The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.

The settlement, agreed to by the nation’s five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.  The banks involved include Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial.  Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.  Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.  As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home — from the first missed payment to the final bank repossession — stretched to 370 days during the first quarter, almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac. 

In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.  “Perhaps a million foreclosures could have been pursued last year but weren’t,” said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.  But that’s all about to change, he said. “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”  In fact, there are indications that the pace of foreclosures are already starting to pick up.

While overall foreclosure activity was down during the first quarter, filings were up 10% in the 26 states where foreclosures must undergo court scrutiny, according to RealtyTrac.  It was in these judicial states that the processing of foreclosures slowed the most following news of the robo-signing scandal, said Blomquist.  Many banks in these states stopped filing foreclosures unless they were extremely confident it would pass muster in the court. (In non-judicial states, foreclosures are reviewed by a trustee, which is a third party such as a title company and less likely to parse every legal document).  But now lenders can move more confidently, said Brandon Moore, RealtyTrac’s CEO.  In the judicial state of Indiana, for example, foreclosure filings were up 45% year-over year. And in Florida, they were up by almost 26%, according to RealtyTrac.  “The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity,” Moore said in a statement.  The resulting flood could bring home prices down even further — yet another impetus for the banks to clear out their foreclosure pipeline as quickly as possible, said Kansas State’s Higgins.  Then, industry thinking is, the housing market would be able to get back to normal and home prices could eventually find their true value. Some industry analysts, such as the chief economist for listing site Zillow, Stan Humphries, are predicting that could happen as soon as the end of the year.  Zillow estimates that home values nationwide will fall another 3.7% by the end of 2012, and that price will likely bottom out by early 2013.  Should home prices hit a bottom then stabilize, it would push many potential buyers off the fence, according to Mike Fratantoni, a vice president at the Mortgage Bankers Association. House hunters would no longer be afraid of investing in assets that were losing money.  “The market is already on the verge of turning the corner on prices and this will help,” said Fratantoni.

Inflation up

The Labor Department said on Friday its Consumer Price Index increased 0.3% after advancing 0.4% in February. That was in line with economists’ expectations.  Outside the volatile food and energy category, inflation pressures appeared to be modest. Core CPI edged up 0.2% after gaining 0.1% in February.  The US Federal Reserve has said it will probably hold interest rates super low into 2014 to help the economy, which is limping back from the 2007-2009 recession.  Amid recent signs of weakness in the labor market, investors are betting the Fed could unleash further monetary stimulus to boost growth, although comments by Fed officials this week suggested the central bank is on hold as it waits to see whether the recovery gains traction.  Last month, overall inflation was pushed up by gasoline prices, which rose 1.7%. That was a much more mild increase than the 6% gain in February.  But electricity prices fell 0.8%, the steepest decline since June.  Food prices climbed 0.2% last month.  Overall consumer prices rose 2.7% year-on-year, down from a reading of 2.9% in February.  In the 12 months to March, core CPI increased 2.3% after rising 2.2% in February. This measure has rebounded from a record low of 0.6% in October.

Wells Fargo has record earnings

Wells Fargo, the largest mortgage lender in the US, reported record earnings in the first quarter.  The San Francisco-based bank earned $4.2 billion, or 75 cents per share, a 10% increase from the $3.8 billion profit one year prior.  Revenue jumped to $21.6 billion in the first quarter from $20.6 billion last year. It’s the highest quarterly revenue in more than two years, the bank said.  Wells still held nearly $2 billion in provision for credit losses at the end of the first quarter. It did release $400 million from its loan loss reserve, compared to a $600 million release in the previous three months.  Wells Chief Financial Officer Tim Sloan said he expects expenses to drop by as much as $700 million in the second quarter. Roughly $100 million in expenses during the first quarter came from consent orders signed with federal regulators last spring to settle mortgage servicing issues.  Mortgage originations totaled $129 billion in the first three months of 2012, up significantly from $75 billion in the same period last year and up from $121 billion in the last quarter of 2011.  The bank did say 15% of the originations during the first quarter were workouts under the Home Affordable Refinancing Program.  Demand is also increasing at Wells. The bank reported $188 billion in mortgage applications as of the end of the quarter, up 20% from the previous three months.

New bubble

According to Citigroup economist Steven Wieting health care is the next big bubble looming in the distance.  And to make matters all the more worrisome, his analysis suggests it’s like nothing we’ve seen before.  “It’s not a single asset price that’s about to pop (like housing) and it doesn’t have a cyclical component,” he said.  Rather, “It’s a fundamental bubble that will have a large impact on the economy.”  Wieting says the trouble is spiraling health care costs that are growing at a fast and furious pace, a pace that will become all but impossible to support.  “Ultimately there will be a price to pay” he says.  With the lion’s share of health care costs shouldered by companies and governments, he thinks the rising costs will ultimately hit budgets.  “We’ll either have to raise taxes or increase budget deficits in order to finance it. And it will crowd out other things. Already we’re starting to see it impact education and infrastructure spending.”  Going forward, Wieting tells us areas in health care that will be hardest hit are areas that operate at high margins. Those companies will probably see their margins squeezed.

DSNews.com – strategic default here to stay

With reports that around 20% of mortgages are underwater, about 46% of bank risk professionals surveyed by FICO expect to see the volume of strategic defaults in 2012 exceed 2011 levels.  “After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets. Many homeowners who find themselves upside down on mortgages in the future are likely to consider strategic default as an acceptable exit strategy.”  Combined with concerns over strategic default are disconcerting results about consumer priorities. Only 29% of bankers said the current generation of homeowners considers their mortgage to be their most important credit obligation, while 49% said its not a priority. 

Even with this discouraging data, 53% of survey respondents expect to see the housing market improve by the end of 2012, compared to 24% who said the market would deteriorate.  Also, 64.8% of respondents think mortgage delinquencies will decrease or stay the same, an 11.3% increase from the previous quarter.  “If job creation continues, banks will be more likely to embrace mortgage lending once again. A healthy job market is essential for improving the quality of mortgage applications and reducing default risk,” said Jennings.  Most respondents, 56%, expect demand for residential mortgage credit to exceed supply over the next six months. A similar majority, 53%, project demand for the supply of credit for mortgage refinancing surpass supply.  The survey included responses from 263 risk managers at banks throughout the US in February 2012 and was a joint effort between FICO, provider of analytics and decision management technology, and the Professional Risk Managers’ International Association, a nonprofit that works to define and implement the best practices of risk management through education.

Legislators who killed a bill requiring that lenders prove they have the right to foreclose on a home say they did so because they tired of laws reforming Colorado’s foreclosure process.  And some rolled their eyes at the ever-present grassroots group that brought it forth — the Colorado Progressive Coalition — suggesting it might have succeeded with different backing.  HB 1156 died in committee two weeks ago on a mostly partisan 8-5 vote, after five hours of testimony, mostly in its favor. One Democrat sided with a majority of Republicans.  Had it passed, it would have stopped a practice that allows foreclosures on just a lawyer’s say-so.  “They need someone other than those groups pushing this stuff,” said Rep. Spencer Swalm, R-Centennial, the vice chairman of the Economic and Business Development Committee, which killed the bill March 13. “But the bottom line, to me, is the big-government, overt intervention in this market.”  Others on the committee told The Denver Post that, in addition to “the same faces supporting and testifying in support,” they voted against the bill because the state already has passed too many laws addressing the foreclosure crisis.  Others decried adding regulation to what they called an overregulated industry.  “Since 2005, the legislature has run and enacted 15 different bills to affect and change the foreclosure process in Colorado,” said Rep. Chris Holbert, R-Parker, the former president of the Colorado Mortgage Lenders Association. “Now is a good time to leave it alone and stop changing things. The process we have in place works fine. Changing things for the 16th time isn’t the right solution.”

QE3 not needed?

A third round of Treasurys purchase is not necessary unless the US economy deteriorates further, according to James Bullard, president of St Louis Federal Reserve Bank.  Recent economic data have signaled that the US economy is doing better than economists think, Bullard told CNBC Tuesday, and a third round of bond buying by the Fed – in a program known as quantitative easing, or QE – is not needed.  “I think QE3 would require the economy to deteriorate somewhat from where it is right now,” Bullard said. “The basic story on the US economy is that we’ve had good news over the last six months or so, especially compared to the recession scenario that was being painted in the August-September time period of last year.”  Injecting too much liquidity into the system will also have the effect of driving commodity prices higher and reducing real spending power, Bullard said.

Olick – no housing recovery?

“Housing was charging back. Spring sprung early. Sentiment among home builders doubled in six months. Any talk that the fundamentals might not be supporting the sentiment was met with harsh criticism. And then suddenly it wasn’t.  A slew of new housing data last week disappointed the analysts and the stock market, and all of a sudden you started to hear concern that maybe housing wasn’t exactly in a robust recovery.  From home builder sentiment to housing starts, to home builder earnings right through to sales of newly built homes, there was not one hopeful headline in any of it (except perhaps if you invest in rentals, as multi-family housing starts made more gains, but that is a contrary indicator to housing recovery).  And then an email from a Realtor in New Jersey: ‘Just reviewed March buyer clicks, Google’s analytics on all the sites we monitor – March is turning out to be the weakest month since last October re: Buyer interest..’  Now we start another week with another disappointment. Pending home sales, a measure of signed contracts for existing homes, not closings, fell half a percentage point month-to-month.  That may not seem like a big deal, but the analysts were looking for a small gain. No doubt the Realtors will point to the solid 9% gain from a year ago, but so much of that gain is based on a change in the foreclosure pipeline.  Last year the foreclosure process stalled. The ‘robo-signing’ mess brought everything to a standstill, and that left investors with little to buy on the distressed side. Foreclosures began ramping up again in the late fall, and that led to a surge in investor buying. Was that the ‘recovery’ we were seeing?

 Investors are still rushing into the market, with distressed sales making up a near-record 48.7% of sales in February on a three month moving average, according to a new report today from Campbell/Inside Mortgage Finance.  Investors are now a full quarter of the market, and they are increasing their activity in short sales (when a lender allows the home to be sold for less than the value of the mortgage).  Don’t get me wrong, investors buying up the distress is necessary to cleanse the market, but it is not real recovery. Mortgage originations are at a 12-year low, despite record low rates. Normal, ‘organic’ home buyers, move-up owner occupants, are not flooding back into this market. Rents are still rising.  Mortgage analyst Mark Hanson runs some disturbing numbers to back up his contention that Q2 will disappoint: ‘Investor sales volume up 37%  year over year for a whopper 69% of all year over year existing home sales gains. First-timers are starting to look weak in Feb. The gains in first-timer and repeat sales can easily be explained by historic rates and weather and can easily reverse in a single month. 

That may be why the home builders, who had been on a streak of gains in confidence, suddenly stopped moving this month. KB Home, which builds lower-priced homes, also came in with wildly disappointing earnings and an 8% drop in new orders. Sales of new homes also disappointed, which one analyst called, ‘puzzling.’  ‘If new homes are not selling, then why are builder confidence and single-family housing permits moving up, and why is the S.& P. home builder index up 80% since last October?’ asks Patrick Newport at IHS Global Insight. ‘Time will tell if builders and investors have gone out on a limb.’  Several other analysts started to question the strength of the recovery as well, with some just hoping that perhaps a warm winter had pulled some demand forward from spring. Despite a miss on existing home sales in February, the headline pointed to, again, big gains from a year ago.  Yes, we are ahead of where we were, but as we’ve noted so many times here on this page, rising foreclosures will put added pressure on this market, and we may not be out of the woods yet.  ‘Despite an extraordinarily mild winter, home sales just plod along at a pace last seen during the mid-1990s,’ notes Mark Zandi in his monthly report from Moody’s Analytics. ‘Thus, the underlying pace of home sales may not yet be strong enough to support a long-lasting upturn by home prices.’  Tomorrow we get the monthly reading on the S&P/Case-Shiller home price index. This index hasn’t been improving nearly as much as home sales, but the ever-hopeful housing lobby keeps blaming that on the fact that prices always lag sales, which is historically true, but what in today’s market has followed history?  Home prices are still falling not because of some lag, but because this housing market is running on sales of distressed properties at the very low end. The rest of the market is still stalled.”

Should we ditch Obamacare?

