NABE

Smart Real Estate News & Commentary by Chris McLaughlin August 30, 2010

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Foreclosure relief – great for banks; for consumers not so much

Mark Gimein of Daily Finance makes the following points about why HAMP actually hurts many borrowers while helping banks:

1.  Foreclosure relief in many cases simply stretches out borrowers’ slow bleed of resources. By keeping borrowers in limbo while letting lenders delay repossessing houses they can’t sell, foreclosure aid is now benefiting borrowers less than the lenders who created the mortgage mess. For lenders, mortgage modification is the waiting room in the mortuary, a convenient place to hold borrowers while the banks deal with the overflow of houses already repossessed.

2.  Most borrowers behind on their mortgages are already overburdened with other debts. After the mortgage reduction, the typical modification recipient, despite an average $513 drop in monthly payments, has to devote 63.5% of his or her income to mortgage payments, other debt, and taxes.

3.  Banks don’t have to kick people out quickly.  Banks have steadily slowed down the foreclosure process: The average homeowner in foreclosure now is an amazing 461 days behind in his payments. Barry Ritholtz of financial blog The Big Picture calls banks’ reluctance to take over houses “strategic non-foreclosure.” Taking a leisurely path to repossession lets lenders avoid the costs of maintaining properties they can’t sell in a market that remains in free fall in much of the country.

4.  The last insult added to this mess comes from Fannie Mae, which has promulgated new rules that lock those who don’t make the effort to modify their mortgages out of the Fannie-backed mortgage market for seven years.  So ultimately this comes full circle, and what started as an effort to help borrowers has become another cudgel in the hands of lenders.

Spending up more than income

Consumer spending is critical because it accounts for 70% of economic activity.  The Commerce Department says spending fell 0.1% in April, rose a tiny 0.1% in May, was flat in June, but rose 0.4% in July.  Personal incomes were up 0.2% in July, less than expected but at least an improvement over June when incomes had not risen at all.  With spending rising, the personal savings rate slowed to 5.9% of after-tax income. That’s down from 6.2% in June, the highest in nearly a year. Even with the July decline, the savings rate is nearly three times higher than it was before the recession began in December 2007. 

The July spending gain was the highest since a 0.5% rise in March. But the concern is that demand could taper off in the second half of this year if unemployment remains near double digits.  If Americans don’t have jobs, they don’t have the income to support spending. the economy is growing too slowly to support sustained job growth and some fear it could fall back into a recession. Economic growth slowed to 1.6% in the April-to-June quarter, the government reported Friday. That was revised down from the initial estimate of 2.4%.  A string of weak economic reports in recent weeks has prompted economists to trim their growth forecasts for the rest of the year and next.

Fannie Mae portfolio up 4.1%

Fannie Mae’s mortgage portfolio through July is up 4.1% from the year ago yet down somewhat from June, and the GSE issued nearly half the mortgage-backed securities during the month than in did last July.  Fannie ended July with gross holdings of nearly $812 billion. That figure stood at $770.4 billion last year and $817.8 billion in June.  The agency issued $42.7 billion of mortgage-backed securities during July, a nearly 48% decline from $79.7 billion a year earlier but up 6.4% from June. Fannie’s MBS issuances peaked in June 2009, when more than $130 billion was issued.  The serious delinquency rate in Fannie Mae’s portfolio fell to 4.99% in June, which is the latest month data is available, from 5.15% in May. For the year-ago July, the agency’s delinquency rate was 4.17%. The rate peaked at 5.59% in February and was as low as 3.42% in April 2009.  “Fannie Mae and FHLB are taking advantage of better funding from callables as bullet LOAS widens due to renewed corporate issuance and calmer short LIBOR levels,” said Jim Vogel of FTN Financial. “The gain can be as much as 10bp.  The obvious result is that both need less funding from bullets and floaters.  The superior funding stems primarily from the constant demand for new callables to replace those redeemed at close to a $100 billion monthly pace.”

NABE – economists mixed on what to do

The National Association of Business Economists (NABE) said Monday that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to an August survey of the nation’s economic policy.  However, nearly the same number of NABE economists said they do not think another stimulus package is necessary to halt the economic slowdown and get the economy back on track. At the same time, a majority believe that policymakers should do more to boost job growth.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, comes as economic growth in the United States has slowed significantly after rebounding from a deep recession.

