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Smart Real Estate News & Commentary by Chris McLaughlin July 23, 2010

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Existing homes sales fall

According to the National Association of Realtors (NAR), existing homes sales fell 5.1% to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8% higher than the 4.89 million-unit pace in June 2009. Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”  AR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors® bring to buyers and sellers in this market.”

Most Americans think things will get worse

A nationwide survey from Citigroup shows that nearly two-thirds of Americans believe that the economy has yet to hit bottom, meaning a double-dip recession is expected.  The quarterly report, conducted by Hart Research Associates, revealed that 62 percent of people asked were still not counting on a rebound, which is 3-point decline from the March reading and almost as bad as last September’s result of 63 percent.  The survey also showed that Americans’ expectations for when the economy will stabilize for their households have been pushed further into the future. Nearly two thirds think that their households will not see a stable financial situation for at least two or three years, it said.  On the positive side, Americans’ views on current economic conditions and the outlook for their own personal financial situations are improving or holding steady, the survey said.  Twenty-four percent said that the local economy where they live is good or excellent, which is up from 19 percent in March, the report said.  “The big question is, could the gloomy news become a self-fulfilling prophesy, prompting consumers to restrain their spending, thus hurting the economic recovery?” he added.

Inventories up, sales down

A NAR practitioner survey shows that first-time buyers purchased 43% of homes in June, down from 46% in May. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers. All-cash sales were at 24% in June compared with 25% in May.  Total housing inventory at the end of June rose 2.5% to 3.99 million existing homes available for sale, which represents an 8.9-month supply at the current sales pace, up from an 8.3-month supply in May. Single-family home sales fell 5.6% to a seasonally adjusted annual rate of 4.70 million in June from a level of 4.98 million in May, but are 8.5% above the 4.33 million pace in June 2009. The median existing single-family home price was $184,200 in June, up 1.3% from a year ago.  Single-family median existing-home prices were higher in 10 out of 19 metropolitan statistical areas reported in June in comparison with June 2009. In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged.  Existing condominium and co-op sales slipped 1.5% to a seasonally adjusted annual rate of 670,000 in June from 680,000 in May, but are 20.5% higher than the 556,000-unit pace in June 2009. The median existing condo price was $180,100 in June.

Bush did it … another perspective

In office 18 months, Obama is still running against the policies of George W. Bush and cites “nearly a decade of not paying for key policies and programs” such as the wars in Iraq and Afghanistan, big tax cuts and a costly Medicare prescription drug program.  Bush came to office with a $236 billion budget surplus in 2001, says Obama. “The day I took office, eight years later, America faced a record $1.3 trillion deficit.”  But blaming the country’s economic woes on Bush tax cuts and spending is a stretch.  It ignores the fact that as recently as 2007, the budget deficit was just $162 billion — long after Bush’s tax cuts of 2001 and 2003 kicked in and spending on the two wars and on the Medicare program was in place.  Furthermore, the projected surplus reflected a continuation of the bubble economy of the late 1990s, when the stock market was soaring, high-tech businesses were on a roll and corporate profits were surging. Those surpluses would have evaporated no matter who became president in 2001.  The rise in the annual deficit from $162 billion in 2007 to over $1 trillion now is largely due to collapsing tax revenues from the recession that began in December 2007, and stimulus and bailout spending by both Bush and Obama, said Brian Riedl, a budget analyst at the Heritage Foundation.  The Bush tax cuts and other policies are “a convenient scapegoat for past and future budget woes,” he said, but can’t be blamed for today’s trillion-dollar deficits — or future ones.  “Over the next 10 years, virtually 100 percent of the rising deficits” will be driven by “entitlement” programs such as Social Security, Medicare and Medicaid and interest payments on the $13.2 trillion national debt, Riedl said.

Olick – don’t be fooled

“Don’t be fooled by the little uptick in home prices in today’s Existing Home Sales report from the National Association of Realtors.  Even the always glass-is-half-full chief economist Lawrence Yun made clear several times in the briefing before the report’s release, that he expects home prices to come under significant pressure over the coming months, as inventories rise.  The report today showed inventories up 2.5 percent to 3.99 million units. At the current sales pace, that represents an 8.9 month supply. The current sales pace ticked down 5 percent in June, even though those numbers are still under the sway of the home buyer tax credit (remember, EHS represent closings in June, so contracts likely signed in April before the credit expired).  But more importantly, the Pending Home Sales Index, which represents contracts signed, fell off a cliff in May, down 30 percent, indicating that closings will be way off as well.  Bottom line, experts who follow housing are having a hell of a time predicting just where home prices are headed nationally.”

