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Smart Real Estate News & Commentary by Chris McLaughlin February 3, 2012

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Home prices declined almost 5% in 2011

Home prices decreased 4.7% in 2011 compared to the year before, marking the fifth consecutive year-end decrease in the CoreLogic home price index. Excluding distressed sales, home prices decreased 0.9% last year, which CoreLogic said gives an indication “of the impact of distressed sales on home prices in 2011.” Home sales last year also show month-over-month declines. December showed the fifth consecutive monthly decline with a drop of 1.4%, but rose 0.2% when distressed sales were removed from the equation.

The December decline followed a much larger drop of 4.3% in November, compared to November 2010. “While overall prices declined by almost 5% in 2011, nondistressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic. While national statistics may be bleak, a few states posted increases in the price of homes last year. Montana came in first with 4.4% appreciation with distressed sales included, followed by Vermont (+4%), South Dakota (+3.1%), Nebraska (+2.5%) and New York (+1.7%). Illinois had the biggest 2011 decline in prices, 11.3%, followed by Nevada at 10.6%. Nevada’s peak-to-current decrease stands at 60% (including distressed homes), compared with a national decrease of 33.7%.

Employment up

The pace of job creation surged in January, with the US economy generating 243,000 new positions while the unemployment rate dropped to 8.3%, according to government data released today. Both numbers were far better than consensus, which expected a growth of 150,000 jobs and a steady unemployment rate of 8.5%. The overall work week remained unchanged at 34.5 hours while wages rose an average of four cents an hour to $23.29. The closely watched labor-force participation number, which can skew the unemployment rate, fell to 63.7%, the lowest since May 1983. The number of those working part-time for economic reasons rose 1.2%. Job gains have been concentrated primarily in the service sector, particularly in retail and the food and beverage industries. Warehousing, manufacturing, mining and health care also have participated. True to form, services were responsible for 162,000 of the January swell, with manufacturing payrolls growing 50,000. Government cuts subtracted 14,000 from the total. The total number of unemployed fell below 13 million for the first time since February 2009, while the total amount of employed Americans rose to 141.6 million, an increase of 847,000 from December. The unemployment rate was last this low in February 2009. The so-called real unemployment rate, which measures discouraged workers as well and is referred to as the U-6, nudged lower to 15.1%.

Long-term unemployment, though, remains a problem, with the duration dropping from a near-record 40.8 weeks to 40.1 weeks. Also, the level of discouraged workers surged, rising 7% to its highest level since December 2010. Job growth remains one of the two missing pieces of the recovery puzzle, even though the rate has been on a steady trek lower. In December, the economy created 203,000 jobs and the unemployment rate slipped to 8.5%, well off its 10.1% cycle peak. The monthly jobs report generally draws considerable trader reaction, which as of late has been all negative.

Olick – rent vs own riles government policy

“Fannie Mae and Freddie Mac, the mortgage giants under government conservatorship, together owned 182,212 foreclosed properties as of the end of September. While they aggressively market and sell these homes to investors and owner-occupants alike, the numbers are still too high; these number could go far higher, as foreclosures previously stalled by paperwork issues come back into process. That’s why the federal regulator overseeing the two is launching a bulk sale program, offering investors the chance to buy foreclosed properties at a discount, as long as those investors turn the properties into viable rentals for a specified number of years. ‘This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets,’ according to a release from the regulator, the Federal Housing Finance Agency (FHFA).

The FHFA launched the initial phase of pre-qualification. Investors must prove they have ‘(a) the financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO [Real Estate Owned, i.e. bank owned] and related matters confidential.’ That last part is to keep the prices competitive as the market starts to improve. Giving investors the opportunity to help clear the massive amount of distress in the housing market is crucial. The inventory of foreclosed properties is large, getting larger, and making it impossible for the overall market to achieve price stability. Witness a report today from CoreLogic which shows that home prices in December fell 4.7% year-over-year including sales of distressed properties. Excluding those properties, home prices fell less than one%.