The NABE survey showed that just under half of those polled see deflation as the main threat facing the economy in the short term, but respondents were less certain about whether inflation or deflation is the biggest threat over the next three years.  In a sign of the challenges currently facing Fed policy makers, there was little consensus among the NABE economists on when the central bank will raise interest rates and begin selling off assets it bought during the financial crisis.  After cutting rates to historic lows near 0% in December 2008, the Fed has been without its main tool for supporting economic activity for nearly two years. It has since bought billions worth of Treasury bonds in an effort to bring down rates for home and other consumer loans. But some central bankers are worried about adding to the $2 trillion worth of assets the Fed has acquired over the last few years.  A clear majority of economists said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire.

DSNews.com – Homebuyer’s tax credit coming back?

After a worse than expected falloff in home sales during the month of July, buzz about a possible revival of the federal homebuyer tax credit has begun to surface.  The National Association of Realtors (NAR) reported last week that sales of previously owned homes plummeted 27 percent in July, hitting their lowest mark in 15 years. New home sales also took a dive, dropping nearly 13 percent from June to July.  Both reports were clear indications of the frailty of the housing market post-stimulus. Although, the steep declines were actually considered a by-product of the tax credits themselves, which expired on April 30 – payback for the incentives that pulled sales forward into the spring months. 

HUD Secretary Shaun Donovan said on CNN’s “State of the Union” program this weekend, “The July numbers were worse than we expected, worse than the general market expected, and we are concerned. That’s why we are taking additional steps to move forward.  Donovan said it was too early to say for sure, after only one month’s numbers, whether the administration would revive its popular homebuyer tax credits to give the housing markets another much-needed boost, but he didn’t wholly rule it out as an option.  “All I can tell you is that we are watching very carefully,” Donovan told CNN. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”  Two U.S. Senate candidates from Florida, one of the hardest hit states by the housing downturn, spoke out in favor of bringing back the federal tax credits for homebuyers on the CNN program.

Now for our real estate education section…

Take the Mystery Out of Time Mastery

One of the most frequently cited reasons for not actively pursuing short sale investments is a lack of time; work schedules, family obligations and other day-to-day activities simply seem to take every available moment. So, where does everyone else find the time to invest? Surely they all can’t be retirees with nothing else to do all day. You are right – they aren’t. Research shows that busy people are more likely to remain busy and get even more done because they have mastered the mystery of time management.

For those of you who have read (and failed) at the 4-Hour Workweek or the 7 Habits of Highly Effective People and other popular time management books, the first step is to determine why you are out of control in the first place. Are you overwhelmed with work, home or other obligations? Chances are you may not even realize the extent of the problem but instead spend your days going from one urgent task to the next.  Although urgency is a great motivator, it can go too far. When the daily “to-do” list tends to pile up into a never-ending series of activities without an end in sight, you can be sure it has gone too far.

Rather than trying to figure out how to schedule enough time to attend a time-management course or sit down and re-prioritize the entire week or work through the weekend in yet another vain attempt to “get organized” try this instead; get control. Sounds simple doesn’t it? Well in some respects it really is simple. Today is Monday…give this a try for five days and see how it works for the remainder of the week:

1. Begin by asking yourself what really constitutes the most important actions for the day…the ones you would stay late in order to finalize…then work on those first. Be careful not to confuse “important” items with “urgent” items.

2. Next on the list are those “opportunity” items. These are tasks which are either time sensitive or require some level of consistent work in order to bring about.  If you find the opportunity list growing too large, it’s time to step back and get a reality check. Keep the list small and only add items once the original ones are accomplished. If an item is no longer a priority then delete it; don’t leave it on the list waiting for another day.

3.  Delegate. Learning how and when to delegate takes a bit of patience and persistence. Contrary to popular belief, hiring someone else to handle the mundane tasks in life isn’t always as simple as it seems. Finding the right person can be time consuming and fraught with frustration especially for those that have a tendency to micro-manage. Let go and let others do their job so you can do yours!