“A new monthly report, Macro Markets Home Price Expectations, a venture by price guru Robert Shiller, found that the results for 2010 vary widely, anywhere from plus 4.9 percent to minus 12 percent. “In July 60 percent of the panelists projected negative home price growth for 2010,” writes Shiller in the report. The longer-term results, however, were less optimistic.  “Although still positive, the average outlook for five-year cumulative home price appreciation fell in July for the second consecutive month, and is now in single-digit territory,” writes Terry Loebs, MacroMarkets Managing Director. “This new consensus suggests a less robust housing recovery scenario – one that, all other things equal, would result in U.S. household wealth by year-end 2014 being about $500 billion less than the level implied by the average of panelist responses just two months ago.”

Now for our real estate education section…

Friday File – 15 Minute Short Sales Resolution…is Your LinkedIn Profile a Liability?

For this week’s 15 minute short sale resolution, it’s time to take a critical look at your LinkedIn profile…specifically, your professional headline.

Face it, if you are like most people, yours probably leaves a lot to be desired. In fact, it might just be a liability if you tend to use it like most people. Find out how you measure up and how to transform your LinkedIn profile from a lackluster liability to a lightning fast lead with this quick quiz:

Question: Do you have a professional headline?

Response: If not, it’s time to get one…NOW!

Actionable Item: Assuming you have a LinkedIn professional headline, continue to the following questions…

1. Did you include a title in your professional headline?

and/or

2. Did you include the name of your company?

Response: Your headline probably needs work!

Gotcha right? Yes, traditional wisdom holds that you should include your name or the name of your company in the headline but is this always true? Let’s examine the wisdom of this little gem for someone named “Joe Smith”. Great name, easy to remember…even easier to forget. Oh yeah, and shared by a zillion others of the same name.

Likewise, title is meaningless. Are you a big title in a little company or a little title in a big company. Perhaps you have some really odd title that tells the reader next to nothing. See the point? Plain and simple, titles and names don’t always mean a lot. So, what should you do to make a great professional title?

3. Explain what you do and why the reader will care. Use a bit of flair and keep it short and simple. Use the WIIFM approach to explain “What’s in it for me?” to the reader. Not sure how to write a great professional headline? Check out our free webinar or other social media marketing for real estate and short sales to learn more.

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)

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About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin July 22, 2010 

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Failed HAMP may benefit from HAFA

With the amount of canceled trial modifications in the Home Affordable Modification Program (HAMP) passing permanent conversions, some are anticipating that the Home Affordable Foreclosure Alternatives (HAFA) program will be more effective in keeping homeowners out of foreclosure.  As you’ll recall, HAFA was designed to give borrowers who failed to make those payments a chance at a short sale or deed-in-lieu of foreclosure.  Based on survey data of the eight largest HAMP participants, the Treasury found that 45% of the canceled trials from HAMP are in an alternate modification. More failed HAMP modifications could enter HAFA after falling into delinquency after the conversion into permanent status.

For modifications that have been permanent for more than six months, 6% have fallen into 60-plus day delinquency again. The default rate, or the percentage of modified loans that are now 90 or more days delinquent, is less than 2% at six months after the conversion. Cary Sternberg, president of Excellen REO, an asset management firm and subsidiary of Titanium Solutions, said that HAMP was designed for those who want to stay in their home, but as prices continue to deteriorate, more homeowners are looking for a way out, either through short sale or deed-in-lieu.  “Then comes HAFA. In recognition of the fact that some borrowers simply could not make payments even if the payment were lower, a more dignified exit strategy was created,” Sternberg said.  “It is too early to tell what the success rate of the HAFA program will be, but I am betting it will be far better than HAMP,” Sternberg said. “HAMP is a Band-Aid, HAFA is an exit strategy.”

Dodd-Frank Act bad for business

Surprise!  The Dodd-Frank Act signed yesterday by President Barack Obama could have a range of unintended consequences on the mortgage securitization market, according to various commentaries.  Standard & Poor’s (S&P) president Deven Sharma warned the legislation could expose rating agencies to greater liability for — and lawsuits over — ratings of mortgage-backed deals.  According to Barclays Capital analyst Joseph Astorina, Moody’s Investors Service, Fitch Ratings and S&P “have instinctively pulled back from the new issue securitization market until they are better able to asses this new liability.”  The law’s reforms concerning securitization are designed to remove the incentive of the “originate-to-distribute” model, according to a client alert from law firm K&L Gates. 

