rising, the outlook is grim. At Freddie, 3.87% of single-family mortgages were at least 90 days past due at the end of December, up from 1.72% a year earlier. Fannie is worse: 5.29% were 90 days past due in November, up from 2.13% a year earlier.

Olick – Obama shifting from HAMP to HAFA (short sales)?

Diana Olick picked up on something Seth Wheeler, Senior Advisor to the Treasury Department, said last week.  According to Olick:  “In discussing the Obama Administration’s Home Affordable Modification Program (HAMP), which is arguably less successful than anyone intended, Wheeler made a comment leading some to believe that the Administration may be shifting focus from modifications to another program which simply gets troubled borrowers out of their homes as quickly and cleanly as possible.  Wheeler told ASF members and guests, ‘Short sales, deeds in lieu are other ways to prevent foreclosures to help achieve stability [in housing].  Modifications are only for a certain subset of distressed homeowners.’”  Olick points to the widely acknowledged failure of HAMP and suggests that Wheeler’s mention of the Home Affordable Foreclosure Alternatives program (HAFA) is indicative of a shift in emphasis for the Obama administration. 

HAFA specifically targets short sales and deeds in lieu of foreclosure. According to the directive: Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower: Does not qualify for a Trial Period Plan; Does not successfully complete a Trial Period Plan; Is delinquent on a HAMP modification by missing at least two consecutive payments; or requests a short sale or DIL.  According to Olick:  “My guess is that last one is the most popular.  The HAFA program offers incentives in this program “upon successful completion of the short sale” or Deed in Lieu. They include borrower relocation assistance of $1500, a servicer incentive of $1000 to cover administrative and processing costs and investor reimbursement of $1000 for subordinate lien releases. That’s when the investor allows up to $3000 in short sale proceeds to go to subordinate lien holders.  ‘It is my belief that the success of HAFA will be vastly greater than HAMP,’ says Mark Hanson, a mortgage consultant in California.  ‘Going forward, figuring out exactly what this means for foreclosures, REO, house sales, housing inventory, values, bank balance sheets, second mortgages, RMBS prices, the builders, the mortgage insurers, and sentiment is where the focus will be.’”

Tax rate balloons

Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.   The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.  Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates.  In addition, employers pay federal unemployment taxes. If states don’t repay their federal loans, businesses could see their this federal tax go up as well in coming years, said Rich Hobbie, executive director of the National Association of State Workforce Agencies.  Higher taxes dampen employers’ ability to hire new workers, crimping any nascent economic recovery. Companies pay taxes on each employee on the payroll.  “There’s no doubt it discourages hiring,” said Douglas Holmes, president of UWC-Strategic Services on Unemployment and Workers’ Compensation, an employers’ trade group. “In fact, it leads to increased unemployment.”  Texas, Hawaii, and Florida are the hardest hit.

Consumer credit falls

According to the Federal Reserve, total consumer borrowing fell a seasonally adjusted $1.8 billion, an annual rate of 0.8%, to $2.456 trillion in December 2009.  Economists predicted a decline in total borrowing of $10 billion in December, according to a consensus survey from Briefing.com. November saw a downwardly revised 10.6% decrease, or $21.8 billion, in total consumer borrowing.  Sean Maher, associate economist at Moody’s Economy.com said he expected November to be revised upward, but instead it was even more negative — so December’s more upbeat data “doesn’t mean we’re out of the woods.”  For all of 2009, consumer debt dropped by 4% to $2.46 trillion from $2.56 trillion in 2008.  Revolving credit, which includes credit card debt, fell in December by $8.5 billion, or an 11.7% annual rate, to $866 billion. 

But nonrevolving credit, which includes car and student loans, bucked the trend. It rose by $6.8 billion, or a 5.2% annual rate, to $1.59 trillion.  The data’s recent volatility and large revisions make it difficult to make predictions, Maher noted, but he expects revolving credit will fall substantially in the coming months but will start to taper off around June.  “Consumers are still finding it tough to get credit, but there are some signs we’ve reached a bottom,” Maher said. The credit crunch should begin easing now, he said, “with breakeven around the middle of the year — and we’re looking for a pretty quick rebound by the second half of 2010.”