4. Appointments versus Tasks. Understand the difference. Appointments are traditionally the last thing you can delegate but many of the tasks required in the process of an appointment can easily be delegated. Create a list of significant outcomes that can be tracked and put into effect immediately.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

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)

*************************************************
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
–

Smart Real Estate News & Commentary by Chris McLaughlin July 19, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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Fix A Flip Re Opens … If you want your deals funded beyond 1 day,

this is the webinar you need to be on this coming Tuesday at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/618365627

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HUD wants a FICO of 500

The Department of Housing and Urban Development (HUD) said that it intends to require borrowers to have scores of at least 500 to qualify for FHA-insured loans. The agency has not required a minimum score before.  “It really is just conforming FHA standards to what FHA lenders have already been doing,” said Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.  As a result, the practical impact of this move will be extremely limited; during the second quarter of 2010, no FHA-insured loans were issued to borrowers with sub-500 scores. And, in fact, less than 1% of borrowers were below 580; most loans went to borrowers with scores above 620. 

The initiative is part of an ongoing effort to reduce default risk to the FHA loan portfolio and to boost the reserves that back those loans, according to HUD Commissioner David Stevens.  “These are the latest in a series of changes to allow the FHA to manage its risk better while continuing to support the nation’s housing recovery,” he said. “By protecting FHA’s capital reserves, we can continue providing affordable, responsible mortgage products and will remain the nation’s largest source of home purchase financing for underserved communities.”  During May, 8.97% of all FHA loans were seriously delinquent (seasonably adjusted). That was up from 7.93% during May 2009. But defaults have turned downward since January, when they peaked at 9.16%.  The defaults have drained FHA reserve, which is funded by insurance payments, to below the 2% minimum mandated by Congress. Taxpayer money could be in jeopardy if the insurance funds are depleted any further.

Hiring up slightly

According to a survey by National Association for Business Economics (NABE), employers grew payrolls for a second consecutive quarter this year. The percentage of firms increasing staff levels grew to 31% in the quarter, versus only 6% in the same period a year ago, while at the same time, the percentage of employers cutting jobs continued to move lower.  Looking ahead, the survey showed that 39% of companies expect to add employees over the next six months, the highest level of planned hiring since January 2008.  “The labor market continued to improve, with increases in current hiring and a rise in the percentage of firms planning to add workers over the next six months,” William Strauss, an economist at the Federal Reserve Bank of Chicago, said in a statement.

The U.S. unemployment rate stands at 9.5% as of June. The jobless rate has averaged 9.7% over the first half of the year, and many economists expect it to remain elevated into 2011.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, also indicated that the pace of the economic recovery slowed in the second-quarter.  Industry demand grew at a slower pace in the quarter, the survey said. Corporate profits grew as price and cost pressures remained tame. About one out of four firms increased capital spending versus the previous quarter, and a growing number expect to continue investing over the next 12 months, according to NABE.  While economic activity is expected to remain positive this year, more economists lowered their expectations for 2010 gross domestic product. Only 20% of prognosticators expect GDP will grow more than 3% this year.

Asking prices up slightly

After increasing for the first time in nine months in May, asking prices for active home listings were virtually unchanged in the June reading of the Altos Research 10-city composite price index. In addition, inventory of existing homes for sale increased both in June and for Q210.  The June median listing sales price for single-family existing homes was $477,937 in June, down $146, about 0.03%, below the May 2010 median of $478,083 for homes in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington DC.  Altos Research said 13 of 26 markets it tracks reported increases in asking sales prices for homes during the month of June.

For Q210, asking prices were up in 14 markets. San Francisco led both categories with a 2% in June and an increase of 4.4% quarter-over-quarter.  Following San Francisco in asking price increases was San Jose (1.5% in June, 2.5% in Q210), Austin (1%, 1.7%), Dallas (0.9%, 2.2%) and Cleveland (0.8%, 1.5%).  The market with the biggest decrease was Phoenix, down 2.4% from June and 3.9% in Q210, followed by changes in Miami (-2.3%, -4%), Washington DC (-0.8%, 0.4%), Las Vegas (-0.6%, -0.9%) and Boston (-0.5%, 0.1%).  Listing inventory totaled 304,831 properties in the 10-city composite, up 2.8% and 5.4% for the quarter. Chicago was the only market where listing inventory decreased in June, but the area was still up 0.7% for the quarter. While Detroit posted a 1.6% increase in listing inventory during June, it was the only market with a decrease in listing inventory for the quarter, down 2.1%. San Francisco lead all markets in inventory volume, up 7.6% in June and 13.5% for the quarter.