As the US Supreme Court hears arguments over President Barack Obama’s health care law, the biggest issue is over whether the individual insurance requirement is constitutional.  The court is in the midst of three days of arguments on the Affordable Care Act after 26 states challenged the law. In addition to the question of whether Congress had the authority to enact the individual mandate, the justices must also determine if the rest of the law can stay in place if the insurance mandate is struck down.  Tom Daschle, a Democrat who represented South Dakota during his time in the Senate, wrote in an op-ed in Politico Monday, “Congress was well within its authority in passing the individual mandate to regulate the interstate effects of an industry that is almost 20% of our nation’s economy—more than $2.5 trillion each year.”  Sen. Tom Coburn, M.D. (R) Okla., disagrees with Daschle. He said that Medicare is a perfect example of why the government shouldn’t be in the health care business.  “The problem with health care in America it costs too much and this bill doesn’t do anything to help the costs,” he said. “What it does is it actually makes it much worse.”  He blamed government regulations and lack of “smart state government” for the high cost.  “What we have is a system that ignores market reality, will not use markets to allocate resources and put it back on the individual to make the best choice for their life,” Coburn said.

NAR – pending sales down

Pending home sales were down slightly in February but remain notably above the pattern in the first half of last year, according to the National Association of Realtors.  The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, eased 0.5% to 96.5 in February from 97.0 in January but is 9.2% above February 2011 when it was 88.4. The data reflects contracts but not closings.  The PHSI in the Northeast slipped 0.6% to 77.7 in February but is 18.4% above a year ago. In the Midwest the index jumped 6.5% to 93.8 and is 19.0% higher than February 2011. Pending home sales in the South fell 3.0% to an index of 105.8 in February but are 7.8% above a year ago. In the West the index declined 2.6% in February to 99.3 and is 1.8% below February 2011.  Existing-home sales for March will be reported April 19 and the next Pending Home Sales Index will be released April 26. The Investment and Vacation Home Buyers Survey, covering transactions in 2011, is scheduled for March 29.

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Fed to fine banks

The Federal Reserve says that it plans to fine eight additional US bank holding companies for improperly foreclosing on homeowners. The financial firms — EverBank, Goldman Sachs Group, HSBC Holdings PLC, PNC Financial Services Group, MetLife, OneWest Bank, SunTrust Banks and US Bancorp — were not part of last month’s settlement over alleged foreclosure abuses. Suzanne G. Killian, a senior associate director at the Federal Reserve, called the fines “appropriate” during a congressional hearing in Brooklyn, New York. Killian offered few details about the size of the fines or when they will be levied. The nation’s five biggest lenders — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial — last month agreed to a $25 billion settlement with state and federal government agencies last month after a 16-month probe. As part of that settlement, the five banks agreed to reduce mortgages for about 1 million homeowners. They also will pay into a fund that will send $2,000 to 750,000 homeowners who were improperly foreclosed upon. Separately, government regulators last April ordered 14 mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon. Since then, letters have been sent to 4.3 million borrowers who were at risk of foreclosure during 2009 and 2010. The deadline for borrowers to seek money under the orders is July 31. So far, nearly 122,000 homeowners have asked for an auditor to review their foreclosures.

North America the next middle east for oil?

Increased production of energy from a number of sources including deepwater drilling, natural gas exploration and Canada’s oil sands could make North America the next Middle East, according to a new report from Citigroup. The bank estimates that total North American energy production will rise from 15.4 million barrels per day in 2011 to almost 26.6 million barrels per day by 2020, boosting gross domestic product (GDP) and creating ripple effects throughout the economy. Citigroup analysts say the US will see large gains in oil production from deepwater drilling, while Mexico will begin to reverse recent declines in output. Production of shale gas liquids will increase by 3.8 million barrels per day by 2020. The report says this new production would amount to about 7% of additional global production, “a higher growth rate than OPEC can sustain.” That increase in energy supply will also be accompanied with a decline in demand. US consumption of oil products has fallen by 2 million barrels per day since its peak in 2005, and the Citi report says demand will fall by another 2 million barrels per day over the next decade.

Citgroup expects the shift in energy supply and demand to increase real GDP by between 2 and 3.3%. It also estimates that some 550,000 new jobs will be created directly in the oil and gas extraction sector by 2020. An additional 2.2 to 2.3 million new jobs will be created from the resulting economic stimulus effects of new production by 2020. In its analysis, Citigroup acknowledges infrastructure bottlenecks and legislation that blocks exports of crude oil of US origin. It also points out that new environmental regulations could prevent the scenario from playing out. But the analysts point out the surge in energy production could be game-changing. “It would not only improve incomes and create jobs, but also improve national energy security and reverse perennial current account deficits.”

MBA – mortgage applications down

Mortgage applications decreased 7.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 16, 2012. The Market Composite Index, a measure of mortgage loan application volume, decreased 7.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7.1% compared with the previous week. The Refinance Index decreased 9.3% from the previous week. The seasonally adjusted Purchase Index decreased 1.0% from one week earlier. The unadjusted Purchase Index decreased 0.6% compared with the previous week and was 1.9% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 2.79%. The four week moving average is up 3.25% for the seasonally adjusted Purchase Index, while this average is down 4.31% for the Refinance Index.

The refinance share of mortgage activity decreased to 73.4% of total applications, the lowest since July 2011, from 75.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6% from 5.8% of total applications from the previous week. “With the rate increase last week, refinances are obviously slowing, and the refinance share at 73% is down to its lowest level since last July. With rate/term refinances falling as we go forward, HARP will be a bigger percentage of refinances but will be more concentrated in certain states,” said Jay Brinkmann, MBA’s Senior Vice President of Research and Education. Brinkmann continued, “Some of the largest institutions are reporting that the HARP share of their refinances remained at about 30% last week, but HARP volume is not equal across the country. The states that I started referring to years ago as the sand states that had the worst delinquencies we now should start calling the HARP states for mortgage refinances. We saw big state-level differences in refinance applications for February over January: Florida was up 49%, Arizona was up 61%, and Nevada was up 71%. Refinances in the rest of the country were generally flat or even down. For example, Texas had no change, Colorado was down 3%, Connecticut was up only 2%, and Virginia was up 1%. HARP clearly is a driving force in those states that saw the most defaults and the biggest drops in home equity.”

The average loan size of all loans for home purchase in the US was $225,463 in February 2012, up from $216,888 in January. The average loan size for a refinance was $222,048, down from $227,563 in January. The largest purchase loans were made in the Pacific region at $ 324,606. The largest refinance loans were also made in the Pacific region at $ 305,949.

US exempts EU from sanctions

The United States on Tuesday exempted Japan and 10 EU nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran’s top customers China and India exposed to the possibility of such steps. The decision is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the US financial system under new sanctions designed to pressure Iran over its nuclear program. The list did not, however, include China and India, Iran’s top two crude oil importers, nor US allies South Korea and Turkey, which are among the top-10 consumers of Iranian oil. A US official held up Japan’s estimated 15-22% cut in oil purchases from Iran in the second half of last year as an example for other nations, saying it did so after the “tragedy” of the earthquake that caused the Fukushima nuclear disaster. “Japan was a model,” State Department Special Envoy and Coordinator for International Energy Affairs Carlos Pascual told lawmakers. “If Japan was able to do what it did … that should be an example to others that they could potentially do more.”

Olick – rising rates may not hurt housing

“It was barely a few weeks ago that mortgage rates were sitting at record lows. The idea of rates over 4% on the 30-year fixed seemed a distant memory. And here they are now at 4.05% on the Bankrate.com overnight, thanks to the recent rise in Treasury yields. The housing market, it seems, just can’t catch a break. Or can it? As the economy improves, the job market improves, and that is a key driver for housing. But on the flip side, as the economy improves, investors finally crawl out of the Treasury bunkers, driving yields higher, and mortgage rates generally follow the 10-year Treasury. ‘We will definitely see a freeze up in refi’s immediately but the decision on a purchase still won’t be impacted until rates get at least to 4.5% I believe,’ says Peter Boockvar at Miller Tabak. ‘Assuming a $200k mortgage, going from 4 to 4.5% in mortgage rate adds about $60 per month to one’s payments, and while an extra $700 per year matters, I’m not sure if it’s a deal breaker.’

While rates have moved a good quarter of a% in the past few weeks, most analysts don’t think they’ll go much higher. ‘Mortgage rates were too high anyway, relative to the 10-year Treasury, so I don’t think you will see a parallel shift,’ says FBR’s Paul Miller, who spoke to several bankers today. They told him mortgage volume is good, which helps keep rates competitive. ‘But it does take time for this stuff to flow through the markets,’ he adds. And then there could be one other phenomenon, as described by Freddie Mac’s chief economist Frank Nothaft: ‘When rates tick up, you may see some potential home buyers who have been sitting on the sidelines, suddenly they may get up, as they are concerned that maybe this is the beginning of a trend, and they don’t want to miss out on these 60-year low mortgage rates. In the near term it can encourage buyers.’”

Oil up to $107 per barrel

Oil prices rose to near $107 a barrel Wednesday after a report showed US crude supplies fell unexpectedly, a sign demand may be improving in the world’s largest economy. By early afternoon in Europe, benchmark oil for May delivery was up 49 cents to $106.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.49 to settle at $106.07 per barrel in New York on Tuesday after Saudi Arabia said it could pump more oil to cover any shortages. In London, Brent crude for May delivery was up 27 cents at $124.39 a barrel on the ICE Futures exchange. The American Petroleum Institute said late Tuesday that crude inventories fell 1.4 million barrels last week, breaking a two-month trend of growing supplies. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels. Inventories of gasoline fell 1.4 million barrels last week while distillates rose 600,000 barrels, the API said.

LPS – first look report
Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, reports the following “first look” at February 2012 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans.

Total US loan delinquency rate:7.57%
Month-over-month change in delinquency rate: -5.0%
Year-over-year change in delinquency rate: -14.0%
Total U.S foreclosure pre-sale inventory rate: 4.13%
Month-over-month change in foreclosure presale inventory rate: -0.5%
Year-over-year change in foreclosure presale inventory rate: -0.3%
Number of properties that are 30 or more days past due, but not in foreclosure: (A) 3,781,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:1,722,000
Number of properties in foreclosure pre-sale inventory: (B) 2,065,000
Number of properties that are 30 or more days delinquent or in foreclosure: (A+B) 5,846,000
States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL
States with the lowest percentage of non-current* loans: MT, AK, WY, SD, ND

*Non-current totals combine foreclosures and delinquencies as a% of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets
(2) All whole numbers are rounded to the nearest thousand
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by in-depth charts and graphs that reflect trend and point-in-time observations.

Money printing going out of style

The era of quantitative easing—a process by which central banks buy assets such as government bonds to inject funds in the markets—may be coming to an end, according to a survey of fund managers. According to a March survey by Bank of America Merrill Lynch, investors are more upbeat about the future and the prospects for growth and they no longer expect further quantitative easing measures to be taken by the Federal Reserve or the European Central Bank. In the survey, 28% of fund managers said they expected the global economy to strengthen in the next 12 months, up from 11% in February. This was the highest reading since March last year. But the report did find that fund managers still see sovereign debt as the biggest tail risk to the global recovery. Investors do foresee higher inflation, with a net 13% expecting it to rise in the coming year.

WSJ – housing mixed

US home building fell in February, but permits for new construction reached their highest levels in nearly 3½ years, reflecting housing’s uneven and protracted recovery. Home construction decreased 1.1% from January to a seasonally adjusted annual rate of 698,000, the Commerce Department said yesterday. Construction of single-family homes, which makes up more than 70% of housing starts, fell by 9.9% – the largest drop in a year. Meanwhile, multifamily homes with at least two units, a volatile part of the market, posted a 21.1% gain. Still, January’s figures were raised to 706,000 starts overall, a 3.7% improvement from December and the highest level since October 2008.

In a positive sign for future construction, the February data showed new building permits rose by 5.1% from a month earlier to an annual rate of 717,000 – also the highest level since October 2008. The housing sector has been healing slowly after prices collapsed more than five years ago. A National Association of Home Builders (NAHB) report on Monday showed that US home builders’ confidence in the market held steady in March at the highest level since 2007. “The level of activity still remains far short of the pace implied by the NAHB index so we look for further gains over the next few months in both sales and starts,” said Ian Shepherdson, chief US economist at High Frequency Economics. “Housing will add to growth all year, and beyond.”