Some, however, think the program is a negative: ‘People are brainwashed to think foreclosures are a bad thing for the housing market. Perhaps four years ago when a million loans all went into default and Foreclosure at the same time but not today. Today, 1st timers and investors — with an insatiable appetite for foreclosures, REO resales, and short sales — are the bedrock of this housing market.’ – Mark Hanson, Mortgage Analyst

‘Foreclosed homes are already meeting strong demand from investors when they come to market. We think these buyers are willing to pay a relatively full price, as they know the specific locations, and a large number of buyers have the ability to bid on the individual homes (doesn’t require significant capital)… Additionally, it will be difficult/expensive for investors to scale up operations given the broad geographic dispersion of properties vs. more traditional rental units, potentially limiting participation.’ – Dan Oppenheim, Credit-Suisse

Oppenheim also asks a valid question as to why the government would offer discounts to large investors buying in bulk, but not to individual investors buying perhaps a single property. There are plenty of Americans out there salivating over incredibly low-priced homes; rental income could be as much of a boon to them as perhaps a tax cut or a refinance. It was interesting yesterday, during his speech touting a proposed new government mortgage refinance program, President Obama, caught up in the moment, exclaimed, ‘No more renting!’ Putting aside the public relations blunder that was, given the fact that the FHFA had announced its REO to rent program not two hours before, it just drove home the conflict our government has between what it thinks Americans want to hear and what our economic reality dictates.

A few simple facts: There is not enough buyer demand to meet the number of homes for sale. A huge number of the homes for sale are empty, foreclosed properties. Too many Americans either cannot afford to buy a home or do not have the credit necessary to finance a home. Too many Americans cannot afford to sell their current homes in order to move or step up to a larger home. Rental demand is therefore strong and getting stronger. While homeownership may be a tenet of the ‘American Dream,’ renting is today’s actuality for a growing number of Americans. Whether it is large investor bulk programs or single investor incentives, adding to rental supply, thereby lowering rents, while at the same time clearing the market of foreclosed properties is a win. It may not be as politically palatable as offering ‘responsible’ borrowers a veiled tax credit in the form of a mortgage refinance, but it is good medicine for what ails housing.”

Pension threat for market investors

It’s no secret that the financial crisis and resulting malaise has taken its toll on bank stocks, commodities and Treasury yields. But it may be have triggered another ripple – one that has gone somewhat unnoticed. Pension funds have become seriously underfunded. According to a recent report from Credit Suisse some of the nation’s largest companies owe their pensions more than 25% of their market cap (after taxes). Although the problem is complex, at its core is simple math. Many firms forecast returns of 8% annually, and that just hasn’t happened. This developing situation is potentially market moving because it could require companies to make larger contributions – much larger. And if contributions ‘do’ go up, the money will have to come from someplace on the balance sheet.

“A pension accounting change at UPS will result in $527 million after tax charge in 2011,” says Joe Terranova. “And Sunoco said they have to contribute $80 million into their pension funds.” In other words, the need to fund pensions could drag down profits and, in turn, share price. In fact, the pension liability at AK Steel was cited by BofA as a reason behind their recent decision to downgrade the stock to ‘Underperform’ from ‘Neutral.” “I think in 2012 it will be a recurring issue,” Terranova says. John Ehrhardt of Milliman confirms the thesis. He tells us that investors should expect record numbers of earnings charges in 2012. “Record low interest rates result in historically high liabilities and the only remaining lever may be employer contributions.” And according to Ehrhardt this may be just the tip of the iceberg. “These companies are going to need 20-30% returns to fill the kinds of gaps we’re talking about.”

WSJ – Ally financial swings to loss

Ally Financial Inc., the US government-owned auto lender, swung to a $250 million net loss in the fourth quarter after taking a charge for regulatory penalties stemming from foreclosure matters. The Detroit-based lender, which provides financing for General Motors Co. and Chrysler Group LLC dealers and customers, continued to make money from its auto-lending operations, but the results were weighed down again by its mortgage unit, which is saddled with lawsuits over foreclosures and soured mortgage investments. The loss compares to a year-ago profit of $79 million. It had a core pretax loss, which reflects results from continuing operations before taxes and other expenses, of $24 million, down from $526 million. Excluding a $270 million foreclosure-related charge, core pretax income would have been $246 million.