DSNews.com – Home ownership at lowest point in a decade

Home ownership in the United States hit a 10-year low during the fourth quarter of 2009. According to data released by the Census Bureau last week, the homeownership rate fell to 67.2% at the end of last year.  That’s down from 67.6 percent the previous quarter and 67.5 percent one year earlier. It represents the lowest percentage of Americans who owned a home since the second quarter of 2000. Homeownership has been on a steady downward slope since 2006, when it became evident that more and more borrowers were put into loans they couldn’t afford and housing woes began to eat away at the government’s long-time push to make the American Dream a reality for anyone that wanted it.

Regionally, homeownership rates are highest in the Midwest (71.3 percent) and in the South (69.1 percent) where housing is considered relatively affordable. They are lowest in the West (62.3 percent) and the Northeast (63.9 percent) where home prices are on the higher end of the spectrum.  Relative to a year ago, the biggest decline, though, was in the South (down 0.7 points) and in the West (down 0.4 points), where you can find the foreclosure hotspots of Florida, California, Arizona, and Nevada.  The Census Bureau also reported that the percentage of vacant homes in the U.S. rose from 2.6 percent in the third quarter of last year to 2.7 percent in the fourth. All told, there were 2.09 million homes sitting empty and available for sale at the end of last year, up from 1.99 million three months earlier, the agency said. As Bloomberg explained, this number includes both listed properties and those that banks have repossessed and have not yet listed.

Now on to our real estate investing educational section…

Sooner or later every short sale investor encounters a sale in danger of dying. Fortunately, with a few simple steps it’s possible to dramatically reduce the risk of spoiling a sale.

1. Get Smart. Prequalify and prepare from first contact. Everyone has an “A” list and a “B” list when it comes to prospective buyers but it’s still necessary to put things into proper perspective before spending a lot of time and effort on dead-ends. Remember, the internet helps to eliminate and reject prospects through the use of well placed questions and comments.  For example, asking a simple question such as “Is there another home you wished you had bought?” can explain a lot; price range, comfort zone and readiness just for starters.

2.  Value-Driven. Tough economic times have led most buyers to become more price conscious than ever; it’s no longer enough to simply show a few over-priced homes to prep for an attractive in-house alternative…instead, be prepared to demonstrate real value with low risk. Buyers want to know they won’t lose money in the long run by buying a given house or property.

3. Don’t Shut Doors on any Deal. Some buyers are just the opposite – they have money and when presented with the right opportunity – are willing to go substantially above and beyond their traditional budget. Don’t automatically exclude higher priced properties for those that have the means to make ends meet at a larger than life level. In this situation, recognize the price is not the prime motivator but rather the “right”  property. Determine what constitutes a desirable deal then make it happen.

4.  Time Right. Timing is everything but it takes time to learn how to distinguish valid help from harassment when working with prospective clients. Too soon and you can quickly cool even the hottest prospect…too long of a delay and you risk having others step in to fill your shoes.

5. Preferred Status. Everyone likes to feel special and as a short sale professional it is your duty to given individualized attention to every prospect….of course, some clients are just a bit more special than others especially when it comes to sealing the deal. Find a few ways to express that little extra something when working with your “A” list clients; meet at a local coffee shop then foot the bill (don’t worry – it’s a legitimate write-off) or schedule exclusive “preview” showings to the most promising prospective buyers before the big announcement. Remember, it’s the thought that counts not necessarily the size of the status symbol.

6. Teach sellers to think like buyers and vice versa. Yes, it’s easier said than done but it’s all in the wording. By teaching sellers to act like buyers and buyers to act like sellers you assure they will present and demand more reasonable offers. Think of it as a small investment that pays big dividends at closing time.