But Joshua Shapiro, chief US economist at MFR Inc., said that so far, the home builders association’s level of confidence hasn’t been matched by actual construction. “Our view remains that single-family housing starts are in a long-term bottoming process but that an enormous overhang of existing single-family home supply will prevent sharp gains in single-family starts in the near to medium term,” Mr. Shapiro said. NAHB said Monday that its members continue to face obstacles, including tight credit for both builders and buyers and a large inventory of inexpensive, foreclosed homes in many markets. The Commerce Department data showed that housing starts were mixed across four US regions. The Northeast posted a 12.3% decline, while starts in the West dropped 5.9% last month. Starts rose 3% in the Midwest and 1.5% in the South. Actual housing starts, calculated without seasonal adjustments, grew to 48,100 in February from 46,500 in January. Lumber and commodities markets watch those numbers closely to gauge demand.
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Chris McLaughlin

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About the author:
Chris McLaughlin is widely known as America’s top
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Whistleblower wins $18 million

Attorney Lynn Szymoniak had spent a career investigating insurance fraud when a bank moved to foreclose on her Florida home in 2008. Almost four years later, the fraud she said she uncovered by combing through mortgage documents earned her $18 million.  Szymoniak, 63, is among six whistle-blowers who will pocket $46.5 million as part of a $25 billion national foreclosure settlement that state and federal officials reached in February with five banks, including Bank of America Corp. and JPMorgan Chase & Co. (JPM), according to the US Justice Department.  Szymoniak’s examination, in which she relied on her experience as an insurance-fraud investigator, led to her claims against banks for submitting fraudulent documents to the federal government asserting that they owned loans insured by the Federal Housing Administration, she said.  The national foreclosure settlement with the five banks, which resolves claims of abusive foreclosure practices, provides mortgage relief to borrowers, pays $1.5 billion to those who lost their homes to foreclosure, and sets standards for how the banks service mortgage loans.

As part of the agreement, whistle-blower claims are being settled for about $228 million, according to court papers filed in federal court in Washington. A group of six whistle-blowers will receive $46.5 million out of that amount, said Alisa Finelli, a Justice Department spokeswoman.  Szymoniak’s foreclosure case began in July 2008 when Deutsche Bank AG (DBK), as trustee for a mortgage securitization trust, sued to seize her Palm Beach Gardens, Florida, home, which was once worth $1.3 million. The bank couldn’t prove it owned her loan and claimed it had lost the mortgage note, she said.  Szymoniak said she was first alerted to problems in the paperwork on her foreclosure when Deutsche Bank said it acquired her mortgage note in October 2008, three months after the bank sued her over the loan.  “So I began doing what I’ve done for years — go out and investigate,” she said. “It was pretty obvious to me that the paperwork was fraudulent.”  Her work quickly uncovered widespread document fraud in the mortgage industry, she said, and eventually led to the filing of her whistle-blower cases in 2010.  The whistle-blower claims resolved in the national settlement include a case filed in Atlanta in 2006 in which banks are accused of defrauding military veterans and the US government.  The banks violated rules under a Department of Veterans Affairs program for refinancing mortgage loans by charging improper fees to veterans, according to the complaint. The banks hid those fees and obtained government guarantees on the loans, according to the complaint.

Inflation leaps, gas leads

The Labor Department said its Consumer Price Index increased 0.4% after advancing 0.2% in January. That was in line with economists’ expectations. Gasoline accounted for more than 80% of the rise in consumer prices last month, the department said.  Outside the volatile food and energy category, inflation pressures were generally contained. Core CPI edged up 0.1% after gaining 0.2% in January. The February increase was below economists’ expectations in a Reuters poll for a 0.2% rise.  The Federal Reserve said on Tuesday that the recent spike in energy costs would likely push up inflation temporarily. Over the long-term, inflation was likely to run at or below the its 2% target, it said.

While the US central bank reiterated its expectation that overnight interest rates would remain near zero until at least through late 2014, it offered no clues on whether it would launch a third round of bond buying or quantitative easing, to keep borrowing costs low to stimulate the recovery.  Last month, overall inflation was pushed up by gasoline prices, which soared 6%, the largest increase since December 2010, after rising 0.9% in January.  Although surging gasoline prices are a strain on consumers, they have so far not caused a sharp pull back in spending, thanks to a strengthening jobs market.  Food prices were flat last month after rising 0.2% in January. Food prices were the weakest since July 2010.  Overall consumer prices rose 2.9% year-on-year after increasing by the same margin in January.  Core consumer prices were last month restrained by apparel prices, which fell 0.9% — the most since July 2006 — after rising 0.9% in January. There were also declines in the prices of tobacco, airline tickets and used cars and trucks.  But new motor vehicle prices rose 0.6% after being flat in January. While housing costs held up, owners’ equivalent rent rose only 0.1% last month after increasing 0.2% the prior month.  In the 12 months to February, core CPI increased 2.2% after rising 2.3% in January. This measure has rebounded from a record low of 0.6% in October and the Fed would like to see that closer to 2%.

Olick – Miami condos – bust or boom?

“South Florida real estate developer Martin Margulies has been sitting on prime ocean-front property for five years, waiting for the condo market to rise from the grave. When the market here crashed in 2007, amid overzealous speculators and an abundance of cheap and easy credit, condo construction ground to a halt. The joke had been that the unofficial bird of Miami was the crane, but that bird flew the coop. Apparently it is now swooping back in.  ‘This is the moment because we’re going to be delivering this property next year, and so by that time there will be good demand, there is good demand now,’ says Margulies, who began construction on a brand new high-end condo tower in December.  And he is right. Foreign buyers, largely from South America, but also from Europe, Russia and China, are flooding into the Miami area, and that has developers rushing to keep up with demand.  ‘The music started again in South Florida,’ says Peter Zalewski of CondoVultures, a Florida real estate data and investment firm. ‘We have an arms race of developers moving into the marketplace trying to put up condos or planned condos in anticipation of a recovery in the next two years or so.’

And they are doing it fast. Twenty five new towers with 5200 units are proposed while there are still 4200 unsold units left from the crash. Sounds crazy, but the foreign demand developers and real estate agents are seeing now is just that hot.  ‘The foreign buyer is coming in looking for wealth preservation or taking advantage of the weak US dollar, or coming in because of problems back home, whether it’s Venezuela or Mexico with the drug war,’ says Zalewski, who has been watching and working this market for the past decade.  Foreign buyers are investing as well as foreign developers, like the Melo group, a family business from Argentina. They began construction last August on the first new tower in Miami in at least four years. A lot of people thought they were crazy, but now the tide has decidedly turned. The Melo’s say they have pre-sold the entire building, and they required buyers to put 50% down. Most of their buyers, again, are foreigners with cash.

This new condo boom, while reminiscent of the recent one, is not built on easy credit. In fact, credit is still very tight here, especially for developers. Martin Margulies tried to get a construction loan for his Hollywood project, the Bellini, but could only get 50% financing along with putting up collateral. He called that ‘onerous,’ and instead took out a personal loan, using his massive art collection as collateral. He says he’s not concerned, as his buyers will be putting down 30% on one to four million dollar units.  ‘The kind of buyers we get they don’t need financing, they’re all cash buyers,’ says Margulies. ‘It’s a lifestyle they have, so they’re not reliant on a bank to give the money.’  Most of the foreign buyers in Miami are renting the properties to locals who have either lost their homes to foreclosure or whose credit is not good enough to get a home loan in today’s tough US mortgage market. The question now is, what happens to all these renters when Florida’s single family housing market recovers and credit opens up again?

Will all these foreign investors want to unload their units at the same time?  ‘You wonder if we’re not kicking the can, where we dealt with the problem at hand by dumping it off to foreign buyers, and now as the domestic buyer starts to move back into the marketplace, is that domestic buyer going to pay the same price that the foreign buyer is willing to pay or take the same chances that the foreign buyer is willing to pay?’ asks Zalewski.  It all sounds frighteningly familiar.”

Industrial output down

The Federal Reserve said Friday that the output of the nation’s factories rose 0.3% last month. That followed even stronger increases in January and December, which combined for the best two month stretch since 1998.  Overall industrial production, which includes output by mines and utilities, was unchanged. Mining activity declined sharply and utilities were flat.  Factory output has risen 17.4% since the depths of the recession in June 2009. It remains 6.7% below its pre-recession peak, reached in December 2007.  Growth at US factories was a little slower in February because auto production edged lower after big gains in December and January. Manufacturers made more electronics, energy products and electrical equipment.  Still, manufacturing has strengthened substantially since last summer, when it faltered because of global supply disruptions caused by the Japan earthquake and tsunami. Factories are benefiting from strong auto sales and growing business investment in machinery and other equipment.

Sales up 14% in San Francisco

San Francisco Bay Area home sales grew 14.2% from last year in February with the region recording 5,702 sales, up from 4,991 a year ago, DataQuick said.  The San Diego-based real estate research firm said sales are up over year-prior levels for the eighth straight month, suggesting a tepid recovery could be under way.  New and existing home prices continue drag, with the February median of $325,500 down 0.3% from $326,000 in January and 3.6% from $337,250 a year ago.  Prices in San Francisco hit their peak of $665,000 in June 2007 before plummeting to $290,000 in March 2009 after the nation fell into a prolonged recession.  Much like the Southern California market, distressed home sales accounted for half of the Bay Area’s resale market in February. Foreclosure sales alone made up 27.4% of all resales in the market, while short sales represented 23.1%.  The average monthly mortgage payment in the Bay Area hit $1,225 in February, down from $1,233 in January and $1,440 a year earlier.

Obama to release emergency oil in front of election?

Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, two British sources said, in a bid to prevent fuel prices choking economic growth in a US election year.  A formal request from the United States to the UK to join forces in a release of oil from government-controlled reserves is expected “shortly” following a meeting on Wednesday in Washington between President Barack Obama and Prime MinisterDavid Cameron, who discussed the issue, one source said.  Britain would respond positively, the two sources said, and Cameron said a release was worth considering.  “We didn’t make any decision, this has to be discussed broadly. We’ve got to look at this issue carefully, it’s something worth looking at. Short-term should we look at reserves? Yes, we should,” Cameron said during a meeting with students in New York.  “We’d both like to see global oil prices at a lower level than they are.”  Details of the timing, volume and duration of a new emergency drawdown have yet to be settled but a detailed agreement is expected by the summer, one of the sources said.  Other countries may also be approached by Washington to contribute, a further source said, Japan among them.   Rising world oil prices have pushed the cost of gasoline in the US up sharply, threatening to stall economic recovery ahead of Obama’s bid for re-election in November.

Renting jeopardizing affordable housing

More Americans are renting houses instead of buying them, a trend that could disrupt price affordability, analysts say.  With more homeowners unable to secure mortgages and uncertain about future finances, renting is the only sure-fire way to live in a single-family property, according to Capital Economics.  But as more Americans turn to home renting, the influx of demand is set to squeeze the nation’s rental supply, pushing monthly rents even higher.  Paul Dales, senior economist with Capital Economics said that rental vacancy rates will fall again in the future, pushing prices up. The median rent is already up to $712 per month—well above the average monthly mortgage cost of $647, Dales reported.  He estimates vacancies in the home-rental market will push average rental rates up as much as 5% by early 2013, compared to 2.4% in January.  “We expect the annual rate at which rents are rising will rise to 3% this year and remain at that level in 2013,” Dales said. “Assuming that the economic recovery gains firmer footing, in future years there is scope for rents to rise by around 4% a year.”

And as single-family renters head into the market, the supply of rentals is unlikely to meet new demand.  This reality is playing itself out in Denver, where the vacancy rate for home rentals fell from 3.4% in the third quarter to 2.1% in the fourth quarter. At the same time, the vacancy rate edged up slightly from the 2% level reported in the fourth quarter of 2010.  “The vacancy rate went up slightly year-over-year,” said Ryan McMaken, a spokesman for the Colorado Division of Housing. “That doesn’t mean much, though, because when you’re looking at vacancy rates below 3%, the bottom line is that the market is tight. For many people, it’s not easy to buy a house right now, so they’re renting.”

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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

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

January on a high for repeat foreclosures

Repeat foreclosures hit an all-time high in January, representing 47% of all starts. Foreclosure starts rose in January suggesting the pipeline is starting to move, according to the latest mortgage monitor report from Lender Processing Services. LPS said foreclosure starts in the first month of 2012 rose 28% from December but fell 11.5% from a year earlier. The data firm says 203,458 starts were recorded in January, compared to 230,023 in January 2011. LPS sees positive changes in the foreclosure pipeline, but  says it’s too soon to call it a trend. When looking at new problem loans, the ratio of troubled mortgages is relatively low nationally but the states with the most seriously delinquent home loans in January included Nevada, Florida, Mississippi, Arizona and Georgia. Nationwide more than 40% of loans in foreclosure are more than two years past due. LPS estimates that refinance opportunities under the new HARP 2.0 are possible for 27.6 million borrowers, but only 6.8 million are probable.