“One of our key priorities remains aggressively addressing the risks related to the mortgage business and taking steps to protect the key franchises at Ally,” Michael Carpenter, the company’s chief executive, said in a statement. “This will be critical to advance plans to repay the US taxpayer.” Ally, which was formerly owned by GM, is one of at least five major mortgage servicers in discussions with state and federal regulators over a potential settlement of “robo-signing” and other alleged foreclosure offenses. Regulators are close to finalizing a deal worth as much as $25 billion that could also include Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. On Tuesday, Ally said it would record the $270 million charge in the fourth quarter for penalties from regulators and other government agencies related to foreclosure issues.

The charge was mainly related to its mortgage subsidiary, Residential Capital, which has been the subject of bankruptcy speculation for several months. The charge caused a temporary decline in ResCap’s tangible net worth below $250 million, breaching debt covenants of some of its lenders, Ally said. Ally has been trying to scale back its mortgage operations as it focuses on building up its auto business and online retail bank. In November, the company said it would significantly curtail its correspondent lending operations, which comprise the bulk of its mortgage originations.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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 January 3, 2012

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Details – anti-flipping rule waiver

I reported last week that the waiver on the anti-flipping rule was extended by the Federal Housing Administration (FHA)  through the end of 2012, but here are some more details, courtesy of DSNews.com.  The new extension will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.  FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.  “This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHAremains a critical source of mortgage financing and stability and we must make every effort that to promote recovery in every responsible way we can.”

According to the FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.  Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.  In addition, in cases in which the sales price of the property is 20% or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.  FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.  Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.  The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.  As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.

Consumer spending tepid

After a strong start on Thanksgiving weekend, a pronounced lull followed, causing retailers to mark down products heavily in the week before Christmas. While final numbers for the season are not in, analysts say they are worried that retailers had to eat into profits to generate high revenues.  Consumer spending makes up 70% of the economy, so until it ignites, general growth is likely to be sluggish.  Macroeconomic Advisers, a forecasting company, projects growth of around 2% for the first half of this year, down from an estimate of 3.6% in the fourth quarter of 2011 and just 1.8% in the third quarter.  For consumers, the reasons for the sluggishness are clear: incomes are essentially flat, job growth is modest, and more than 40% of the new jobs in the last two years have been in low-paying sectors like retail and hospitality.  While consumer spending is not “going to collapse,” said Joel Prakken, senior managing director at Macroeconomic Advisers, “there are some headwinds there.”

DSNews.com – broad-based price decline

Data released last week by Standard & Poor’s indicates the fourth quarter of 2011 started with broad-based declines in home prices.   The 20-city composite of S&P’s closely watched Case-Shiller index was down 1.2% in October versus September, while the 10-city composite reading registered a 1.1% drop.  Home prices fell in 19 of the 20 cities covered by the S&P/Case-Shiller index. Phoenix was the only metro area to see a month-over-month increase, with prices there rising 0.3%.  David M. Blitzer, chairman of the index committee at S&P Indices, says Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness.  He notes that Atlanta was down 5.0% over the month of October, after having fallen by 5.9% in September.  Chicago, Cleveland, and Minneapolis – some of the strongest markets during the spring and summer buying season – all saw monthly declines of 1.0% or more in October.  On a year-over-year basis, the 10- and 20-city composites posted declines of 3.0% and 3.4%, respectively, when compared to October 2010.

Detroit (+2.5%) and Washington D.C. (+1.3%) were the only two cities to record positive annual returns. Atlanta posted the worst year-over-year result with an 11.7% decline.  S&P notes, however, that 14 of the 20 metros and both composite readings recorded improved annual returns when compared to the agency’s previous report. Miami saw no change, while Atlanta, Detroit, Las Vegas, Los Angeles, and Minneapolis saw their annual rates worsen.  According to the S&P/Case Shiller index, the crisis low for the 20-city composite was back in March 2011. The 20-city reading in October is about 1.9% above that recent double-dip mark.  The index’s 10-city composite hit its crisis low quite earlier in the cycle, in April 2009, S&P says. October’s 10-city assessment is about 2.4% above its relative low.

Shhh – the US is broke, but don’t tell anyone!