7. Have a contingency plan in place. Every good investor identifies the “out” long before buying into the given investment – it’s no different with short sales. Know when and how you plan to exit the property then have a contingency in place should something go amiss. It’s one additional layer of protection that allows short sale investors to sleep easy by knowing they have plenty of outlets for every property.

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

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

Done For You Lead Machine Unveiled Tomorrow!

You don’t want to miss this webinar … an all new done for you

lead machine with social media!  This is the first time that this new

concept has been unveiled — so don’t miss it!

 

RSVP here for the webinar Saturday at 3 PM ET, NOON PST:

https://www2.gotomeeting.com/register/917699515

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

Home prices bottomed?

According to the PMI Mortgage Insurance Risk Index, the risk of home prices dropping even lower in the next two years is stabilizing in most Metropolitan Statistical Areas (MSAs).  The index charts the chance that home prices will rise or fall along a yearly timeline. To do this, PMI analysts translate a percentage, which predicts the probability that house prices will be lower in two years, into a Risk Index score. A score of 100 means there is a 100% chance that the prices will be lower in two years for that MSA.  According to the latest Index, risk may have peaked for many MSAs, though the average risk score remains “very high.”  In Q309, risk dropped in 22 of the top-50 MSAs. Of all the 384 MSAs measured in the Index, 212, slightly more than half, had decreases in risk scores.

But even though risk declined in the majority of MSAs, the average risk score stayed above 50, dropping for the first time in over a year from 58.3 to 57.5.  MSAs in Florida, California, Nevada and Arizona continued to have the highest risk scores in the nation during Q309. All MSAs in Florida, Nevada and Arizona have risk scores in the 90s. But California showed some improvement. Of the 28 MSAs measured in California, 25 saw decreases in risk scores from Q209 to Q309.  North Dakota, South Dakota, Nebraska and Vermont continue to show minimal risk. North Dakota leads the nation with the lowest risk score of 1.6.  The leading MSAs in terms of risk correspond closely with the MSAs holding the highest foreclosure rates in the RealtyTrac Year-End 2009 Foreclosure Report.

Unemployment rate down, more jobs lost

The Labor Department says the good news is that unemployment fell to 9.7% in January, much lower than economists’ forecasts of 10%. The bad news is that the U.S. economy lost 20,000 jobs in January.  The Labor Department also released an annual revision of U.S. payrolls on Friday, using data that wasn’t initially available. Losses for 2009 alone came to 4.8 million jobs, more than 600,000 more than previously estimated. The revision showed the economy has lost 8.4 million jobs since the start of the recession in December 2007 — 1.4 million more job losses than initially reported. The payroll number for December was revised to a net loss of 150,000 jobs. The government had previously indicated that 85,000 jobs were lost in December.  But the government said the tepid job growth initially reported in November was actually much stronger than previously believed. Jobs rose by 64,000 in November, up from an initial estimate of 4,000. It is the only month in the past two years in which jobs grew. 

January’s report offers hope that employers are starting to reverse course and may start adding jobs soon. Aside from November’s gain, January’s job losses were the smallest since the recession began and are down from the huge loss of 779,000 jobs in January 2009.  The manufacturing sector added jobs for the first time since January 2007. Its gain of 11,000 jobs was the most since April 2006.  Retailers added 42,100 jobs, the most since November 2007, before the recession began. Temporary help services gained 52,000 jobs, its fourth month of gains. That could signal future hiring, as employers usually hire temp workers before permanent ones.  The average work week increased to 33.3 hours, from 33.2. That indicates employers are increasing hours for their current workers, a step that usually precedes new hiring.

Rent free for years

Diana Olick points to a new trend among homeowners.  The percentage of borrowers who are delinquent on their mortgages but paying their credit card bills on time is growing, to 6.6 percent in the third quarter of 2009 from 4.9 percent in the same quarter of 2008, according to a new study by Chicago-based TransUnion. At the same time, the share of borrowers that are delinquent on credit cards but current on their mortgages slipped to 3.6% from 4.1%.  In an interview with Reuters, the author of the study, Sean Reardon, confirmed, “This goes against conventional wisdom and that has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages.” 