Big Names Rally to Romney

Leading members of the Congress and influential conservatives are showing signs of rallying around Mitt Romney in the presidential race signaling that a coast-to-coast burst of voting on Super Tuesday should mark a moment to start concentrating on defeating President Obama. The endorsements come as the Romney campaign is pressing elected officials and activists in the 10 states that are voting Tuesday and those that do so in the following weeks to help nudge the contest toward a conclusion. A methodical effort is under way among governors, donors and top Republicans to make the case that a long nominating fight could weaken the party’s chances to win the White House, maintain control of the House and gain a majority in the Senate. It is a significant moment for Mr. Romney, but also a critical one for Rick Santorum, who is scrapping for delegates but also trying to win the popular vote in Ohio to revive doubts about Mr. Romney’s appeal among conservative and working-class voters. Newt Gingrich is also fighting to stay in the race, staking the future of his candidacy on a victory in Georgia. Here in Ohio, where voters have developed a well-earned reputation as a bellwether that captures national political sentiments, the primary will help determine the length of the presidential race and the direction of the Republican Party. The state could also provide one of the best opportunities for Mr. Santorum to slow Mr. Romney’s march to the nomination.

Olick: Buying Foreclosures – One Investor’s Key to Success

With potentially millions of foreclosed, bank-owned homes coming to the housing market over the next few years, cash-heavy investors are poised to profit, especially when buying in bulk. The Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, recently announced a pilot property sale program of 2500 foreclosures now on the books of Fannie Mae. Phoenix investor Geoffrey Jacobs is hoping to get in on it. “The ability to buy in bulk adds to our ability to grow our portfolio in a meaningful way in a short period of time,” says Jacobs, principal at Empire Group, which has already bought over 1000 Phoenix-area homes in the past two and a half  years. “When you look at how well these properties lease and the type of  rental yields, it’s a compelling investment.”  When Empire Group first began buying foreclosures in 2009, it farmed out the property management to smaller companies and individuals. Jacobs quickly learned that method was costing precious profit. Just twenty percent of the nation’s 8.7 million single family rental properties are managed by professionals, according to Steve Cook of Real Estate Economy Watch. Individual owner/investors do the bulk of the rest. Owners, according to Cook, may be spending too much time and money on maintenance. Jacobs’ group, however, is very profitable, with 8-9 percent annual returns on his properties. His renters stay, he says, with a 65-70 percent re-up rate. He credits good management and hopes, someday, that his long-term renters will become buyers. Unfortunately, that may take a while, as so many of them need to rebuild their credit. Empire Group has already passed the first round of pre-qualification for the FHFA REO to Rent program and is hoping to clear the second round and start bidding on bulk properties in the next few weeks.

Factory orders fall, as economy staggers once again

New orders for U.S. factory goods dropped in January by the most in over a year as businesses cut orders. The Commerce Department said on Monday orders for manufactured goods fell 1 percent, a less steep decline than the 1.5 percent drop expected by private forecasters in a Reuters poll. Still, it was the biggest decline since October 2010. Many economists think the expiration of some tax breaks on capital spending at the end of 2011 led businesses to bring forward investments. Orders for non-defense capital goods, excluding aircraft fell 3.9 percent in January. This is a closely watched category because it is taken as a sign of businesses’ future spending plans. Shipments for this category declined 3 percent. Business spending and manufacturing have been drivers of the recovery since the 2007-2009 recession.

Home prices fall by smallest margin: Clear Capital

National home prices fell by the smallest margin in 10 months in light of REO saturation increases, a trend that Clear Capital calls “unusual and encouraging.” Prices declined 1.9% year-over-year, according to the firm’s Home Data Index market report. Short-term prices remained stable, falling only 0.6% quarter-over-quarter, highlighting short-term stability over the last few months. All regions showed improvements in yearly and quarterly price drops, while three out of four saw upticks in real estate-owned properties for sale. Clear Capital found that the nation’s top 15 performing metropolitan statistical areas were resilient against higher REO saturation, with six of them showing quarterly price appreciation greater than 2%. Alex Villacorta, Clear Capital’s director of research and analytics, said markets such as Atlanta and Tucson, Ariz., hit hard by the foreclosure epidemic, are filled to the brim with REO properties for sale and will see a falloff in 2013 — if not before.

Ds News: Consumer Credit Points to End of Housing Downturn

Consumer credit data suggests spending will increase and the housing market will begin to emerge from its slump this year, according to Equifax and Moody’s Analytics. Both companies note that as key market data align with pre-recession totals, consumers should anticipate steady economic growth for major credit sectors. Looking across the full spectrum of consumer credit, Equifax and Moody’s found that delinquency rates for auto, bankcard, and consumer finance are back to pre-recession levels. These sectors are expected to contribute to the U.S. economy’s nascent recovery.  The home mortgage lending sector continues to see the highest percentage of delinquencies, the companies’ report notes, even with outstanding mortgage balances (including first liens and home equity lines and loans) having declined by $1 trillion since 2008 and continuing to drop. The companies also note that tighter lending guidelines are reflected in loans made to the prime risk segment. Consumers that fit the bill of a prime risk now account for more than 80 percent of all new 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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

MBA – mortgage application down

Mortgage applications decreased 0.3% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 24, 2012. This week’s results are adjusted for the Presidents Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 0.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9.4% compared with the previous week. The Refinance Index decreased 2.2% from the previous week. The seasonally adjusted Purchase Index increased 8.2% from one week earlier. The unadjusted Purchase Index increased 0.9% compared with the previous week and was 4.3% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 0.33%. The four week moving average is down 0.96% for the seasonally adjusted Purchase Index, while this average is up 0.64% for the Refinance Index.

The refinance share of mortgage activity decreased to 77.9% of total applications from 80.1% the previous week. This is the lowest refinance share since December 2, 2011, and the first time the measure has fallen below 80% since December 9, 2011. The adjustable-rate mortgage (ARM) share of activity decreased to 5.0% from 5.3% of total applications from the previous week. “Mortgage rates remained near survey lows last week, but refinance volume fell slightly,” said Michael Fratantoni, Vice President of Research and Economics at the Mortgage Bankers Association. Fratantoni continued, “According to survey participants, more than 20% of refinance applications were for HARP loans. The HARP share of total refinance applications has increased over the past month. Purchase application volume increased over the week, but remains within the narrow and anemic range of activity we have seen since the expiration of the homebuyer tax credit in May 2010.” In January 2012, among home purchase applications, 86.4% were for fixed-rate 30-year loans, 6.5% for 15-year fixed loans and 5.4% for ARMs. The share of purchase applications for “other” fixed-rate mortgages with amortization schedules other than 15 and 30-year terms was 1.7% of all purchase applications. The share of 15-year fixed and ARM decreased from the previous month while the 30-year fixed and “other” fixed category shares increased from last month.

Growth up 3%, inflation up

Gross domestic product expanded at a 3% annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said in its second estimate. That was a step up from the 2.8% pace it reported in January. Price indexes also swelled, with the core personal consumption expenditures (PCE) index jumping 1.3%, against an advanced reading of 1.1%. Economists polled by Reuters had expected fourth-quarter GDP would be unrevised at a 2.8% pace. The economy grew at a 1.8% pace in the third quarter. While the rebuilding of inventories added a hefty 1.88 percentage points to GDP in the last quarter, the pace of accumulation was not as fast as previously reported. Business inventories increased $54.3 billion, instead of $56.0 billion. Excluding inventories, the economy grew at a 1.1% rate, rather than 0.8%. That was still a sharp step-down from the prior period’s 3.2% pace. Although business overall business spending was revised up, investment in equipment and software was lowered to a 4.8% growth rate from 5.2%. Export growth estimates were also lowered, but weaker imports led to a smaller trade gap.

In addition, consumer spending — which accounts for about 70% of US economic activity — was a touch firmer than initially thought. Consumer spending rose at a 2.1% rate instead of 2%. Even spending on home building was firmer than previously estimated and investment on nonresidential structures was modestly weak. So far data ranging from employment to manufacturing have shown underlying strength in the economy, reducing the need for the Federal Reserve to ease monetary policy further by launching a third round of asset purchases or quantitative easing. But surging gasoline prices, which have risen 12.6% or 42 cents since the start of the year and averaged $3.78 a gallon in the week through Monday, are clouding the outlook. High gasoline prices helped to almost snuff out growth early last year. However, economists believe the impact on households this time could be mitigated somewhat by weak costs for natural gas and a strengthening labor market.

WSJ – Senators for short sales

The best that can be said about the latest Congressional attempt to heal the housing market is that politicians have at least diagnosed a real problem: a glut of homes for sale. Like other proposed top-down fixes, however, the latest Beltway brainstorm would likely hurt more than help. Republicans Lisa Murkowski and Scott Brown and Democrat Sherrod Brown want to speed up short sales, which occur when a lender agrees to let a homeowner pay off a mortgage by selling a home at a price below the outstanding loan balance. Their bill—introduced earlier this month—would force lenders to approve or deny short-sale offers within 75 days or face a $1,000 fine, plus attorneys’ fees. The lender could ask for an extension only once, for 21 days. Accelerating short sales isn’t a bad idea, in and of itself. Delinquent borrowers can offload their mortgage and find another home they can afford, or move to an area that’s cheaper. Lenders don’t have to endure a lengthy foreclosure process and risk having the property sit unoccupied for months, if not years. Borrowers who can afford the home can snap them up at bargain prices.

But why do the Senators want to interfere in a market that is working? CoreLogic recorded 293,574 short sales last year, up from 273,100 in 2010 and 64,813 in 2007. That makes sense: Lenders want to minimize their losses as best they can and are working through their portfolio as quickly as possible. Setting an arbitrary timeline for short sales makes for a good political talking point, but it might have unintended consequences. Lenders often have to coordinate with investors and second-lien holders to approve the deal, which takes time. They also don’t want to rush, make a mistake and expose themselves to litigation for sloppy paperwork, especially after the recent furor over alleged “robo-signing” abuses. Fraud is another concern, though it’s hard to get firm estimates on the extent of the problem. Risk consultancy Interthinx estimates about $1 billion was lost annually in deals between 2007 and 2010 when buyers resold property for more than 20% of the original sale value within six weeks—a red flag for fraud in a market with falling or flat home prices. Sometimes a broker’s low-ball assessment done on a house is fraudulent; sometimes a broker conceals from the lender the fact that a willing buyer exists for the house at a higher price. Big banks like Wells Fargo or Bank of America can devote resources to fighting this kind of fraud but smaller lenders may not have the same capabilities. Try as Congress might, there’s no quick fix to the oversupply of homes that’s weighing down the housing market. Increasing the regulatory burden on lenders will only prolong the pain.

WSJ – home prices hit new lows

Home prices fell to fresh lows in December, but economists say that a drop in the number of homes listed for sale could help stabilize prices in parts of the country this year. Home prices fell by 4% last year, according to the Standard & Poor’s/Case-Shiller index that tracks 20 metro areas. Prices dropped by 1.1% for the three-month period ending in December compared with the same period ending in November. That was slightly better than November’s reading, when prices were down 1.3% from October. Tuesday’s report is the latest evidence that the housing market still faces a cloudy outlook after a six-year downturn. The inventory of homes for sale has contracted, reducing competition among sellers, according to The Wall Street Journal’s quarterly survey of housing-market conditions in 28 metro areas.

But a large potential backlog of foreclosed properties hangs over many housing markets. Other headwinds including tight mortgage-lending standards that show few signs of easing. “These are times of continued, great uncertainty about home prices,” said Robert Shiller, the Yale University economist who co-founded the index that bears his name. “We might be on the verge of a home recovery, but then, maybe not.” Others are becoming somewhat optimistic. Thomas Lawler, an independent housing economist in Leesburg, Va., said the S&P/Case-Shiller index should hit a bottom this spring. He said many analysts have overlooked positive developments, including a dearth of new construction and the falling share of homes selling out of foreclosure. “You don’t hear very many people talk about the actual housing stock, and how slow it’s growing,” he said, while conceding that it is “absolutely true that organic demand has yet to show any material rebound.”

Even when prices stop falling, they aren’t likely to rise for years, leaving millions of homeowners stuck in properties worth less than what they owe. “We’re looking at an L-shaped recovery,” said Stan Humphries, chief economist at real-estate website Zillow, who predicts another 3.7% decline in home prices for the coming year. In most of the country, home prices aren’t falling at anywhere near their jaw-dropping pace of 2008. But only two markets showed an increase in home prices during the fourth quarter. In Phoenix, home prices were up by 0.8%, while Miami reported a smaller gain of 0.2%. Detroit was the only city to post a year-over-year gain, rising by 0.5%. Home prices in Atlanta, meanwhile, fell by 12.8% last year, while Chicago posted a 6.5% decline. One surprising development in many housing markets is that the supply of homes for sale has fallen to a five-year low. While that normally would be a sign of health, real-estate agents say a paucity of homes is holding back sales.