The General Accounting Office has released its fiscal 2011 annual report.  When companies and governments have bad news to release, they try to release it at the moment when journalists and the public are paying the least amount of attention — thus, hopefully, generating the least possible amount of grumbling and complaints.  So it’s no surprise that the GAO released its 2011 report on the Friday before Christmas, possibly the day of the year on which the country was paying the least amount of attention.  As you might expect, the GAO’s annual report on the financial condition of the United States contains tons of bad news.  The country can print its own money, so it’s not “broke” in the classic sense of the word (can’t pay its debts, can’t fund its operations).  But the country is also clearly on an unsustainable course.

Here are the highlights:

-  The US ran a $1.3 trillion budget deficit in 2011, flat with 2010 and the third year in a row of deficits over $1.3 trillion

-  The US federal debt load continues to climb as a percentage of GDP and is expected to explode over the next few decades

-  The big problem in our current and future finances is NOT spending on Defense, Education, the Environment, and the other government programs that Democrats and Republicans love to fight about.

The big problem in our budget is a combination of:

-  Taxes that are currently off their peak as a percentage of GDP

-  Future unfunded commitments to Medicare and Social Security

To be perfectly clear: The amount of the “unfunded liability” for our Social Insurance programs (Medicare and Social Security) is now $34 Trillion. This is an increase of $3 Trillion from last year. This number has increased at about $1.7 Trillion per year for the past 10 years. If not for some absurd assumptions about how Congress is going to eventually chop the cost of Medicare (the so-called “doc-fix” that pays doctors more for Medicare procedures that Congress passes every year), the liability would be $46 Trillion.  So, what’s the implication and solution?  Over the long haul, the intelligent solution is a combination of modestly higher taxes and reductions in Medicare and Social Security benefits.  The other option is bankruptcy.

Miami-Dade sales up 25%

Pending home sales in Miami-Dade County jumped 25% in November from a year earlier, the Miami Association of Realtors said Tuesday.   The number of listings hit 3,348, up from 2,598 a year ago, the trade group said.  Single-family home and condo sales pending during the month jumped 43% and 14%, respectively, over their November 2010 levels.  “Miami pending home sales have consistently increased over the past couple of years,” said Jack Levine, 2011 chairman of the Miami Association of Realtors. “We continue to see increasing pending sales, which points to increased future closed sales, price appreciation, and market strengthening.”  The pending sales home index nationally increased 7.3% to 101.1 during the same month, showing a greater deal of confidence from an level of 83.3 a year earlier, the report said.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

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 150 high-value, high-profit

properties

* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

* In 2010, Chris’ 4 Central Florida real estate offices

closed 2,786 sides for a closed sales volume of

$392,912,927!

* 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 January 2, 2012

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

BOA short sale program to expand?

Bank of America’s (BOA) cash-back incentive, which tempted delinquent borrowers to do a short sale over a lengthy foreclosure, ended Dec. 12 with mixed reviews. The Florida-only program offered between $5,000 and $20,000 in relocation expenses to qualified homeowners who agreed to vacate their homes through a short sale in lieu of the average two-year foreclosure process.  But as of early December, only about 3,000 homeowners of 20,000 solicited by the bank had expressed interest in the plan, which one real estate consultant said was unthinkable before the robo-signing scandal heightened the foreclosure chaos.  “A year ago, banks weren’t making offers like this. Now, it’s a complete reversal in that they are proactively soliciting short sales,” said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach. “They are offering unbelievable deals.”

Realtors say banks, including Wells Fargo and JPMorgan Chase, began offering cash incentives about six months ago to homeowners who agree to do short sales. With foreclosures taking an average of 749 days in Florida, according to a November RealtyTrac report, it’s cheaper to pay off an owner than take them to court, Realtors say.  BOA spokeswoman Jumana Bauwens said she couldn’t comment on concerns unless they dealt with a specific case, but that the company was “pleased” with the homeowner response.  Bauwens said Florida was chosen to test the program because of its high number of foreclosures. If it’s ultimately deemed successful, it could be expanded to other states.  To qualify, homeowners had to submit their short sales for approval by Dec. 12 – an extended deadline from an original Nov. 30 date. The homes could not have offers on them already, and the closing needed to occur before Aug. 31.