Other “unintended” consequences cannot be known until the legislation is enforced, noted accounting firm Deloitte in commentary.  “By way of example, a driving element of the law has been to address the ‘too big to fail’ issue, reducing the risk that large firms might take excessive risk because they are in effect guaranteed to be bailed out in the event of a failure,” the firm said. “But because this is an extremely complicated problem, no one actually knows what the consequences of the new law will be — the new systemic regulator will probably make this a central issue as it sharpens its mandate in the coming months.”

Jobless claims up

The Labor Department says there were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week.  The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.  The 4-week moving average of initial claims, which is calculated to smooth out volatility, was 456,000, up 1,250 from the previous week’s revised average of 454,750.  The government also said 4,487,000 people filed continuing claims in the week ended July 10, the most recent data available. That’s down 223,000 from the preceding week’s upwardly revised 4,710,000 claims.  Economists surveyed by Briefing.com expected ongoing claims to edge lower to 4,600,000 from the unrevised 4,681,000 in the previous week.  The 4-week moving average for ongoing claims fell by 21,500 to 4,567,000 from the preceding week’s revised 4,588,500.

Commercial real estate coming back?

Analysts have been warning for months that commercial real estate could be the next shoe to drop in the subprime mortgage collapse that came to a head in 2008, but there may be some good signs in the thawing of securitization markets and indications that investors are ready to come to auction when properties are on the block.  Marc Halle, managing director of real estate investments for Prudential Financial executives, acknowledged that distressed conditions are likely to intensify in the market but does not expect to see “wholesale foreclosures.” Instead, real estate investment trusts could become a more attractive asset class in a slowing economy as interest rates stay low and REIT dividends remain solid.  The banks are expected to launch $1.4 billion in two offerings of commercial mortgage-backed securities, according to a report Wednesday in the Wall Street Journal, which cited sources familar with the planned sales. 

The offerings pale in comparison to the more than $1 trillion coming due in maturing debt over the next five years, but offer some glimpse that Wall Street may be getting back on board.  Uncertainty among borrowers regarding whether banks will go back to more normalized lending practices is at the root of criticism against the Frank-Dodd financial regulations that President Obama signed Wednesday.  Banking analyst Dick Bove, at Rochdale Securities, said there is a persistent rumor that the Federal Reserve is looking at loosening capital requirements. Bove, a harsh critic of the new law, said that would be a welcome development.  “It demonstrates that the Fed understands that it must help the banks so that the banks can help the economy,” Bove said in a note to clients. “It implies that the Fed will not be very hasty in putting into effect the onerous rules being mandated by the banking legislation. If the Fed truly understands this, the outlook for banking and, more importantly, the economy is beginning to change in a positive manner.”  Banks themselves have been voicing some slightly encouraging sentiment regarding the direction of commercial real estate.

20% of Americans suffered major economic loss

The new Economic Security Index, constructed by Yale political scientist Jacob Hacker and a team of researchers, estimates that 20% of Americans suffered a significant economic loss last year – the highest level in the past 25 years.  The Index looks at the interaction of three key variables that have a direct bearing on a person’s economic security: income loss, medical expenses and debt.  The ESI defines people as economically insecure when their situation meets two criteria. First, within a year’s time they have lost 25% or more of their available gross income. Available gross income is the money they have left over after paying for medical costs and debt. Second, they don’t have enough in an emergency fund or other liquid reserves to make up the difference.  According to the index, which tracks Census Bureau data since 1985, 12.2% of Americans were economically insecure in 1985. By 2009, Hacker and his team estimate that 20.4% of Americans could be classified that way. The actual number of people affected increased by more than half, from 28 million in 1985 to roughly 46 million by 2007, the last year for which hard numbers were available.  In the past, some economists, such as Stephen Rose of the moderate-progressive think tank The Third Way, have conducted research that counters the broadly negative view about how the middle class has fared economically over the years.

Now for our real estate education section…

How to Price Any Property for Maximum Profits

Although the classic definition of the “right price” is whatever a willing buyer is willing to pay a willing seller (yes, we know it’s redundant), pricing is also a value proposition. In order to price a property for maximum profits, it’s essential to understand how to communicate and evaluate the value proposition to both the buyer and the bank.