Antidote to an anti-business agenda?

Because of the perception that Obama is anti-business and his policies are causing small and large businesses to hunker down and wait out the witch hunt, House GOP Leader John Boehner said he supports a ban on all new federal regulations, after meeting Friday with business lobbyists who complained about uncertain economic conditions.  “I think having a moratorium on new federal regulations is a great idea. It sends a wonderful signal to the private sector they may have some breathing room,” Boehner said.  He said any ban would include an exemption for “emergency regulations” for some agencies, and suggested it could last a year.  Boehner and Illinois Republicans Peter Roskam and Aaron Schock convened a group of nearly 20 Washington-based business leaders on Friday who represent various sectors — including homebuilders, retailers and manufacturers — as part of their “America Speaking Out” initiative to gather ideas for the GOP legislative agenda.  Roskam said those in the meeting reported that a significant obstacle to the economic recovery is “the down-talking of the private sector, the rhetoric.” 

“The anti-business rhetoric that they see coming out of Washington is more than just symbolic.” Roskam added. “It’s creating a great deal of uncertainty.”  The people in the meeting repeatedly criticized the approach to the economy taken by the Obama administration and congressional Democratic leaders, criticizing excessive federal spending and burdensome government regulations.  Jay Timmons from the National Association of Manufacturers maintained the United States is “becoming one of the most risky places in the world in which to do business.” But Timmons did make a pitch for both parties to come together, saying, “It takes a bipartisan effort to get this economy moving again.”  Naturally, Ryan Rudominer, spokesman for the Democratic Congressional Campaign Committee, seized on the GOP meeting Friday to argue it would result in “a Republican agenda written for lobbyists by lobbyists.”  Apparently it’s better to have a Democratic business agenda written by social activists?

BoA encourages short sales

Bank of America (BoA) reported $35.7 billion in nonperforming loans, leases and foreclosed properties in Q210 – which is 15% above levels measured in the same quarter of last year.  These loans and properties increased more than $5 billion in total aggregate balance since Q209. The total did drop by more than $200 million worth of these loans and properties from the $35.9 billion reported in Q110.  They represented 3.74% of all outstanding loans, leases and foreclosed properties at the end of Q210.  Since 2008, BofA and the acquired Countrywide completed nearly 650,000 loan modifications. During Q210 alone, BofA completed 80,000 modifications, including 38,000 trial modifications that were converted into permanent workouts under the Home Affordable Modification Program (HAMP).  If a modification does fail, BoA is putting an emphasis on selling the home through a short sale ahead of foreclosure. At REO Expo 2010, Matt Vernon, the short sale and REO executive at BoA said that the bank added 1,000 employees to the short sale staff and will “do everything possible to liquidate property prior to foreclosure.”

Now for our real estate education section…

The 15 Minute Resolution…How to Generate Free Leads with Craigslist

This week’s 15 minute resolution is a simple but super effective way to put the power of CraigsList to work generating free leads. No spam, no expensive software and best of all…hardly no time is involved!

Everyone in real estate has probably tried to use Craigslist to buy or sell real estate; it’s powerful, free and frequently used by people throughout the entire nation. Unfortunately, it’s also slow, behind the times and a major drain on time for those that try to sort through pages and pages of dull links and competitors advertisements.

Now it’s possible to change all that with just 15 minutes of time and these quick steps:

1. Visit Google keywords or any of your favorite keyword finder to create a list of real estate/short sale related keywords. Great examples might include “motivated seller”, “commercial property”, “investment income” or any other relevant words that signify the type of property you are seeking.

2. Visit www.Craigslist.com and select the state and city of your choice. Copy the url exactly as it appears in the url address bar.

3. Visit the Google Advanced Search page at http://www.google.com/advanced_search?hl=en

- In the second line of the advanced search (where is says “this exact wording or phrase”) type in the keywords previously outlined one at a time.

- Scroll down the advanced search page to the bottom where it says “Search within a site or domain” and put the Craigslist.com url exactly as it appears in the address bar.

- Indicate the number of listings, whether you would like to receive results via email (or forward to your phone) and other parameters such as price. Viola’…that’s it! Now you are ready to start receiving instant leads via Craigslist for free. Not only will this save time and money when working with Craigslist but it’s a simple way to begin building a contact list in your local area or across the nation.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

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)

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