Ford hits 2 million mark in 2011

The Ford brand passed the 2-million mark, said Erich Merkle, Ford US sales analyst.  Ford’s small cars sales posted an increase of more than 20% this year, while its utility vehicles hit a 30-percent gain, the company said.  Overall, including its Lincoln luxury brand and now-defunct Mercury brand, Ford company sales were up about 11% through November, and the Ford brand’s sales were up about 18%.  As gasoline prices rose in 2011, customers continued to move toward smaller, more fuel-efficient vehicles. In recent years, Ford has emphasized fuel efficiency, including adding its “EcoBoost” engines that include turbocharging and fewer cylinders, particularly on utility vehicles and pickup trucks.  US auto sales in December are expected to top 13 million on an annual rate, J.D. Power and Associates and LMC Automotive said.  Once again, as it has each year for more than three decades, the Ford F-Series pickup trucks are the best-selling vehicle in the US market. Through November, Ford sold 516,639 F-Series pickup trucks, according to Autodata.

Olick – housing’s new hope

“I’m not sure if it’s that usual New Year’s Eve optimism evoked by the generic philosophy that the grass is always greener on the other side of the calendar year, or perhaps the emotional need to dig ourselves out of what has surely been one of the more lugubrious periods in the US economy, but there is some hope in housing.  A few positive readings in home sales and housing starts recently, topped off by today’s 7.4% monthly jump in contracts to buy existing homes, are fueling what I dare say is a spark, albeit not a fire. They are also managing to trump what was a particularly opposing reading in home prices from the number crunchers at S&P/Case-Shiller this week.  Don’t worry, I’m not going to dump a bunch of coal on the numbers and claim they’re all spurious in some way; I’m all prepared to be munificent, while chary (did I mention my new year’s resolution is to improve my family’s vocabulary, as well as banish ‘like’ from my kids’ lexicon.) I will note that even the Realtors, while touting affordability and pent-up demand, note that many of these new signed contracts are the result of delayed transactions.  ‘Contract failures have been running unusually high,’ notes National Association of Realtors chief economist Lawrence Yun. ‘Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,’ he said.

Then there is a big story in the Wall Street Journal [on Friday] of hedge funds putting their money back in housing, suggesting that while the numbers aren’t all there for a big win, these funds are usually ahead of big market shifts, so the housing surge must be on its way. I’ve spoken to some of these hedge fund types as well, and they seem to be playing on the surging rental market for now, getting the bargains but not expecting any big ‘flipping’ returns any time soon.  ‘Bottom line, whether due to even lower prices, historically low mortgage rates, falling inventory and a better tone to the labor market or a combination of all, the housing market is showing signs of stabilizing,’ says Peter Boockvar at Miller Tabak. ‘I say stabilize instead of bottom, as its too early to make that claim just yet with still a huge amount of foreclosures that hasn’t worked its way through the judicial system and prices that haven’t likely stopped going down as a result.’  Some are predicting that foreclosures will push home prices down another five to ten% before hitting a true bottom.

In addition, those rock-bottom mortgage rates that everyone is touting this week may be heading up, as the conservator of Fannie Mae and Freddie Mac today directed the two mortgage behemoths to inform servicers that guarantee fees would rise ten basis points next week. That, if you recall, is to pay for the temporary extension of the payroll tax cut. Yep, that money heads to the US Treasury, not to the troubled balance sheets of Fannie and Freddie. This accused nostrum will likely raise rates a tad, but rates are still close to historical lows. And we should remember that.  It’s all relative. Are things getting a bit better? Probably. I heard (or read…can’t remember) someone today say that housing has gone from a negative to a nothing for the US economy. So when we tout and rave about today’s pending home sales numbers, we mustn’t forget where we’ve been:  ‘It’s not going to keep 2011 from being the worst on record for new home sales, for single family permits and single family housing starts. Next year is going to be better, but that’s not saying much because this has been the worst year, probably since 1945,’ said IHS Global Insight’s Patrick Newport. In other words, housing ain’t exactly fecund, but it’s at least inching off life support.”