At the current sales rate, it would take about four months to sell the supply of homes on the market in Denver, Washington, D.C., and Orange County, Calif. That level is lower, at less than three months, in Phoenix and San Francisco, and has dropped to just 1.9 months in Sacramento, Calif. But several markets still face supply-demand imbalances that could keep pressure on prices. New York’s Long Island had a 13-month supply of homes at the end of the fourth quarter. Nashville and Charlotte, N.C., had a 12-month supply, and northern New Jersey had a nearly 11-month supply. Those numbers will rise if banks sell more foreclosed properties as they correct deficient mortgage-handling practices.

Unemployment for 5 years

The US economic recovery is “frustratingly slow” and it could take four to five years to ratchet the unemployment rate down to about 6%, from more than 8% now, a top Federal Reserve official said yesterday. The recovery is held back by the housing market and Europe’s debt crisis among other headwinds, but monetary policy is now appropriately positioned to eventually achieve this “maximum employment” level, said Cleveland Fed President Sandra Pianalto. “We do not have a good deal of concrete history for monetary policy to fit our current circumstances, but I am confident the Federal Reserve is making the most of its tools to move the economy in the right direction,” the Fed official said at an economic development meeting in Westfield Center, Ohio. Pianalto, a voter this year on the Fed’s policy-setting panel, is a moderate dove in line with Chairman Ben Bernanke’s core of policymakers who have taken aggressive action to bring down unemployment, which stands at 8.3% after rising above 9% last year. The US central bank in late 2008 slashed interest rates to near zero and has since bought $2.3 trillion in long-term securities in an unprecedented drive to spur growth and revive the economy after the worst recession in decades.

Olick – time to buy?

“Nobody wants to catch a falling knife. It is as simple as that. If potential buyers see continued home price erosion, they will stay parked on the sidelines. But as with everything else in this unique and historic housing market, perhaps the usual logic doesn’t apply. ‘Housing is one of the great investments right now. I tell people all the time when they come up to me, they say, ‘What should I do, Mr. Trump?’ I say go buy a house,’ said Donald Trump earlier today on CNBC. ‘It wouldn’t be an obvious mistake to buy a house now,’ hedged Robert Shiller, barely a few hours later. Perhaps they were just jumping off Warren Buffett’s declaration yesterday that if he had a way to manage them, he would buy a couple of hundred thousand single family homes and rent them out. Housing appears to be rated a ‘buy’ these days, especially among investors, who see a ripe and rising rental market and big potential for income. But is it the right time yet for what I call ‘organic’ buyers to get in? By this I mean people buying a home to actually live in it, raise a family in it, let the dog run around in the back yard. If prices are still falling, couldn’t an even better deal be waiting down the road a bit?

No. House prices will continue to fall on a national basis at least through 2012, but you have to look past national headlines to your local market, which is likely already recovering nicely. The trouble with the national numbers is that they are heavily weighted toward the lower end of the market and to the distressed end of the market. Around 73% of homes that sold in January were priced below $250,000, according to the National Association of Realtors. Forty-seven% of homes sold that same month were considered ‘distressed,’ which is either a foreclosure or a short sale (where the lender allows the borrower to sell for less than the value of the mortgage). With all the activity in these areas, no surprise that prices skew lower. The $250,000 to $500,000 price range may now be the sweet spot for the market. Sales in January were up in this price range, and if you have good credit, you are within GSE and FHA loan limits in most markets. While FHA just raised its insurance premiums, which may hurt much-needed first-time homebuyer demand, it is still one of the best loan products out there today, especially for those with lower down payments. You cannot time housing any more than you can time the stock market. True, housing moves far more slowly, but that works to its benefit, as prices don’t rise and fall on daily news or even on major events. Sales have clearly bottomed in housing, and prices always lag sales. They will lag longer this time around, no question, but they will come back. Supply and demand will eventually win out, even after an historic crash. If you can’t get a good mortgage now, then perhaps it’s not your time, but if you can, waiting may not buy you much.”

US conducts criminal libor probe

The US Justice Department is conducting a criminal probe into whether the world’s biggest banks manipulated a global benchmark rate that is at the heart of a wide range of loans and derivatives, from trillions of dollars of mortgages and bonds to interest rate swaps , a person familiar with the matter said. While the Justice Department’s inquiry into the setting of the London interbank offered rate, or Libor, was known, the criminal aspect of the probe was not. A criminal inquiry underscores the serious nature of a worldwide investigation that includes regulators and law-enforcement agencies in the United States, Japan, Canada and the UK. Several major global banks, including Citigroup, HSBC, Royal Bank of Scotland and UBS, have disclosed that they have been approached by authorities investigating how Libor is set. No bank or trader has been criminally charged in the Libor probes. It wasn’t clear which banks or traders the Justice Department is targeting in its criminal probe.

Fannie loses $2.4 billion, asks for $4.6 billion

Fannie Mae lost $2.4 billion in the fourth quarter and asked the federal government for another $4.6 billion in bailouts. Fannie earned a $73 million profit the same period the year before. The government-sponsored enterprise reported a $16.8 billion loss for the entire year, widening 20% from the $14 billion in losses in 2010. Fannie paid $2.6 billion in dividends to the Treasury Department in the fourth quarter. Since entering conservatorship in 2008, Fannie received $116 billion in bailouts through the end of 2011 and paid back roughly $19.8 billion. A $6.1 billion increase in lost net fair value of its assets pushed a poorer performance in 2011. Significant declines in interest rates over the year pushed more losses on its risk management derivatives. Combined with Freddie Mac and Ginnie Mae, the federal government guaranteed more than 99% of mortgage-backed securities issued between 2009 and 2011, accounting for more than 85% of all single-family loans.

Fourth quarter revenues declined 8% to $4.5 billion from the year before. Revenues for the year actually increased 17% to $20.4 billion. Fannie charged off $4.7 billion in credit losses, increasing 40% from the same quarter in the prior year. The higher losses came from a slight increase in foreclosures. The mortgage giant repossessed more than 47,000 homes in the last three months of 2011, up from nearly 46,000 one year prior. The problem loans continue to rise from the books of business originated between 2005 and 2008. These loans cost Fannie $140 billion since 2009. Its becoming a smaller portion of the entire portfolio, though, shrinking to 31% at the end of 2011 from 39% the year before. “Our new single-family book now accounts for more than half of our overall single-family guaranty book of business,” said Fannie Mae CFO Susan McFarland.

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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

NAR – pending home sales up

Pending home sales are on an upward trend, which has been uneven but meaningful since reaching a cyclical low last April, and are well above a year ago, according to the National Association of Realtors (NAR).  The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, rose 2.0% to 97.0 in January from a downwardly revised 95.1 in December and is 8.0% higher than January 2011 when it was 89.8. The data reflects contracts but not closings.  The January index is the highest since April 2010 when it reached 111.3 as buyers were rushing to take advantage of the home buyer tax credit.  The PHSI in the Northeast rose 7.6% to 78.2 in January and is 9.8% above a year ago. In the Midwest the index declined 3.8% to 88.1 but is 10.8% higher than January 2011. Pending home sales in the South increased 7.7% to an index of 109.1 in January and are 10.5% above a year ago. In the West the index fell 4.4% in January to 101.9 but is 0.7% above January 2011.

Why gas prices vary across the country

The national average for regular gasoline rose to $3.70 Friday, up 14 cents in the past week – and only about 40 cents shy of the all-time record high of $4.11 a gallon reached in July 2008.  While many are feeling the pain at the pump, Americans are seeing widely divergent prices depending on where they live.  Why are drivers in Fort Collins, Colorado paying a little over $3, while those in Santa Barbara, California are seeing gas prices at $4.33 a gallon?  Colorado, Montana, Utah and Wyoming have the cheapest pump prices in the country, at about $3.21 a gallon or less on average, while retail gasoline prices are near $4.30 a gallon in California and are over $4 in some parts of New York.  The answer lies in the “chaos” in crude oil prices around the nation, says OPIS energy analyst Tom Kloza. “There’s never been more diversity in crude oil prices. There’s never been more diversity in gasoline prices.”  The divergence in pump prices comes from the wildly differing wholesale prices for gasoline. The wholesale price of gasoline in the Rocky Mountains and Midwest is about 20 to 40 cents cheaper than on the East Coast, for example.

The price of the refined fuel reflects regional supply issues that face refiners in various parts of the country, based on the type of oil they process. Crude oil in some landlocked areas in the Midwest — such as North Dakota, where there has been a tremendous supply surge recently — reached about $95-$96 a barrel Friday. For refineries that use sour crude in the Midwest, Western Canadian Select grade of crude, a heavy grade, the price is closer to $91 a barrel.  Yet, on the East Coast, refining capacity, and as a result gasoline supply, has been drastically reduced in the past few months. Two refiners outside of Philadelphia, which account for 20% of the gasoline in the northeast have shut down. Overall US and European refinery shutdowns have taken about 2.6 million barrels of gasoline supply off the market since 2009, says Houston-based energy analyst Andy Lipow.

East Coast refiners import most of crude oil from Europe and West Africa. North Sea Brent crude prices rose have risen above $125 a barrel. Light Louisiana sweet crude prices on the Gulf Coast reached $130 a barrel on Friday, due to tight supplies of European and West African crude blends.  (RBOB gasoline futures traded at the CME Group’s New York Mercantile Exchange – in close proximity to East Coast refiners and delivery terminals – also more closely reflects the Brent crude price. March RBOB gasoline futures rose 1% Friday to settle at a 2012 high of $3.15 a gallon.)  Wholesale oil and gasoline prices have been rising sharply all over the country in the past few days, Kloza says. “At this rate, it’s a foregone conclusion retail prices will rise another 5 to 15 cents a gallon this week.” Retail gasoline prices have already spiked 5 cents since Friday.  At this rate, if the surge in gasoline prices next month mirrors the month of February, record pump prices may be in store even before the summer driving season gets underway.

Olick – 2500 foreclosures up for bulk sale

“Barely six hours after billionaire investor Warren Buffett said that if he could he’d like to buy ‘a couple of hundred thousand single family homes’, the regulator of Fannie Mae and Freddie Mac put about 2500 of theirs up for sale.  It is the next step in the government’s REO (bank-owned) to rent program; the plan, announced earlier this month, is designed to help Fannie and Freddie unload thousands of foreclosed properties weighing on their books. Fannie Mae alone owns more than 100,000 repossessed properties.  ‘This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace,’ said FHFA acting director Edward DeMarco in a press release.

While the prequalification phase began several weeks ago, investors can now move to the next phase, where, if accepted by proving financial capacity and experience, they can get access to the properties for sale. The bulk of the properties are in the most distressed markets, such as Florida, parts of California, Phoenix, AZ, and Las Vegas, NV. Atlanta, GA, however, has the highest number in the mix, 572 properties making up 23% of the total up for sale. Atlanta housing was hit hard by the recession and high job losses. Just 17% of the properties are vacant, so investors would largely be getting assets with existing cash flow.  As these first properties hit the market, there is no shortage of investors ready to scoop them up. Rental demand is still surging, and rents continue to rise, despite record high affordability and record low mortgage rates. Nearly 47% of all closings in January were of distressed properties, according to a new survey from Campbell/Inside Mortgage Finance, and investors now make up nearly a quarter of all buyers, according to the National Association of Realtors.

As banks start to ramp up the foreclosure process again, after a year of delays following the ‘robo-signing’ scandal, more properties will be repossessed and put up for sale; investors are flocking to the deals, largely using all cash, as they get into increasingly competitive situations. Even owner-occupants (non-investors) are turning more to cash, as credit is still tight.  ‘Despite near record low mortgage rates, homebuyers are finding it very advantageous in the current housing market to shop with cash. And low returns on money deposited in banks as well as mortgage approval hassles also are pushing homebuyers to consider all cash transactions,’ according to Campbell/IMF. ‘Between last October and January, the use of cash by current homeowners purchasing a new principal residence surged from 30.8% to 34.1%.  Critics of the bulk REO to rent program say that giving large investors with hoards of cash bulk deals squeezes out smaller investors who might do more improvements to the properties and then turn around and sell them at higher prices, thereby increasing overall home values. Investors in the FHFA program are required to hold the properties and rent them for ‘a specified number of years,’ according to the agency’s initial announcement.”