As Olick points out, “most troubled borrowers have already figured out that there are so many forces in motion trying to save homes from foreclosure that they can easily miss one, two, five or six mortgage payments before even getting a call from the bank; then, they’ve got many more monterhs of negotiations over modifications, short sale options, even the foreclosure process itself, insuring they will have a roof over their heads for a good long time.  Home building Analyst Ivy Zelman said that in some Florida counties the courts are so backed up with foreclosures that it can take up to three years to get one home through the system.  That’s three years of living rent-free, which frees up plenty of cash to pay the Visa bill.”  The study, based on a database of 27m consumer credit records, found the magnitude of delinquency is significantly higher in the lowest credit scoring segment, opposed to delinquency in the total market. The payment priority shift to credit cards over mortgages is even more pronounced in sand states like California and Florida, which experienced a more severe housing bubble effect, TransUnion said.

US debt ceiling raised

The House of Representatives voted yesterday to raise the debt limit by $1.9 trillion, raising the debt ceiling to $14.3 trillion, a new high for the amount of debt for the U.S. As recently as 2001, the U.S. debt was only at $5.7 trillion, but it exploded after Sept. 11, 2001, amid record spending by the Bush and Obama administrations.  If Congress doesn’t hike the debt ceiling, the U.S. would be unable make good on Social Security and Medicare payments.  The Senate approved the debt limit increase in mid-January on a 60-40 party-line vote.  The House vote was a close one, at 217-212. All Republicans and more than 30 Democrats voted against raising the debt ceiling – moderate and fiscally-conscious Democrats were leary of voting for the bill.  The debt ceiling increase is part of a broader bill that would impose so-called “PAYGO” rules on the House. In other words, the House would have to pay for all tax cuts or programs it creates so they are budget neutral.  In theory, anyway.

Mortgage rates slightly higher

Freddie Mac’s weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 5.01% with a 0.7 origination point for the week ending February 4, up from last week’s average rate of 4.98%.  It’s the first week-over-week increase in 2010.  A year ago, the 30-year FRM was 5.25%. Bankrate.com’s weekly survey of large banks and thrifts put the 30-year FRM at 5.15%, up from 5.13% last week.  Freddie put the 15-year FRM at 4.4%, up from last week’s average rate of 4.39%, but still down from last year’s rate of 4.92%. Bankrate.com put the 15-year FRM at 4.55%, up from 4.54% last week.  Freddie Mac vice president and chief economist Frank Nothaft said despite the increase, rates remain relatively stable amid other positive developments, including recent increases in pending home sales and mortgage applications.  “Even more encouraging news came from the Federal Reserve’s Senior Loan Officer Opinion Survey, which reported that banks have generally stopped tightening standards on most types of loans in the fourth quarter of 2009, with commercial real estate as the exception,” Nothaft said.  “However, banks have yet to unwind the tightening that occurred over the last two years. Moreover, substantially fewer banks expected credit quality to deteriorate over the coming year,” he added.  Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27%, up from last week’s rate of 4.25%. Last year, the five-year ARM averaged 5.26%. Bankrate.com’s average rate for five-year ARMs was 4.56%, up from 4.54% last week. Freddie’s survey of the one-year Treasury-indexed ARM put the average rate of 4.22%, down from last week’s rate of 4.29% and last year’s 4.92%.

Now on to our real estate investing educational section…

Friday File – 15 Minute Resolution for the Week

Whether you know it or not, everyone has at least three budgets; a financial budget, a time budget and a mental budget. As a short sale investor you have probably spent plenty of time calculating your financial budget but what about your time and mental budget? This week make a point of spending 15 minutes to plan and prepare for the week ahead. Not only will you save time and money (really they same thing) but most people find they feel less stressed and more refreshed at the end of the week.