Employers offer weird benefits

Pet insurance, at-your-desk meditation services, jewelry discounts and funeral planning — from the quirky to the somber, workplaces are providing a range of unique benefits in 2012.  The options come as many firms try to placate employees frustrated by pay cuts, heavy workloads, high health insurance costs and reduced 401(k) matches.  “Companies are trying to have it feel like it’s not one big take-away,” said John Bremen, a managing director at employer consultancy Towers Watson. “They are trying to find ways to appeal to the workforce.”  Many voluntary benefits — such as reduced-price computers and pet insurance due to group-buying discounts — won’t gouge a corporate budget.  “On the employer side, there’s a recognition that they can’t always add to the benefits program in a way they have in the past,” said Ronald Leopold, national medical director at MetLife. “But they want to offer employees different things and a broader set of (choices).”

Among the many options offered: free tickets to theme parks, cellphone plan discounts and at-work massages.  Benefits at drug manufacturer Allergan include adoption assistance and auto insurance discounts. It also has a free concierge service for workers to acquire theater tickets, drop off laundry and get restaurant reservations.  Firms such as S.C. Johnson, TD Bank and Travelocity provide discounted health coverage for workers’ pets through Petplan Pet Insurance. Petplan “has seen tremendous growth in this area of voluntary benefits,” co-CEO Chris Ashton said. “In this struggling economy, employers are increasingly looking for low-cost options to keep their employees happy.”

WSJ – 2011 ends with near record mortgage rate lows

Average fixed mortgage rates in the US over the past week finished the year near all-time lows, with the 30-year home loan at 3.95%.  According Freddie Mac’s weekly survey of mortgage rates, the rate for a 30-year fixed-rate mortgage has been at or below 4% for the past nine consecutive weeks and only twice in 2011 did it average above 5%.  The 30-year fixed-rate mortgage averaged 3.95% for the week ended Thursday, up from 3.91% the previous week and below 4.86% a year ago. Rates on 15-year fixed-rate mortgages averaged 3.24%, up from 3.21% last week and below 4.20% a year earlier.  Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARM, averaged 2.88%, up from 2.85% yet below 3.77% of a year ago. One-year Treasury-indexed ARM rates averaged 2.78%, up from 2.77% in the prior week and below 3.26% last year.  To obtain the rates, 30-year and 15-year fixed-rate mortgages required payments of 0.7 percentage point and 0.8 percentage point, respectively. Five-year and one-year adjustable rate mortgages required an average payment of 0.6 percentage point. A point is 1% of the mortgage amount, charged as prepaid interest.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

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 150 high-value, high-profit

properties

* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

* In 2010, Chris’ 4 Central Florida real estate offices

closed 2,786 sides for a closed sales volume of

$392,912,927!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

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Smart Real Estate News & Commentary by Chris McLaughlin December 30, 2011

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Foreclosures up in New York

In the New York metro area, the foreclosure rate rose to 7.5% in June, up 2.1 percentage points from the previous peak in December 2009, according to Foreclosure-Response.org, a joint project by the Local Initiatives Support Corp., the Urban Institute and the Center for Housing Policy. The rate is up 3.7 percentage points from March 2009, when the group started tracking the data in 100 US metro areas.  “New York is a judicial state, so it takes a long time for properties that enter foreclosure to exit the process,” said Rob Pitingolo, a research assistant for Urban Institute. “The backlog of foreclosures in the system is driving the foreclosure rates up.”  Judicial states require a lengthy and formal court proceeding to carry out a foreclosure, and in New York that process can take up to two years for a loan to complete foreclosure, according to experts.  “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete,” said Leah Hendey, a research associate at Urban Institute, in a statement. “It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets.”

The increasing foreclosure rate contributed to New York’s serious delinquency rate of 10.8% in June, much higher than the average 9.3%. In fact, while the serious delinquency rate has improved across the largest metro areas in the nation, falling 1.1 percentage points from its December 2009 peak of 10.4%, delinquency got worse in New York, where the rate rose 0.6 percentage points. The serious delinquency rate covers first-lien mortgages in foreclosure as well as loans that are delinquent for 90 or more days.  The good news is fewer homeowners in the New York metro area are falling behind on their mortgage payments, according to the data. The New York area’s 90-day-plus delinquency rate dropped 1.2 percentage points to 3.4% in June, compared with the same time a year ago. Delinquent loans in the New York metro area came in slightly below the average rate of 3.7%. The 90-day-plus delinquency rate represents the percentage of all mortgages that have not yet entered a foreclosure but are 90 or more days overdue.