S&P Greece downgrade may be short

Standard & Poor’s downgrading of Greece’s long-term ratings to ‘selective default’ could well be short but there is a risk Athens falls back into default later, S&P analyst Moritz Kraemer said today.  S&P cut Greece’s rating on Monday, the second ratings agency to proceed with a widely expected downgrade after Athens announced a bond swap plan to lighten its debt burden.  “It’s a distinct possibility that this will be a short default which will be cured,” Kraemer told Reuters Insider television. “The more interesting question is not when it will be cured but whether it will be the last one.”  “I think the rating coming out of default of the Hellenic Republic will give some indication of what the likelihood of another restructuring down the road would be.”  When assessing what rating to give Greece in the future, S&P would look at the political environment, the growth outlook and the remaining debt stock.  “We think that on all three fronts there are huge question marks,” said Kraemer.

DSNews – debt and delinquency on the decline

Real estate-related debts are on the decline, as are overall delinquencies, according to a quarterly report from the Federal Reserve Bank of New York.  Debt maintained through mortgages and home equity lines of credit (HELOC) declined $146 billion during the fourth quarter of last year. Mortgages made up a majority of the decline – $134 billion – while HELOCs made up the remaining $12 billion.  Mortgage debt is now 11% below its peak, while HELOC debt is now 11.7% below its peak.  Also in the fourth quarter, the delinquency rate on consumer debt was reduced from 10% to 9.8%.  About $1.12 trillion of the total $11.53 trillion in consumer debt was delinquent. About $824 billion in debt was seriously delinquent (90 or more days past due).  While overall delinquency declined, about 2.2% of mortgage loans became delinquent in the last quarter of the year.

Foreclosures increased 9.5% over the quarter as 289,000 homes received foreclosure filings. However, the foreclosure rate is still 35.3% below the level recorded in the fourth quarter of 2010.  Also, despite the rise in foreclosure filings, the rate of loans that became seriously delinquent declined, corresponding with a rising cure rate, which reached 27.2% at the end of last year.  “Overall it appears that delinquency rates are stabilizing at levels that remain significantly higher than pre-crisis levels,” said Andrew Haughwout, VP and economist at the Federal Reserve Bank of New York.

FHA to raise premiums

The Federal Housing Administration (FHA) will raise mortgage insurance premiums this April in order to repair the health of its emergency fund.  The FHA upfront mortgage insurance premium will increase to 1.75% from 1% of the base home loan amount. This will apply regardless of the term or loan-to-value ratio beginning in April.  The annual mortgage insurance premium will increase by 10 basis points for loans under the $625,500 limit beginning April 1 and by 35 bps for home loans above that amount starting in June, the FHA said Monday. Authority for these raises come under the payroll tax cut extension agreed to last fall.  The FHA said the changes will boost the Mutual Mortgage Insurance Fund by $1 billion.  The UFMIP can still be financed into the mortgage. The increase to the upfront premium will cost new borrowers roughly $5 more per month.  Reverse mortgages and borrowers in special loan programs would be exempt from the changes, according to the FHA.

Last week at the Mortgage Bankers Association servicing conference in Orlando, FHA Commissioner Carol Galante said there would be upcoming insurance premium changes for the streamline refinance program. An FHA spokesman said these changes would be included in a letter to lenders due soon.  The MMI fund slipped below the Congressionally mandated 2% threshold in 2008, and in slipped to 0.2% last year. According to an analysis of President Obama’s budget, the fund could have declined further in 2013 and possibly needed a bailout from the Treasury Department. Nearly $1 billion in revenue from settlements with mortgage servicers announced in the last few weeks will also keep the fund from needing assistance, according to FHA.  “After careful analysis of the market and the health of the MMI fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” Galante said. ”These modest increases are one of several measures we are taking towards meeting the Congressionally mandated 2% reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

2012 – the year of the short sale?

By Tom Tryon: “Here is the real-time tale of two real estate markets. One market is depressed and distressed. Property values are down. Since mid-2006, residential values in Florida have declined by 51%. Hundreds of thousands of properties have been, or are, in foreclosure and huge numbers of homes have been repossessed. Consider these statewide numbers, presented by analyst Jack McCabe during last week’s Herald-Tribune Hot Topics forum:

- 150,000 residential properties in Florida have been repossessed, and are owned, by banks.

- 371,000 foreclosure cases are open in courts.

- 530,000 residential mortgage loans are at least 90 days past due and in default.

- 265,000 homeowners have not made a mortgage payment in more than two years.

- 1 million residences are in some form “distressed,” whether in foreclosure, owned by banks or in default.

- 46% of mortgages “under water” – in other words, the debt exceeds the current market value of the residential property.

Add this number – 809, the average number of days to process a foreclosure in Florida – and it’s easier to understand why so-called short sales, in which owners and mortgage holders sell at steep losses, are viewed as advantageous options and positive movements in the total market. The overriding question posed during the forum was: Will 2012 be the Year of the Short Sale? The answer, expressed by the overwhelming consensus of McCabe, the guest speaker, the panel – Michael Braga and Harold Bubil of the Herald-Tribune; attorneys Nancy Cason and Tom Avrutis – and audience was: Yes. There was one caveat: 2013 might be the Second Year of the Short Sale. That’s because the volume of pending foreclosures — and the imminent threat of even more, could make it impossible to clear this “shadow inventory” from the real estate market. There was widespread agreement among the 150 people — analysts, lawyers, bankers, real estate agents and developers — who attended the forum that more lenders are warming to short sales, despite the bottom-line effects of writing off losses. What’s more, the homeowners in financial peril are overcoming the psychological hurdles – and coming to terms with the financial implications of – short sales.

The real estate market is so complex that it’s impossible to cover in a multi-day symposium, much less a 90-minute forum. But I took away two simple points: 1) The current market is like a summer day in Florida: Dark and cloudy during one part of the day, with scattered sunshine and the possibility of bright days ahead; 2) It’s no wonder my wife and I have stayed in the same home for 25 years; real estate makes my head spin.”

Oil prices on the way up

Oil prices are poised to gain for the third straight week, undermining global equity market sentiment and threatening the fragile economic recovery. A CNBC poll of analysts and traders showed 12 out of 16 respondents, or 75%, expect oil prices to rise this week. Three believe prices will fall and one expects no change. Though the bulls comprise the overwhelming majority, many are lightening long positions, or bets that prices will rise, as they believe the recent rally is showing signs of fatigue. “You have to trade from the buy side but I would be reducing my long positions ahead of the weekend,” said Tom James, Chairman & Co-Founder, Navitas Resources, in an email on Thursday. “The fundamentals in the physical market don’t support the current short term price.” James added that he was looking to add long positions on any pullback in Brent crude to $115. “Target for the year is now $150 on longer term basis for Brent.”

Numerous respondents this week are warning higher retail gasoline prices could threaten the fragile economic recovery in the US David Kotok, chairman and chief investment officer, of Cumberland Advisors said an additional penny a gallon on gasoline translates roughly to a $1.4 billion decrease in US annual spending power. The average US price of gasoline jumped 18 cents a gallon in the past two weeks to $3.69 on Feb. 24, according to the nationwide Lundberg Survey, Reuters reported. But supplies of fuel remained plentiful in most of the country, the survey found. At $4.24 a gallon, San Diego had the highest average price for regular unleaded gasoline on Feb. 24, while the lowest price was $3.07 a gallon in Denver. Some believe gasoline prices may average $4.50 a gallon or as high as $5.00, damaging demand ahead of the peak summer driving season.

Olick – builders say good market trumps energy prices

“Sales of newly built homes are still stumbling along at historically low levels, but builders claim they are beginning to see the light at the end of a very long tunnel. Sales may not be surging back, but in some of the better local economies, buyer interest is. We saw it at open houses over the President’s Day weekend, and it’s starting to show up on line even more dramatically. Virginia-based NewHomesGuide.com, the website of New Homes Guide magazine, saw a 46% jump in unique visitors from December 2011 to January 2012 and a 47% jump from one year ago. Page views were up 59%. ‘We always see a seasonal jump in January,’ said Publisher, Leslie Stritmatter in a press release, ‘but the increases from the same period last year show this to be a much more significant bounce. I’m very hopeful that this is a sign of consumer confidence returning to the markets.’ Consumer sentiment is improving. ‘Right now the improving labor market trumped rising gasoline prices in influencing confidence, which is good in that new jobs and wages can help cushion the blow of an ever rising cost of living,’ says analyst Peter Boockvar at Miller Tabak.

When it comes to housing, the same may be true of high affordability, improving employment, better confidence, record-low mortgage rates and lower-priced homes; they all trump rising gasoline prices. ‘We don’t think there’s going to be a big impact from gas prices because we have so many forces taking us to recovery,’ says Richard Kettler of Kettler/Forlines Homes. Kettler says they have seen a substantial increase recently in the number of visits to his homes, which largely straddle the suburbs and exurbs of Washington, DC. ‘The attitude of the home buyer is much better, they’re more excited,’ he adds. He also notes there is now suddenly more interest in larger homes, not McMansions, but moving from the 2 thousand square foot range to 3000. Higher gas prices may not hit buyer demand overall, but they will affect some choices. ‘We are more sensitive today because of the economic scenario we are still recovering from,’ says Mark Fleming, chief economist at CoreLogic. ‘From a housing perspective, this impacts the exurban communities, as an increased cost of living will reduce demand to buy homes, and these are the same communities hit the hardest by the housing crash anyway.’ A study by the Federal Reserve in 2010 found that a 10% increase in gas prices reduces home construction by 10% after four years in locations with a long average commute time, compared with other locations.

The effect of higher gas prices on home buyers will depend on how long the spike lasts. If consumers think it’s temporary, they won’t factor it as much into their decision. There are, however, continuing obstacles to the new home market. Sales are still barely above where they were last year, and last year was the worst on record for the nation’s builders. This despite all the stimulus in the market. And as I’m writing this, Mr. Kettler just came out of his office, grumbling that one of his sales is being held up by an appraisal that came in too low.”

Debt ceiling fight on the way

Remember the bitter debt ceiling debate in Washington last summer? Well, another showdown could be in the offing sooner than planned. The deal cut this summer to end the debt ceiling standoff provided for a $2.1 trillion increase in the country’s legal borrowing limit, which now stands at $16.394 trillion. At the time, it was estimated that such an increase could carry the Treasury Department safely beyond the contentious presidential election season and into early 2013. But now that Congress has extended the payroll tax cut, emergency unemployment benefits and the so-called Medicare doc fix — only some of which was paid for – there is a greater chance that US borrowing could reach the debt ceiling sooner. Treasury Secretary Tim Geithner recently told lawmakers that even with passage of the payroll tax bill – which will add an estimated $101 billion to deficits in fiscal year 2012 — he doesn’t expect the debt limit to be reached “until quite late in the year.” That’s a hair past the Nov. 6 election but smack dab in the middle of the fiscal firefight that Congress is expected to have over the expiring Bush tax cuts.

Meanwhile, the Bipartisan Policy Center, which analyzed projected monthly deficits and other factors that could play a role in Treasury’s borrowing, now projects that the debt ceiling could be hit between late November 2012 and early January 2013. Of course, if need be, the Center notes that Treasury could still avert a US default by employing “extraordinary measures” — such as suspending investments in federal retirement funds. So even if Treasury is at risk of hitting the ceiling at the end of November, it’s possible that its moves could take the risk of default off the table until early 2013. Keep in mind, though, that these estimates assume nothing material changes between now and the end of the year to increase federal borrowing. But if there are any surprises along the way — such as a slowdown in the economic recovery that puts a crimp in federal revenue, or more unpaid-for legislation — the debt ceiling could be hit before Election Day, said longtime political observer Norm Ornstein, a resident fellow at the American Enterprise Institute. Either way, the presidential election, the pending expiration of the Bush tax cuts and the debt ceiling are a combustible mix. And it’s impossible to predict the endgame for any of them yet. Much will depend on when the ceiling is breached and who wins the election, Ornstein said.