1. Record then reward the time of your life. Do you know where the days, hours and moments of your life go? If not, start keeping track of how much wasted time you spend on mundane, non-productive activities. Decide which can be eliminated then move on to step two…delegate. Be sure to eliminate as much as possible prior to delegating or else you risk spending even more time and money on non-productive activities. Once you have eliminated and then delegated as many routine, mundane and non-productive activities as possible it’s time to reward yourself by setting aside at least a portion of that time toward achieving another life goal. It could be to take up a new hobby or spend additional time with family and friends; whatever the reason allow it to reconfirm the benefit to be derived from pursuing short sales.

2. Establish a mental budget. Sure, some people enjoy eating, thinking and dreaming about work or investments but for others it is simply a means to an end. Either way, establish a mental budget to determine a rational and reasonable return on your mental investment. Whether it’s ten hours a week or ten hours a day, find the right balance between work and play to create the life you really love. Not only will you appreciate short sales rather than resent the effort but it’s likely to show in your negotiations and communication with others.

3. Review your financial budget to balance all three. Make sure the time and emotional investment you are putting into short sales is adequately rewarded by establishing a minimum thresh-hold for each transaction. For example, if you know a project is likely to require x number of hours and you need to make at least $500 per hour then only accept projects that will meet or exceed your given criteria. Not every deal – even a good deal – is the perfect fit for every person. By aligning your needs, demands and expectations with a firm return it’s possible to spend less time while creating every expanding deals that satisfy all your criteria without sacrificing sanity.

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/

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Refinance loans up 21%

Demand for home loans rose to a six-week high on a mini refinance wave, with borrowers pushing to lock in rates before they climb later this year, the Mortgage Bankers Association (MBA) said today.  Applications to buy homes and refinance loans jumped last week to mid-December levels as average 30-year mortgage rates held near 5%. The industry group’s mortgage index jumped 21% last week, fueled by a 26.3% leap in demand for refinancing as purchase loan requests increased 10.3%.  The 30-year mortgage rate dipped 0.01%age point to 5.01%. But this borrowing cost was 0.40%age point above the record low set last March and seen headed higher throughout the year.  “Rates continue to hover around 5%, quite low by historical standards, but are well above the record lows seen in 2009 and hence are not generating substantial refi volume,” said Michael Fratantoni, MBA’s vice president of research and economics.  Affordability remains high with mortgage rates still historically low and average home prices plunging about 30% from 2006 peaks before stabilizing since last summer.  The government’s bonus to first-time and move-up buyers via a tax credit remains in place for several more months, luring buyers who have been sitting on the sidelines waiting for some signs of stability.  “I do think the housing recovery in the U.S. still has legs and is firmly in tact,” said Ian Pollick, economics strategist at TD Securities in Toronto. “There’s a lot of pent up demand in the system right now, there are a lot of really really good deals.”

Jobs reports mixed

According to payroll-processing firm Automatic Data Processing (ADP), private-sector employers cut 22,000 jobs in January, marking the smallest decline since February of 2008.  The number of cuts in December was revised down to 61,000 from the previously reported 84,000. Economists surveyed by Briefing.com had forecast a loss of 30,000 jobs in January.  The service sector reported an increase of 38,000 jobs in January, marking the second consecutive month of job growth for that sector following a 21-month decline.  The figure was offset by a loss of 60,000 in the goods-producing sector and a drop of 25,000 manufacturing jobs, which marked its lowest level since January, 2008.  In a separate report Wednesday, outplacement firm Challenger, Gray & Christmas Inc, said planned job cuts had accelerated in January.  Challenger said employers announced 71,482 layoffs in January, reversing what had been a steady decline in layoff announcements.  January’s figure is up 59% from December 2009, when layoffs fell to a 24-month low of 45,094. But it was a sharp decline from the 241,749 cuts announced a year ago.  The retail and telecom sectors were the hardest hit in January, with 16,737 and 14,010 job cuts, respectively.  The unemployment rate is expected to remain unchanged at 10%.