Treasury to charge banks for risk monitoring

The US Treasury Department plans to start charging large banks a fee to cover the costs of the financial risk council it leads and a research office tasked with measuring threats to financial markets.  The Financial Stability Oversight Council and the Office of Financial Research were created by the 2010 Dodd-Frank financial oversight law, which instructs the government to bill banks for their operations.  On Thursday the Treasury Dept. released a proposed rule that would apply to banks with more than $50 billion in total assets, starting in the middle of next year.  The department is proposing charging these banks a flat rate that would be applied to an institution’s total consolidated assets, and would be collected twice a year.  The department has yet to announce the specific fee banks will be charged because the budget for the council and research office will not be known until President Barack Obama releases his fiscal 2013 budget proposal early next year.  The Treasury Dept. said it plans to have a final fee rule out no later than the end of May and will let banks know what their tab is in June. The fees will first be collected in July.  Treasury said the collected fees will be enough to cover six months of OFR and FSOC operating expenses and 12 months of capital expenses.  The proposed rule will be subject to 60 days of public comment.

Olick – housing’s new hope

“I’m not sure if it’s that usual New Year’s Eve optimism evoked by the generic philosophy that the grass is always greener on the other side of the calendar year, or perhaps the emotional need to dig ourselves out of what has surely been one of the more lugubrious periods in the US economy, but there is some hope in housing.  A few positive readings in home sales and housing starts recently, topped off by today’s 7.4% monthly jump in contracts to buy existing homes, are fueling what I dare say is a spark, albeit not a fire. They are also managing to trump what was a particularly opposing reading in home prices from the number crunchers at S&P/Case-Shiller this week.  Don’t worry, I’m not going to dump a bunch of coal on the numbers and claim they’re all spurious in some way; I’m all prepared to be munificent, while chary (did I mention my new year’s resolution is to improve my family’s vocabulary, as well as banish ‘like’ from my kids’ lexicon.) I will note that even the Realtors, while touting affordability and pent-up demand, note that many of these new signed contracts are the result of delayed transactions.

‘Contract failures have been running unusually high,’ notes National Association of Realtors chief economist Lawrence Yun. ‘Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,’ he said. Then there is a big story in the Wall Street Journal today of hedge funds putting their money back in housing, suggesting that while the numbers aren’t all there for a big win, these funds are usually ahead of big market shifts, so the housing surge must be on its way. I’ve spoken to some of these hedge fund types as well, and they seem to be playing on the surging rental market for now, getting the bargains but not expecting any big ‘flipping’ returns any time soon.  ‘Bottom line, whether due to even lower prices, historically low mortgage rates, falling inventory and a better tone to the labor market or a combination of all, the housing market is showing signs of stabilizing,’ says Peter Boockvar at Miller Tabak. ‘I say stabilize instead of bottom, as its too early to make that claim just yet with still a huge amount of foreclosures that hasn’t worked its way through the judicial system and prices that haven’t likely stopped going down as a result.’  Some are predicting that foreclosures will push home prices down another five to ten% before hitting a true bottom.

In addition, those rock-bottom mortgage rates that everyone is touting this week may be heading up, as the conservator of Fannie Mae and Freddie Mac today directed the two mortgage behemoths to inform servicers that guarantee fees would rise ten basis points next week. That, if you recall, is to pay for the temporary extension of the payroll tax cut. Yep, that money heads to the US Treasury, not to the troubled balance sheets of Fannie and Freddie. This accused nostrum will likely raise rates a tad, but rates are still close to historical lows. And we should remember that.

It’s all relative. Are things getting a bit better? Probably. I heard (or read…can’t remember) someone today say that housing has gone from a negative to a nothing for the US economy. So when we tout and rave about today’s pending home sales numbers, we mustn’t forget where we’ve been:  ‘It’s not going to keep 2011 from being the worst on record for new home sales, for single family permits and single family housing starts. Next year is going to be better, but that’s not saying much because this has been the worst year, probably since 1945,’ said IHS Global Insight’s Patrick Newport. In other words, housing ain’t exactly fecund, but it’s at least inching off life support.”