What to Measure

1. Capacity – Any given area or builder has a set capacity. The more less capacity, the higher the price assuming demand is in place. During the height of the real estate boom, savvy builders capitalized on desirable locale’s by creating a sense of urgency related to capacity…often to the detriment of the eventual buyers who later learned there was a glut of unsold condo’s or other properties waiting in the sideline. However, despite the recent decline in real estate, many markets and specific neighborhoods remain highly desirable with limited capacity.

2. First Offering – Closely related to capacity is the concept of “first offering”. Face it, everyone likes something that is “brand new” but have you ever stopped to ask yourself why? A new house or neighborhood is somewhat “unproven” but the excitement of being “first” tends to create anticipation that can be tapped into. Take a note from developers that routinely price high to create a sense of value, then discount to provide customers a sense of a “good deal”.

3. Enhanced Value – Everyone likes to feel like they are appreciated and nothing says “appreciation” like a free upgrade or other valuable service. Make a list of amenities included in the sale of the property and/or consider including a few low-cost additional enhancements. Popular ones include free lawn-care for a year, electronic device or home warranty.

What to Exclude

1. Acquisition Cost – Without a doubt, this is one of the most common mistakes made by novice investors; the tendency to use acquisition cost as a basis for the sales price of a property. As millions of Americans have learned, what you pay for a property may have little to no bearing on the eventual price of a property….good and bad. Although the media is filled with horror stories about people that paid too much for a property (of more often…obtained bad financial terms), there are equally impressive numbers of people that made a lot of money after paying very little for a property. Price the property based upon value…not acquisition cost.

2. Expenses – If acquisition cost is the most common errors, surely expenses are the next. The tendency to add up the cost of repairs, insurance, broker and agent fees, taxes and other expenses in order to derive a figure is outdated at best and limiting at worst. Again, price the property based upon perceived value rather than cost or expenses. It’s often possible to perform inexpensive upgrades that dramatically alter the appearance (and desirability) of a property for very little investment. Don’t deny yourself the benefit of a fully priced property if in fact, it’s possible to price higher.

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 5, 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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IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!  

* Best part — with this new strategy, it’s like it’s 2008 all over again… where you can generate an autopilot, dependable, predictable, and steadily soaring income that’ll create enough wealth to retire for good!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect you to obtain the free DVD and tune in to the encore Saturday at 8:30 PM ET, 5:30 PST:

https://www2.gotomeeting.com/register/159690035

**********************************************************
$8000 tax credit gets a last gasp

On Friday President Obama signed a law giving consumers three extra months to close the deal and still get a popular tax credit from the government – assuming they’re already in the process of buying a home.  Homebuyers with contracts signed by April 30 who failed to go to closing by the original June 30 deadline will now have until September 30 to complete their purchases.  The Senate approved the measure on Wednesday just hours ahead of the earlier deadline and one day after the House of Representatives approved the measure. 

The $8,000 tax credit for first time homebuyers and $6,500 credit for others purchasing a new primary residence was a highly popular temporary measure by the Obama administration to jump start home sales during the economic recession.  Real estate agents said as many as 180,000 homebuyers would miss the June 30 deadline because banks and settlement offices were struggling to deal with the volume of people rushing to close on their deals signed before April 30.  Critics say the three-month extension is an invitation for fraud, providing prospective home buyers time to back date contracts to a date before April 30 and subsequently closing on those contracts by the new September 30 deadline.  “The IRS reminds taxpayers that special filing and documentation requirements apply to anyone claiming the homebuyer credit,” the Internal Revenue Service said.

Bankruptcy filings up

Bankruptcy filings surged 14% during the first half of 2010, according to the American Bankruptcy Institute. Filings totaled 770,117 through June, compared to 675,351 during the same period last year.  The institute also said that bankruptcies totaled 126,270 in June, a jump of 8.5% from the same month in 2009, when they totaled 116,365.  The institute relied on data from the National Bankruptcy Research Center for its information. 

Samuel Gerdano, executive director of the institute, says “Years of rising consumer debt and low savings rates, combined with the housing and unemployment crisis, are causing bankruptcy levels not seen since the 2005.”  In 2005 Congress amended the Bankruptcy Code, making it harder for Americans to file and sparking a rush to file by October of 2005, when the amendments kicked in. In 2005, bankruptcy filings totaled more than 2 million.  By comparison, Gerdano expects there will be more than 1.6 million new bankruptcy filings by the end of 2010.