MBA – Commercial and Multifamily Mortgages Increased in 4th Quarter

According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, fourth quarter 2009 commercial and multifamily mortgage loan originations were 12% higher than during the same period last year and 15% higher than during the third quarter of 2009.  The 12% overall increase in commercial/multifamily lending activity during the fourth quarter was driven by increases in originations for all property types except multifamily.  When compared to the fourth quarter of 2008, the increase included a 105% increase in loans for hotel properties, a 101% increase in loans for retail properties, a 59% increase in loans for industrial properties, a four% increase in loans for office properties, a one% increase in health care property loans, and an eight percent decrease in multifamily property loans.  Fourth quarter 2009 mortgage originations were 15% higher than originations in the third quarter 2009.  Among investor types, loans for commercial bank portfolios saw an increase in loan volume of 39% compared to the third quarter 2009, loans for life insurance companies saw an increase in loan volume of 35% compared to the third quarter 2009, conduits for CMBS decreased by 50% during the same time span, and originations for GSEs decreased 15% from the third quarter to the fourth quarter 2009.  “Commercial and multifamily mortgage originations picked up in the fourth quarter, but remain at a low level in absolute terms,” said Jamie Woodwell, Vice President of Commercial Real Estate Research at the MBA.  ”The trend shows stability coming back to the market, but the pick-up in volumes really indicates just how low origination levels had fallen.”

Obama’s budget in a nutshell

President Obama’s proposed 2011 budget calls on Congress to make a number of tax changes for individuals.  These include:  Letting tax cuts expire – the 2001 and 2003 Bush tax cuts are scheduled to expire by 2011 – the 33% bracket would become 36% and the 35% bracket would rise to 39.6%.  The long-term capital gains tax rate would increase to 20%, up from 15%;  limit itemized deductions – to cap at 28% the rate at which high-income households can itemize their deductions.  Currently the value of a deduction is equal to the deductible amount multiplied by one’s top income tax rate, which can range well above 28%; keep the estate tax – assumes the estate tax will be made permanent at a $3.5 million exemption level per person and a top rate of 45% on taxable estates.

That’s more generous than current law, which calls for a $1 million exemption level and a 55% top rate starting in 2011; raise taxes on investment fund manager profits – tax the portion of profits paid to managers of hedge funds and private equity funds as ordinary income rather than as a capital gain, subjecting it to much higher tax rates than the 15% capital gains rate currently imposed; eliminate capital gains tax on small business stock – eliminate the capital gains tax altogether on stock in small businesses held for at least five years; make tax cuts permanent on lower and middle income – tax cuts will be made permanent for everyone making less than $200,000 ($250,000 for couples); permanently protect the middle class from the “wealth” tax; extend the Make Work Pay credit – one-year extension of the stimulus-created tax credit; permanently expand a low-income tax credit – families making less than $85,000 would be able to claim nearly double the child and dependent care tax credit for which they currently qualify; permanently extend the American Opportunity Tax Credit – expanding the existing Hope Scholarship tax credit and making it partially refundable.  So much for deficit restraint.

DSNews.com – Banks not tightening credit any more

According to a new report from the Federal Reserve, most large banks have stopped tightening standards on a number of loan types.  However, just because it’s not getting tighter doesn’t mean it’s getting easier.  Still, it might be seen as a hopeful sign for a financing world that’s been strained since 2007 – hopeful for pretty much every sector except commercial real estate, that is. That’s one of the only loan types where the majority of banks said they’d continued to tighten credit criteria.  “Banks’ policies on commercial real estate lending were an exception, as large net fractions of respondents further tightened their credit standards during the final quarter of last year,” the report said. “In addition, banks reported that they had tightened terms on [commercial real estate] loans substantially over the past year.”  The Fed said only a small net fraction of banks tightened standards on prime residential real estate loans in the fourth quarter.  A somewhat larger percentage of banks – but still fewer than in previous quarters – tightened standards on nontraditional residential real estate loans.  Likewise, just a small net fraction of banks reported more stringent lending standards for revolving home equity lines of credit.  Banks reported weaker demand across the board – for commercial property loans, prime residential real estate loans, nontraditional mortgages, and home equity loans, alike.  The Federal Reserve’s survey results are based on responses from 55 domestic banks and 23 U.S. branches and agencies of foreign banks.