Oil up

Oil prices inched higher toward $100 a barrel Friday amid encouraging signs the US economy is slowly improving and continuing tensions between Western powers and Iran.  By early afternoon in Europe, benchmark crude for February delivery was up 13 cents to $99.78 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 29 cents to settle at $99.65 in New York on Thursday.  In London, Brent crude was down 48 cents at $107.53 a barrel on the ICE Futures exchange.  Crude has traded near $100 since mid-November after jumping from $75 in October as investors eye growing evidence the US economy could avoid a recession next year. The government reported Thursday that claims for jobless benefits fell to a four-week average of 375,000, the lowest level in three and a half years.

Energy trader Blue Ocean Brokerage said oil prices would likely eventually jump by about $50 if Iran, OPEC’s second-biggest crude exporter, tried to close the strait.  “Let’s start with an easy $20 spike, then add in a risk premium for insurance costs, delays, costs to push oil through alternative routes and the obvious loss of 3.5 million barrels a day from Iran,” energy trader Blue Ocean Brokerage said in a report.  “Crude oil prices have managed to outperform the commodity complex this year, with geopolitical risk premiums and seemingly resurgent US economy offsetting a worsening situation in the eurozone,” said analysts at Sucden Financial in London. “With regard to Iranian tensions specifically, an EU foreign ministers’ meeting on Jan. 30 to consider further sanctions on the country will likely prove an important focus in early 2012 trade.”  Trading volume was low this week as many investors take vacations around the Christmas and New Year’s Day holidays.  In other Nymex trading, heating oil rose 0.4 cent to $2.9241 per gallon and gasoline futures lost 0.7 cents at $2.6624 per gallon. Natural gas futures were down 2.2 cents to $3.005 per 1,000 cubic feet.

NAR – pending home sales up

Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors (NAR).  The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, increased 7.3% to 100.1 in November from an upwardly revised 93.3 in October and is 5.9% above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4% monthly gain.  The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.  The PHSI in the Northeast rose 8.1% to 77.1 in November but is 0.3% below November 2010. In the Midwest the index increased 3.3% to 91.6 in November and is 9.5% above a year ago. Pending home sales in the South rose 4.3% in November to an index of 103.8 and remain 8.7% above November 2010. In the West the index surged 14.9% to 121.2 in November and is 2.9% higher than a year ago.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.  The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

Foreclosure backlog to take “decades” to clear

The number of seriously delinquent mortgages in the nation’s largest metropolitan areas slowed this year, according to a new study from the Urban Institute. But foreclosures remain a burden on the housing market, prompting the policy research group to call for a resolution to the housing crisis to ensure the foreclosure backlog is cleared out in a reasonable time period.  The institute said the serious delinquency rate in the 100 largest metro areas slowed to 9.3% in June from 10.4% in December 2009, according to data from Foreclosure-Response.org. The Urban Institute said the serious delinquency rate is classified as the share of loans in foreclosure, plus all of those that are more than 90 days in arrears.  “The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear,” said Leah Hendey, research associate at the Washington firm. “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete. It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets.”  This decline was driven by a drop in delinquent loans, which fell to 3.7% in June from 5.5% in December 2009.

In hard-hit areas like Riverside and Stockton, Calif., the foreclosure rate declined significantly, dropping 1.9 percentage points and 1.7 percentage points from the peak two years ago.  Florida, New York and Illinois experienced a different shift in the market with foreclosure rates climbing in cities throughout those states.  In Tampa, the foreclosure rate jumped 2.8 percentage points, and in Chicago, it grew 2.3 percentage points. Those three states are judicial foreclosure states, which force a court to make a final decision before a property can leave the process. This leads to a growing backlog, the Urban Institute said.  Mortgage originations are down in all of the 100 metro areas surveyed, as well. Some of the largest drops occurred in Buffalo, N.Y., where originations fell 39% this year, and Miami, where new home loans fell 82%, the report said.

See you at the top!

Chris McLaughlin

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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 150 high-value, high-profit

properties

* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

* In 2010, Chris’ 4 Central Florida real estate offices

closed 2,786 sides for a closed sales volume of

$392,912,927!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

Wealth Building

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