HAUP now active

As of July 1, homeowners have been able to apply for assistance from the Home Affordable Unemployment Program (HAUP).  HAUP provides homeowners a forbearance of monthly mortgage payments, either reducing them or suspending them for at least three months. Servicers can extend the timeline depending on regulatory guidelines.  In June, the unemployment rate edged down to 9.5% from 9.7% in May, according the Department of Labor.  Homeowners who qualify for the program have a first-lien mortgage originated on or before Jan. 1, 2009. The unpaid principal balance on a single-unit primary residence must be equal to or less than $729,750, and the mortgage has to be in default or in imminent default. 

HAMP requires borrowers to be employed with some income for the modification to be reduced down to 31% of the monthly income.  But once the borrower finds another job or the borrower is 30 days from the end of the HAUP forbearance period, the borrower can be revaluated for a HAMP modification.  Those who have already gone through the Home Affordable Modification Program (HAMP) process are not eligible for the HAUP.  HUAP joins the Home Affordable Foreclosure Alternatives (HAFA) program, which provides incentives to servicers for providing short sales and deeds-in-lieu of foreclosure, as another net to catch borrowers who fall out or fail the HAMP program.

Factory orders drop more than expected

The Commerce Department said Friday that orders for manufactured goods decreased 1.4 percent in May. It was the biggest drop since March 2009.  Excluding the volatile transportation sector, orders fell 0.6 percent. That number fell 0.7 percent in April, the worst showing in 13 months. Overall orders in April grew a revised 1.0 percent.  Orders for big-ticket durable goods were down 0.3 percent, after a 2.0 percent increase in April. Electronics and commercial aircraft were among the weakest performers. 

Demand for those goods expected to last less than three months fell 2.1 percent. Lower gas prices were partly to blame. But there were significant losses for makers of clothing, drinks and tobacco, and chemical products.  The overall decline in orders was bleaker than the 0.5 percent drop expected by economists surveyed by Thomson Reuters.  Manufacturing has been a rare bright spot, helping lead the country out of recession with increased hiring and productivity.  However, economists fear joblessness and less demand for exports could sap the sector’s strength in the coming months.

DSNews.com – Delinquencies inch up in May

The seasonal improvement period for delinquencies and foreclosure inventories has come to a halt, according to an industry report released last Thursday by Lender Processing Services (LPS).  The Florida-based analytics firm’s monthly Mortgage Monitor report found that the total U.S. delinquency rate jumped to 9.2 percent in May, inching up 2.3 percent from April and 7.9 percent higher than the same month last year.  Herb Blecher, VP of LPS Applied Analytics, said the slight increase on the delinquency side was expected as this is the period when rates start to pick up. He said delinquencies will likely continue to increase all the way through the end of the year.  The foreclosure inventory rate remained stable from the month prior at 3.18 percent, but it was 13.5 percent higher than May of 2010. Blecher explained that while some stability has been achieved in the foreclosure inventory rate, a further decline over the coming months is unlikely. 

The national noncurrent loan rate, which reflects both foreclosures and delinquencies, came in at 12.38 percent. Not including REO properties, nearly 6.3 million loans were noncurrent in May. When REO properties were included, the total jumped to nearly 7.4 million.  On a state-by-state basis, Florida and Nevada continued to hold the most noncurrent loans in May, with rates of 22.4 percent and 21.8 percent respectively. On the other end of the spectrum, the lowest noncurrent loan rates were seen in North Dakota, at 4.1 percent and South Dakota, at 5 percent.

Now for our real estate education section…

Life, Liberty, the Pursuit of Happiness & Real Estate

By the time you read this, the entire nation will have once again celebrated another Fourth of July with all of its star spangled glory, hoards of hot dogs and rainy day fireworks. This year it is also a good idea to stop and reflect on what the founding fathers really had in mind when declaring independence and the self-evident concept that all men are created equal. While life, liberty and the pursuit of happiness might seem an odd topic for a real estate investing newsletter…real estate played a critical role in the creation of what was to become the “American way of life”. In fact, real estate is so critical to the plans of the founding fathers that to tamper with ownership is to change the very fabric upon which our society was based.