Vacancy rate unchanged

According to the US Department of Commerce, the national vacancy rate for “homeowner” housing units remained at 2.7% in Q409, unchanged from Q109.  The rate only slightly wavered from 2.9% at the end of 2008 and 2.6% in Q309. The highest the rate has ever climbed since 1996 was to 2.9% in Q108 and again in Q408.  For rental housing, the vacancy rate dropped to 10.7% in Q409 from 11.1% in the previous quarter but increased from 10.1% in the last quarter of 2008.  For Q409, more vacancies appeared in principal cities, 3.1%, compared to 2.5% in the surrounding suburbs, according to the report. The rate within the city dropped from 3.5% in the fourth quarter of 2008.  More vacancies appeared in the South, 2.9%, edging 2.8% in the Midwest and 2.7% in the West. The Northeast region had a 1.9% vacancy rate. The South also had the highest rental vacancy rate of 13.7% in Q409. The Midwest had a 11.2% rental vacancy rate, followed by the West, 8.9%, and the Northeast, at 7.2%.  To combat vacancies, the US Department of Housing and Urban Development (HUD) recently announced that it would provide financing for owner-occupants looking to purchase real-estate owned (REO) property.

Now on to our real estate investing educational section…

How to Save the Sale

Sooner or later every short sale investor encounters a sale in danger of dying. Fortunately, with a few simple steps it’s possible to dramatically reduce the risk of spoiling a sale.

1. Get Smart. Prequalify and prepare from first contact. Everyone has an “A” list and a “B” list when it comes to prospective buyers but it’s still necessary to put things into proper perspective before spending a lot of time and effort on dead-ends. Remember, the internet helps to eliminate and reject prospects through the use of well placed questions and comments.  For example, asking a simple question such as “Is there another home you wished you had bought?” can explain a lot; price range, comfort zone and readiness just for starters.

2.  Value-Driven. Tough economic times have led most buyers to become more price conscious than ever; it’s no longer enough to simply show a few over-priced homes to prep for an attractive in-house alternative…instead, be prepared to demonstrate real value with low risk. Buyers want to know they won’t lose money in the long run by buying a given house or property.

3. Don’t Shut Doors on any Deal. Some buyers are just the opposite – they have money and when presented with the right opportunity – are willing to go substantially above and beyond their traditional budget. Don’t automatically exclude higher priced properties for those that have the means to make ends meet at a larger than life level. In this situation, recognize the price is not the prime motivator but rather the “right”  property. Determine what constitutes a desirable deal then make it happen.

4.  Time Right. Timing is everything but it takes time to learn how to distinguish valid help from harassment when working with prospective clients. Too soon and you can quickly cool even the hottest prospect…too long of a delay and you risk having others step in to fill your shoes.

5. Preferred Status. Everyone likes to feel special and as a short sale professional it is your duty to given individualized attention to every prospect….of course, some clients are just a bit more special than others especially when it comes to sealing the deal. Find a few ways to express that little extra something when working with your “A” list clients; meet at a local coffee shop then foot the bill (don’t worry – it’s a legitimate write-off) or schedule exclusive “preview” showings to the most promising prospective buyers before the big announcement. Remember, it’s the thought that counts not necessarily the size of the status symbol.

6. Teach sellers to think like buyers and vice versa. Yes, it’s easier said than done but it’s all in the wording. By teaching sellers to act like buyers and buyers to act like sellers you assure they will present and demand more reasonable offers. Think of it as a small investment that pays big dividends at closing time.

7. Have a contingency plan in place. Every good investor identifies the “out” long before buying into the given investment – it’s no different with short sales. Know when and how you plan to exit the property then have a contingency in place should something go amiss. It’s one additional layer of protection that allows short sale investors to sleep easy by knowing they have plenty of outlets for every property.

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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