Florida’s “category 5″ foreclosure problem

Already facing overloaded dockets of criminal and civil cases, Florida’s court system is getting hit by a deluge of foreclosures that could tie up the state’s legal system for years to come, according to nationally prominent lawyer. “It’s Florida’s Category 5 foreclosure hurricane,” said Kendall Coffey, a legal expert and author of “Foreclosures in Florida,” a book he discussed during a Space Coast Tiger Bay Club dinner in Cocoa Beach. “Collateral damage can be seen in every sector of life,” he said. “The collapsing real estate market inflicted waves of unemployment, massive losses in the financial and real estate industries, and an untold human cost for the families forced out of homes auctioned at public sales. The mortgage meltdown has also battered local governments with a deteriorating tax base.” There are 368,000 pending home foreclosures in the state, and that number could double by 2016, Coffey said. “In contrast to most states that employ abbreviated processes for deeding the mortgaged property back to the lender, every foreclosure action in Florida is a lawsuit governed by the same rules for pleadings and court hearings that apply to other civil litigation,” said Coffey, who added the average foreclosure in Florida takes 806 days. “We’re not just going to hand it over to the lender.”

“Foreclosures in Florida” details aspects of Florida law along with legal and practical strategies for lenders and borrowers embroiled in default issues, work-outs and litigation over troubled mortgage loans. Coffey is partner in the Coffey Burlington law firm in Miami and has a home in Brevard County. He’s a former US attorney, legal analyst for the CNN, MSNBC and Fox networks and author. He was among the lawyers representing Al Gore during the 2000 presidential election recount dispute. His latest book, “Spinning the Law,” looks at the art of trying cases in the court of public opinion. The foreclosure crisis that began with skyrocketing default notices in 2006 has engulfed the nation, but hit Florida especially hard. Half of state’s homes are “underwater,” meaning owners owe more on their mortgages than their home is worth. The state’s real estate driven economy is generating floodtides of litigation and has spawned an industry of foreclosure defense lawyers who rely on overwhelmed court dockets to stave off foreclosure and keep clients in their homes, Coffey said. “Florida still has and will have one of the slowest rates of foreclosure in the country,” he said. How will the consumer fare? “Ultimately,” Coffey said, “homeowners will lose a contested foreclosure in the overwhelming majority of cases.”

More buyers paying with cash

Even more American homebuyers are paying cash to acquire homes, according to a new survey from Campbell/Inside Mortgage Finance. The group’s HousingPulse Tracking Survey said between October and January, the number of homeowners purchasing residences with cash grew from 30.8% to 34.1%. This trend is occurring at a time when mortgage rates are holding low. The survey noted that all-cash buyers are getting discounts of approximately 10%. Homebuyers who turned to cash purchases are doing so because of the slow underwriting process late appraisals and long-wait times when dealing with certain loans, the report said. “It is taking about 60 days to close a non-troubled FHA loan. About 30 days longer than usually a year ago,” an agent in Florida told the survey team. To release its report, the Campbell/Inside Mortgage Finance HousingPulse Tracking survey interviewed 2,500 real estate agents across the country.

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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

WSJ – The case for rentals

Lewis Ranieri, the co-inventor of the mortgage-backed security, authored a research paper with University of California economist Kenneth Rosen that lays out the case for using federal entities to support private investors who are already converting foreclosed properties into rentals.  The foreclosure-to-rental model can be developed in “most every market in the United States,” write Messrs. Ranieri and Rosen. But they also highlight their “top 10” markets where such a program makes the most sense. Those markets generally have high levels of foreclosures and strong apartment fundamentals. They include Chicago, Denver, Detroit, Oakland, Seattle, Minneapolis, and Los Angeles.  Some markets, such as San Francisco, aren’t great candidates because while they have strong rental conditions, they don’t have high levels of bank-owned foreclosures. Others, such as Las Vegas, aren’t well suited yet because they have poor rental fundamentals despite a glut of bank-owned inventory.

The paper argues that existing industry and government effort to modify mortgages, while necessary, won’t alone be enough to deal with the problem of already vacant properties and those that may not qualify for modifications.  So why is the government needed? There’s two reasons: First, Fannie Mae, Freddie Mac, and the Federal Housing Administration sit on nearly half of all foreclosed properties, making them key sellers to investors that are converting properties into rentals.  Second, Mr. Ranieri says investors could soak up the overhang of distressed properties even faster if Fannie or Freddie expanded their investor financing programs.  The paper addresses many of the logistical challenges involved with building the infrastructure needed to acquire and manage scattered-site rental homes. “I’m always asked is this kind of a program scale-able? The answer is there are already people who are already doing a reasonable job with it,” Mr. Ranieri said in a speech last year.

The paper includes a series of other interesting ideas that build on the rental-conversion idea:

- Employ a “rent-to-own” option that would allow tenants to allow some tenants to ultimately purchase their rental homes. Mr. Ranieri has already employed that option through his company, Selene Finance, which invests in distressed loans and homes.

-  Raise the ceiling on the number of loans that Fannie and Freddie will guarantee to a single buyer. Currently, those limits are set at 10 and four, respectively, but Mr. Ranieri has argued that investors who make large down payments of 30% or 35% should be able to take out 25 mortgages. That would allow smaller investors to get more involved in repairing their local markets, even as federal officials consider structured sales of bulk properties to larger outfits.

-  Change appraisal rules for investor purchases to evaluate the value of properties based on the rental income, rather than the traditional metric of “comparable sales.”

Other influential housing analysts, including Laurie Goodman of Amherst Securities, have also strongly backed policies that would convert bank-owned foreclosures and other distressed properties into rentals.  But the idea remains unpopular with the National Association of Realtors and major real-estate brokerages, which say that foreclosed properties are selling briskly and don’t need to be taken off the market.

Jobs recovery, or not?

Based on weekly jobless claims, the February jobs market is bearing out to look very much like January, which saw 243,000 net new jobs and the unemployment rate at 8.3%, down from December’s 8.5%.  Thursday’s weekly jobless claims were unchanged at 351,000 for the week ending Feb. 18, the same week that the Bureau of Labor Statistics will use for the February monthly employment report survey week. Continuing claims fell by 52,000, to 3.4 million, with the four-week average falling to 359,000, its lowest level since March 2008.  “[The] bottom line is claims have been improving. The trend in layoffs is improving. That tells you firms are more optimistic about the outlook and they continue to lower the amount of cost cutting,” said Credit Suisse economist, Jonathan Basile.  While that’s a good sign, Basile said it may be some time before the trend can be trusted as signs of a sustainable jobs recovery.  “We do know this is a very warm winter, and in recent months, there’s been a lot more construction jobs showing up than usual,” said Basile. “These are the times of year when there are construction layoffs. I think we’re going to have to get through the March, April, May data to sort out whether this strength in jobless claims is a weather phenomena or a fundamental move.”  Economists at Barclays Capital said they are now looking for a total nonfarm payroll addition of 225,000 jobs in February and a decline in the unemployment rate to 8.1%. The February employment report will be released March 9.  The economists note that the ongoing improvement in the weekly claims data and other indicators indicates improvement in private employment across a variety of sectors.  But they also note: “Favorable weather conditions are also likely to support hiring in construction-related sectors.” They also see federal and state governments continuing to cut jobs.

BOA: no more mortgages for Fannie

Bank of America (BOA) is faced with numerous reps and warrants challenges on the mortgage front, and as a result of growing uncertainty, it will no longer sell certain mortgage refinances into Fannie Mae mortgage-backed securities.  “The issue is tied to ongoing disagreements between Bank of America and Fannie Mae in regards to repurchases,” said Dan Frahm, spokesman for BOA.  Specifically, Bank of America will no longer place non-Making Home Affordable Program (MHA) refinance first-lien residential mortgage products into Fannie mortgage-backed securities.  Making Home Affordable is the Obama administration’s initiative to help struggling homeowners get mortgage relief through a variety of programs.  “We continue to deliver MHA programs, including loan modifications and refinancing through HARP to our customers whose loans are owned by Fannie Mae,” Frahm said, adding mortgage origination levels will not drop at the bank. “We’re adequately prepared for this, there will be no impact to our customers.”

BOA will likely do more business with Freddie Mac and Ginnie Mae as a result of this decision.  The bank says the risk of repurchases on non-MHA mortgages is too great, and hedging repurchase risk is now too difficult.  “We are not able to predict changes in the behavior of the GSEs based on our past experiences,” BOA reports in a regulatory filing with the Securities and Exchange Commission. “Therefore, it is not possible to reasonably estimate a possible loss or range of possible loss with respect to any such potential impact in excess of current accrued liabilities,” the filing states.  “The ultimate resolution of these exposures could have a material adverse effect on our cash flows, financial condition and results of operations,” the filing said.  At the heart of the decision is recent changes in mortgage insurance policies. The filing notes Fannie Mae policy where MI rescission must be resolved in a timely fashion. As of Dec. 31, 2011, 74% of the MI rescission notices received had not been resolved, and Fannie began exercising repurchases with Bank of America.  “We have informed FNMA that we do not believe that the new policy is valid under our relevant contracts with FNMA and that we do not intend to repurchase loans under the terms set forth in the new policy,” BOA states. “If we are required to abide by the terms of the new FNMA policy, our representations and warranties liability will likely increase.”

Oil hits $108

Oil prices rose to a fresh nine-month high above $108 a barrel Friday in Asia amid signs the US economy is improving against a backdrop of elevated tensions in the Middle East over Iran’s nuclear program.  Benchmark crude for April delivery was up 59 cents to $108.42 per barrel late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.55 to settle at $107.83 in New York on Thursday.  Brent crude was up 55 cents at $124.17 per barrel in London.  The government said Thursday that the number of people seeking unemployment benefits last week was unchanged and that the four-week average was the lowest in four years.  Traders brushed off evidence that crude demand in the US remains weak. The Energy Department’s Energy Information Administration said Thursday crude inventories rose 1.6 million barrels last week and that oil demand has dropped 6.7% from a year ago.  “The ability of crude to post new highs in the face of what appeared to be a bearish EIA report attests to the underlying strength of this price advance,” energy trader and consultant Ritterbusch and Associates said in a report. “The oil market has evolved into somewhat of a self perpetuating cycle in which new highs beget new buying that forces new highs.”  Crude has jumped from $96 earlier this month amid growing tension over Iran’s nuclear program and fears global crude supplies could be disrupted. Some analysts expect economic sanctions by the US and Europe and countermeasures by Iran will help keep crude prices elevated this year.  “There is a relatively high and growing probability to a scenario in which there is no resolution in 2012, in which oil prices grind higher along with a gradual escalation of tension,” Barclays Capital said in a report.  In other energy trading, heating oil fell 0.5 cent to $3.29 per gallon and gasoline futures were steady at $3.29 per gallon. Natural gas fell 0.2 cent to $2.62 per 1,000 cubic feet.

Frustration with Florida’s foreclosures

Florida courts continue to struggle with a backlog of more than 368,000 pending cases, according to Jane Bond, a Florida foreclosure attorney at McCalla Raymer. It’s a nightmare, attorneys say — one with no end in sight.  “It’s not as bad as it seems. It’s much, much worse,” said David Rodstein, a foreclosure attorney with the Rodstein Law Group.  Bond and Rodstein chaired a panel at the Mortgage Bankers Association annual mortgage servicing conference in Orlando, Fla. The state is suffering from an ailing housing market. Home prices dropped 41% from 2006. Nearly half of all borrowers are underwater. Distressed properties abound. Unemployment is at 9.9%. And as it tries to clear the backlog of foreclosures, the state is going nowhere fast.  “The judges are frustrated. The attorneys are frustrated. The servicers are frustrated. Everyone is frustrated,” Bond said.  The average foreclosure in Florida takes nearly 800 days to complete, more than twice the national average, according to RealtyTrac.  Rodstein said 40% of foreclosures filed by servicers are contested by the borrower because of a very efficient bar system in the state. It’s helped create a cottage industry of delays, displacing an earlier system not any fairer.  “Borrowers can hire these attorneys for a small monthly payment — much less than the mortgage — and the attorney can come in and easily delay the case for year plus,” Rodstein said.

But the delay recently has much to do with some attorneys’ own mistakes.  Massive firm David J. Stern ceased foreclosure work in March after coming under investigation for robo-signing and other document problems. The entire firm crashed later in the year. Several other firms came under investigation as well.  The result was almost a complete freeze on the system. What had been a 60,000 foreclosure filings per month pace slowed to less than 19,000, according to Bond.  The Florida Bar News reported in November that the court system, which operates almost entirely on foreclosure fees since the crisis, had to take out a bridge loan to continue operating as the robo-signing correction paused the process.  An accelerated “rocket docket” that had made some progress through the backlog closed in the summer when funding ran out.  Servicers had to spread out the Stern cases among many more firms. Consent orders signed with regulators in April capped the amount of files a servicer could have with one law firm. One bank, Bond said, went from having six representatives in the state to more than 26 after Stern folded.  Defense attorneys aren’t letting up for what they claim to be a system still under abuse by the servicers. According to a survey released Wednesday by the National Consumer Law Center, 90% of defense attorneys claimed clients were foreclosed on while waiting for a modification, a practice banned by consent orders last year.  “Until rigorous national mortgage servicing standards that are enforceable by homeowners are put in place by the federal government, banks will continue to seize homes illegally and routinely,” said NCLC attorney Diane Thompson.