Throughout history, societies have risen and fallen based upon land rights and ownership. “Free men” were nearly always landowners while serfs, servants and peasants were those forced to eek out a living without the benefit of owning raw assets or the land upon which the based a livelihood. During the formation of this nation, land rights were closely associated with the ability of a man (or woman) to determine their own fate, pursue a life of individual meaning and the very essence of freedom itself. The rights of property ownership include:

The right of possession, the ability to control the property, the right to enjoy the property, the right of exclusion and disposition. Unfortunately, many of these same rights upon which the nation was built are now under attack from a variety of sources. Not only does the erosion of land ownership and property rights impact the individual but also society at large. From runaway zoning regulations to the actions of eminent domain, land rights in the United States have eroded over decades but never to the extent seen in recent years. For example, the same bill that allows a judge to modify a mortgage contract is seen as a potential threat to the very foundation of contractual law…creating a more risky (and therefore more costly) lending environment for future loans. Squatters rights which are plaguing many cities across the nation have severely undercut the foundational right of enjoyment, exclusion and disposition. Even the newly proposed (and passed) regulations concerning required training, licensure and/or certification for everything from lead laws to owner financed properties is expected to have dramatic impact upon the rights of the individual to control and dispose of their own properties.

What does this mean for real estate investors and other property owners?

Change. Perhaps not the exact type of change the nation had in mind during the last election but change just the same. However, change isn’t always bad. In many instances it present unprecedented opportunity for those that are prepared to act. If history is any measure, excessive regulations tend to add ever increasing cost and growing scarcity over the long run. The new lead laws are a prime example; be requiring additional certification for anyone (including the property owner) to perform even rudimentary work on a home built prior to 1978, the cost of renovation is likely to increase even without putting more money into the pockets of the property owner.

Houses built post 1978 just became slightly more valuable if for no other reason than the lack of headache associated with them. Likewise, foreclosed properties plagued by squatters are at a distinct disadvantage…but may represent a golden opportunity for new investors long on time and short on funds. Savvy real estate estate investors would do well to keep an eye out for buying opportunities and price their bids accordingly. In the meantime, congratulations in exercising one of the most fundamental rights enjoyed by every red blooded American throughout the history of our great nation…the right to buy and sell property. It’s the cornerstone of what made this nation strong and what has been the foundation to wealth over the eons.

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
–

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

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

We all know Jeff Watson from his legal expertise advising short sale investors …

and in particular, he’s been on lots of webinars explaining the latest with Freddie Mac. 
And while he can help you make a lot of money, all his efforts are for not if you end up losing it.
Learn how to protect your wealth with Jeff Watson this Thursday.

On this webinar, you’ll learn:

 * The 3 best ways in 2010 to protect yourself from frivolous lawsuits.

* 4 ways to protect yourself from paying excess taxes, and 2 common tax loopholes.

* 2 ways to avoid “heat seeking” missile technology to become “invisible” to lawsuits

So join us tonight at 8:30 PM ET, 5:30 PM PST to learn how to protect yourself:

https://www2.gotomeeting.com/register/822515859

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

Fitch – CMBS defaults will pass 11% by 2011

Commercial mortgage loan defaults look likely to rise through the end of the year, with another 4.4% likely in 2010 and the overall default rate expected to pass 11% among securities rated by Fitch Ratings, the credit-rating agency said today.  New CMBS defaults increased more than five-fold last year, totaling 1,464 loans worth $17.75bn, Fitch said.  “Fourth-quarter default rates reached their highest ever levels both in principal balance and number of loans with no clear signs of stabilization,” said managing director Mary MacNeill, in an e-mailed statement.

Large loan defaults also increased “dramatically” last year, with 56 loans worth more than $50m defaulting in 2009 compared with only five in 2008. Most of the defaulted loans came from 2006-2008 vintages.  Among all vintages, 2007 deals led defaults in 2009, accounting for 35.6% by principal balance. Fitch predicts 10-year cumulative defaults rates on ‘07 Fitch-rated CMBS to reach 27%.  For the first time in five years, multifamily was not the property type with the most new defaults, Fitch said, as that distinction fell instead to retail properties that accounted for 32.3% of new defaults. Multifamily took 22.1% of new defaults, while office properties took another 20.2% of new defaults.

House sales forecast to rise in March

Economists polled by Thomson Reuters claim the National Association of Realtors will report that sales of previously occupied homes rose last month to a seasonally adjusted annual rate of 5.28 million, up from 5.02 million in February. “The spring selling season will be a success and probably the most active we’re seen in years,” said Stuart Hoffman, chief economist at PNC Financial Services Group.  Sales declined over the winter, eroding gains made last fall and summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector.  The government is offering a $8,000 credit for first-time buyers and a $6,500 credit for current homeowners who have lived in their property for the past five years.

But now time is running out. Buyers must sign contract offers by April 30 to qualify, and real estate agents say that’s spurring sales.  Still, some housing market experts predict the market will take a dramatic “double-dip” once the government’s supports are gone. But others argue that there is enough pent-up demand to keep the market chugging. And prices have fallen dramatically since the boom years — as much as 50% in some places. So buyers can pick up bargain-priced foreclosures.

Jobless claims fall

There were 456,000 initial jobless claims filed in the week ended April 17, down 24,000 from a revised 480,000 the previous week, according to the Labor Department’s weekly report. Economists surveyed by Briefing.com had expected new claims to fall to 450,000 in the latest week, and analysts polled by Reuters had expected claims to fall to 455,000. The data covered the survey period for the government’s closely monitored employment report for April, which will be released on May 7.  The number of new claims was the lowest since the 442,000 reported in the week ended March 27.  The number of people filing continuing claims totaled 4,646,000 in the week ended April 10, the most recent data available. That figure was down 40,000 from the preceding week’s revised 4,686,000 claims, and slightly above the 4.6 million economists expected, according to Briefing.com.  The four-week moving average of new claims, which irons out week-to-week volatility, rose 2,750 to 460,250.

While initial claims and the four-week average are still above levels viewed by analysts as in line with job market stability, anecdotal evidence indicates employment is creeping up.  Last month, the economy recorded its largest jobs gain in three years, largely driven by private sector hiring as employers started to warm up to the economy’s recovery—which is showing signs of gathering momentum.  Analysts expect the hiring trend continued in April, also supported by recruitment for the 2010 census.  The number of people still receiving benefits after an initial week of aid fell 40,000 to 4.65 million in the week ended April 10, the Labor Department said. However, it was less than market expectations for a fall to 4.60 million and the prior week’s figure was revised up.  The insured unemployment rate, which measures the percentage of the insured labor force that is jobless, slipped to 3.6 percent in the week ended April 10 from 3.7 percent the prior week.

Olick – green building not valued

“Home builders and green product manufacturers say [a lack of valuation for green renovations and building] is one of the major roadblocks in the green building movement. If appraisers don’t add green value in the form of cash, consumers aren’t going to invest the upfront costs.  Anyway, Resch is obviously a huge green supporter and has modeled his home accordingly, with solar panels, energy efficient lighting and appliances, a rainwater collection tank and some kind of water-saving landscaping that I didn’t really understand.  He upgraded his home four years ago and admits that today those same upgrades would have cost him about 40 percent less, largely because of tax incentives.  I’ve always kind of turned my nose up at the tax incentives offered for green upgrades, because while they’re at 30 percent, they’re largely capped at $2000, which anyone who’s ever remodeled their home knows is chump change in a major upgrade.  What I didn’t know was that solar is the exception. R  esch informed me that in October of 2008, as part of the Emergency Economic Stabilization Act, the $2000 cap on “qualified solar electric property expenditures” was removed. So take 30 percent off all your solar expenditures.

Appraisers argue that the marketplace isn’t really demanding upgrades like solar panels, and that’s why the industry is not adding appraised value to homes with them.  Resch admits that in DC, he’s not likely to see much of an increase on his home’s value today, but if he lived in California, he says he would. That’s because environmental upgrades are far more commonplace there, and so consumers tend to expect/demand them more.  DC will surely follow suit, but it will take a few years, especially since the nationwide housing collapse set green building back a bit. Once homeowners come up for air and start to see their home values increase, experts believe they will be willing to go greener, and appraisers will then respond.

GM pays back $5.8 billion

General Motors has made a final payment of $5.8 billion to the U.S. and Canadian governments, paying off the last of its $6.7 billion in loans, the company said Wednesday.  “I am very pleased to announce that, as of today, General Motors has repaid, in full and with interest, the loans made last July by the U.S. Treasury and Export Development Canada,” said GM chief executive Ed Whitacre, speaking at a plant in Fairfax, Kan., where GM builds Chevrolet Malibu and Buick LaCrosse sedans.  But the loan money is only a fraction of the financial support that the federal government gave to GM over the past 12 months to stop it from going out of business.  Overall, GM received $50 billion in federal help. In return, the government got $2 billion in preferred stock and 61% of the company’s privately held common shares.  Taxpayers could recoup money from a possible sale of GM stock to the public in the future.