The problems aren’t over for Florida or the rest of the country either. According to Lender Processing Services, roughly 1.7 million mortgages are more than 90 days past due but not yet in the foreclosure process.  “Unless you’re a servicer with a very geo-centric model, you’re having to deal with different state policies that are changing month to month,” said Rick Sharga, executive vice president at Carrington Mortgage Services. “The tendency is to almost throw your hands up in the air.”  The state legislature is working on speeding up the process. The Florida Senate passed H.B. 213 last week to allow servicers to use an alternative court process that could potentially limit the amount of hearings per foreclosure and would loosen affidavit requirements.  After delaying the bill last week, a second committee in the Florida House of Representatives passed the bill Wednesday for the floor to vote.  If signed into law, the bill would take effect in July. Servicers and the courts will need more time to implement it as well. Until then, the backlog remains.  “We don’t have a paradise,” Bond said at the conference, which is being held next to the Walt Disney World. “We have the opposite.”

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 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Foreclosure abuse rampant

A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country. The audit of almost 400 foreclosures in San Francisco found that 84% of them appeared to be illegal, according to the study released by the California city on Wednesday. “The audit in San Francisco is the most detailed and comprehensive that has been done – but it’s likely those numbers are comparable nationally,” Diane Thompson, an attorney at the National Consumer Law Center, told Reuters. Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork. Of those documents, created between January 2008 and December 2010, 4,500 showed signature irregularities, a telltale sign of the illegal practice of “robosigning” documents.

One of the major problems that has emerged in the foreclosure crisis is that it is far from clear that many lenders foreclosing on properties actually own the loans and have the right to take action against them. In many cases during the housing bubble that burst in 2008, original mortgages were repackaged and sold to so many investors that it is now unclear who actually holds the loans. In the San Francisco study, which studied properties subject to foreclosure sales between January 2009 to November 2011, 45 per cent were sold to entities improperly claiming to be the owner of the loan. “It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans,” the report stated.

One factor that probably caused the particularly high 84 per cent rate of illegal foreclosures in San Francisco is that California is a “non-judicial” foreclosure state. In other words, the foreclosure process does not need to be overseen by a judge. That left the conduct of lenders in California – one of the hardest-hit states in terms of foreclosures – largely unscrutinized until the robosigning scandal gained prominence in late 2010. In judicial foreclosure states such as New York, some judges have been taking banks to task for submitting faulty foreclosure paperwork. But Ray Brescia, a visiting professor at Yale Law School and an expert in housing law, said foreclosure fraud had been as rampant in judicial states as non-judicial ones. “This number around 80% is not a number we have not seen before,” Brescia said, referring to both the issuing of faulty loans during the housing bubble and the foreclosure crisis that followed. “There have been a very high level of irregularities across the country.”

Businesses brace for new “fair” tax plan

The Treasury Department will roll out a corporate tax reform plan today from President Barack Obama, administration officials said yesterday, with expectations low for any major tax code overhaul in an election year. The Obama plan will follow such principles as “fairness” that the president laid out in his State of the Union address to Congress last month, the officials said. A cut in the corporate tax rate, which presently tops out at 35%, may be included, as well as a proposal for a minimum tax on overseas profits, analysts said. After the presidential and congressional contests are decided in November, however, a number of major tax and budget issues will converge on Washington and new momentum for comprehensive tax reform may follow. Potomac Research analyst Greg Valliere said: “Even if Geithner floats something and members of both parties say they’re interested, I simply cannot see a reform bill passing before the election, close to a zero% chance.” He added: “I suppose anything would be possible in a lame-duck session in December, but something this huge and complex will require a thorough vetting, and that could take a year – or much longer.” The last major rewrite of the tax code came in 1986 under Republican President Ronald Reagan.

Republican Representative Dave Camp, chairman of the US House of Representatives tax-law writing Ways and Means Committee, wants to slash the top corporate rate to 25%. Obama last week unveiled a $3.8 billion budget-and-tax proposal that called for aggressive government spending to boost the economy and for higher taxes on the rich. On Friday, Congress approved extending a payroll tax cut through the end of 2012. Its expiration will coincide with several other fiscal earthquakes: the expirations of individual tax cuts enacted under President George W. Bush, and $1.2 trillion in automatic budget cuts across all government programs imposed as part of last year’s deal to raise the debt ceiling. After these events and others, analysts said, thorough tax reform may be a realistic prospect. For now, they said, tax proposals will largely amount to political messaging. Republican presidential candidate Mitt Romney on Tuesday called for a flatter, fairer and simpler tax code. He is scheduled to make a major economic speech on Friday in Detroit. Details of his tax plan may emerge before then.

Mortgage applications down

The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.5% in the week ended Feb 17. The MBA’s seasonally adjusted index of refinancing applications gave up 4.8%, while the gauge of loan requests for home purchases slipped 2.9%. The refinance share of total mortgage activity dipped to 80.1% of applications from 81.1%. Fixed 30-year mortgage rates averaged 4.09%, up 1 basis point from 4.08% the week before. The survey covers over 75% of US retail residential mortgage applications, according to MBA.

Eurozone at the brink of recession

The euro zone economy is in danger of tipping into recession, with the services sector shrinking this month along with manufacturing, tempering a wave of optimism after a new bailout deal for Greece struck this week. Surveys of purchasing managers published on Wednesday showed unexpectedly weak activity in the region’s most powerful economy, Germany, and in France. This is as well as in the bloc’s floundering debtor states, such as Spain, where unemployment is running at 23%, and Greece where the euro debt crisis began more than two years ago and continuous cuts have provoked riots. The Markit Eurozone Composite Flash PMI, a good leading indicator of overall economic growth, fell to 49.7 in February from 50.4 last month, below expectations for a rise to 50.6 and under the 50 line that divides growth from contraction. That weakness was echoed in China, whose PMI showed export orders falling in their worst performance in eight months. Europe is China’s biggest export market. Older data published on Wednesday, official figures on euro zone industrial orders for December, showed there had been some stabilization at low levels. Manufacturing orders in the 17 countries that share the euro rose 1.9% on the month, beating the 0.7% predicted in a Reuters poll and reversing a 1.1% fall in November. But with euro crisis curtailing on British business with the bloc, two Bank of England policymakers voted earlier this month for an even bigger stimulus to the economy in February than the extra 50 billion pounds ($79 billion)that their colleagues agreed to pump into the economy, minutes to the BoE’s February 8-9 meeting showed.

Olick – will gas prices be the spoiler?

“I spent Sunday afternoon at a Toll Brothers neighborhood in Northern Virginia called ‘Dominion Valley.’ It’s a planned community about 45 miles from the heart of DC that sprung up in 2000 and has sold 2500 homes, with another 1,000 still planned. My mission was to get a sense of buyer traffic as the President’s Day weekend unofficially kicks off the spring home selling season. As I was driving back toward DC, I noticed the price of gas (for the cheap stuff) was $3.75 a gallon. Ouch. (They’re higher in other parts of the country). That can’t be good for sales. Some of the potential buyers I spoke with worried about the drive time, but hadn’t seemed to give gas prices as much thought. Many people who live in Dominion Valley commute into the city, or just outside to the Pentagon and surrounding contractor base in Crystal City. Commutes in this area are often long, but when gas prices spike they become more costly, too.

The sales center and model homes bustling with potential buyers. With a weather forecast for snow and the ‘National Sales Event’ advertised by Toll Brothers was mostly discounts on upgrades, I was surprised to see a steady crowd. John Elcano, Toll’s VP for Virginia Sales, told me they’ve raised prices four times since October. Several of the potential and actual buyers I spoke with were eager to move, one from a condo in the same community, another a first time home buyer, and another who was downsizing from a bigger house with a bigger yard. Scott Genburg and his wife, who live near Dominion Valley, already sold their existing house, without even putting it on the market. A realtor canvassed their neighborhood and they accepted the offer. So they ended up needing to buy something fast and bought a new home. But none of the folks I spoke with were looking for a bigger house with a longer commute, a stable of the boom times. With the federal government a steady source of jobs, the Washington, DC, and Northern Virginia markets have shown resilience in the face of the great recession. Builders seem to be responding. Metrostudy reports that finished, vacant housing inventory rose more sharply than any other market it studies in the last quarter, up 17.7%. At the same time, the inventory of existing homes for sale is low. Ken Croisetiere, who just got married, expressed frustration with the house hunting process ‘it feels like a great time to buy, but what we’re finding out is that the houses that appeal to us are not as abundant as we would like to find. Toll’s Elcano says, ‘people are relocating to the area, they can’t find a resale to move into so they‘re moving more toward the new construction.’ But will people still move to new construction in the suburbs if it cost $100 to keep the tank full on a weekly basis? ISI home building analyst Steve East says higher gas prices will impact builders, with a ‘modest effect’ on the entry level market.”

Oil hits $106

Oil prices hovered above $106 a barrel Wednesday in Asia amid concern that conflict over Iran’s nuclear program could lead to global crude supply disruptions. Benchmark crude for April delivery was up 11 cents to $106.36 per barrel late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.65 to settle at $106.25, the highest since May, in New York on Tuesday. Brent crude was down 16 cents at $121.50 per barrel in London. Oil has jumped from $96 earlier this month amid escalating tension between Western powers and Iran. On Tuesday, Iran Gen. Mohammed Hejazi warned his country is prepared to carry out a pre-emptive strike against any nation that threatens Iran. His comments followed Iran’s announcement of war games to practice protecting nuclear and other sensitive sites — viewed as a message to the US and Israel that the Islamic Republic is ready both to defend itself and to retaliate against an armed strike. Iran said over the weekend that it will stop selling oil to Britain and France in retaliation for a planned European oil embargo this summer. The move was mainly symbolic — Britain and France import almost no oil from Iran — but it raised concerns that Iran, which produces almost 4 million barrel a day of crude, could take the same hard line with other European nations that use more Iranian crude. “A real stoppage of 4 million barrels a day will send crude markets to at least $130,” Carl Larry of Oil Outlooks and Opinions said in a report. “A stoppage longer than a month will push that number to $150. Damage to oil fields or transport areas will add even more premium that will not go away for years.”

WSJ- should mortgage rates be even lower?

Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower. Over the past year, a wide gap ripped open between the mortgage rates house hunters see and a benchmark interest rate investors demand to buy bonds backed by home loans. In normal times, this obscure metric would only be of interest to bankers, brokers and traders of mortgage-backed securities. But with housing still dragging on the economy, the spread is potentially slowing the recovery—and important to everyone from top Washington policy makers to strapped homeowners who could use a few extra dollars each month.

For months, a key interest rate on mortgage-backed securities—known as the current coupon yield—has tumbled faster than average US 30-year mortgage rates. In recent weeks, the difference between the two has flirted with levels seen in the aftermath of the financial crisis. Some say the wide spread shows the large banks that dominate the mortgage market are flexing their muscle by keeping prices relatively high. Others argue the gap reflects increased regulatory costs, risks and new realities of mortgage making. Either way, the spread is wide. Tuesday afternoon, it was 0.96 percentage points—almost double its average over almost 30 years. It has been as high as 1.20 percentage points this year.

If history is any guide, it should be a lot lower. With yields on mortgage-backed securities at these levels, the 30-year fixed rate mortgages would be roughly 3.40% if the spread was around its historical average of 0.50 percentage points. That rate would save a US homeowner with the average outstanding loan balance of $155,000 about $41 in mortgage payments each month, versus the current rate. Over the seven-year period someone usually holds a 30-year mortgage, that translates into a roughly $3,446 difference, according to numbers provided by trade publication Inside Mortgage Finance. Wider spreads generally translate into better margins for banks and brokers. And some lenders have seen profitability on mortgage origination improve as the spread has widened. Some mortgage-finance observers suggest that increased concentration among the large banks that dominate the mortgage market better helps explain the wide spreads. They argue that because there are fewer banks doing the bulk of the mortgage lending than in years past, it is easier for them to capture market share without offering rock-bottom prices. “It’s a lack of competition. We really haven’t seen a competitive marketplace since 2008,” said Guy Cecala, publisher of Inside Mortgage Finance.

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