A White House report issued shortly after GM’s announcement was upbeat on the progress that both General Motors and Chrysler have made since coming out of bankruptcy but noted that the government would likely not make a profit on the funds it had invested.  “Overall, the investments made by the prior and current administration in GM, Chrysler, and GMAC will likely result in some loss, but the U.S. Treasury anticipates it to be much lower than forecast last year,” the report said.  Funny how this administration always includes “the former administration” in the bad news but completely neglects it when the good news is being announced, huh?

California Defaults Drop 4.2% in Q110

According to the San Diego-based research firm MDA DataQuick, defaults on California homes dropped 4.2% in Q110 from record levels in 2009.  The firm measured 81,054 notices of default (NODs) at county recorder offices in Q110, down from 84,568 in Q409 and down 40.2% from the 135,431 in the first quarter of 2009.  “Several factors are at play here and it’s hard to know how they play into each other right now. A year-and-a-half ago the subprime loan mess was the black hole,” said MDA DataQuick president John Walsh. “Now, playing catch-up, is the financial distress households are experiencing because of the recession. Add to the mix shifting policy decisions, both by lending institutions and in public policy.”  Walsh added there are signs of the worst trouble moving from the hard-hit entry-level markets to the more expensive neighborhoods.

California’s more affordable markets, which represent 25% of the state’s housing inventory, accounted for 47.5% of all default activity last year. In Q110, that number fell to 40.9%. Those percentage points would most likely to have migrated to the mid- to high-end housing markets, but the concentration of default activity remained relatively low. ZIP codes with median sales prices of more than $500,000 saw mortgage defaults rise 1.5% in Q110 but dropped 19% from Q109.  “We’re also seeing some lenders become more accommodating to work-outs or short sales, while others appear to be getting stricter about delinquencies. It’s very noisy out there,” Walsh said.  On average, DataQuick reported, the foreclosed homes spent 7.5 months in the foreclosure pipeline, compared to a year ago, when it was 6.8 months.  “The increase could reflect, among other things, lender backlogs and extra time needed to pursue possible loan modifications and short sales,” according to the report.  REO sales accounted for 42.6% of all resale activity in Q110, up from 40.6% in the previous quarter but down from 57.8% last year.

Now on to our real estate investing education section …

Six Reasons Foreclosure Investing Will Make You Rich

1. Inflation – Past, Present & Future. The historic rate of inflation is roughly 3 percent but double digit inflation has taken place during periods of economic volatility and expansionary monetary practices such as those embraced by the current administration. Experts ten to believe we may encounter inflation in the 8 or even 10 percent rate within the next three to five years leading to high rates of nominal returns among all physical assets including real estate.

2. Demographic Demands – Immigration, escalating birth rates among minority populations and longer lifespan for elderly citizens all adds up to a rapidly expanding number of people seeking shelter and basic homes.

3. Declining Inventory – The media makes much ado about excess inventory but savvy short sale investors will also notice the simultaneous reporting of a ’shortage’ of affordable housing. Can both situation be true? Yes. While the absolute number of housing units available may currently exceed demand, the actual number of affordable and desirable units is much more restrictive. For example, pier construction, energy efficiency, zoning regulations and other mandates often result in a lack of affordability even if the primary mortgage is acceptable. As units become functionally obsolete, the demand for safe, convenient, inexpensive homes will grow.

4. Leverage – Real estate benefits the small investor via the use of leverage; few other investments have the advantage of leverage combined with physical assets and alternative sources of income; it’s a winning combination that provides maximum flexibility and minimal personal risk when properly structured.

5. Taxing Tribulations – Budget shortfalls and aggressive social support obligations are stressing federal and state budgets to the maximum. Earned income taxes, estate taxes and even a newly proposed VAT tax are likely to take a big bite out of average taxes for middle class Americans. Shifting from higher taxed earned income to lower taxed Capital Gains is a quick way to reduce the overall tax burden by 10 to 15 percent.

6. Short vs Long Term Strategy. The age old adage to “buy and hold” stocks, bonds or even real estate for the long haul has come under increased scrutiny in the wake of fiscal irresponsibility, irregular reporting habits and unreliable regulatory agencies. The new trend is to take profits when they are available, maximize cash flow and focus on short term gains rather than the promise of long term appreciation. Short sales provide exceptional ROI without the long term risk.

See you at the top!
Chris McLaughlin

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

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

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

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

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Join my Facebook Fan Page: http://www.mclaughlinchris.com
–
Loss Mitigation Training Institute LLC
206 E. Pine Street
Lakeland, FL
33801
US