obama

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

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

Fix A Flip … Replay Comes Down Soon!

We’ve been flooded with phone calls and e-mails begging
us to reopen Fix A Flip … so today you get another
chance!  If you’ve been frustrated by not being able to close
your flip transactions due to 30 to 90 day seasoning
requirements, this program is for you!

Watch the replay here:

http://www.shortsalesriches.com/fixaflipwebinar
(please allow a few minutes to upload)

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

Housing: How Strong a Recovery? 

The U.S. housing slump is levelling off, but whether it grows into a lasting recovery will depend on how heavily the housing market is leaning on the government’s crutches, and how long Washington is willing to keep those supports in place.  Barclays Capital economist Michelle Meyer puts it this way:  “The debate has shifted from ‘Is the housing market recovering?’ to “’How strong will the recovery be?’”  Despite the recent reassuring signs, Barclays still expects the S&P Case-Shiller home price gauge to drop another 8 percent through the first quarter of 2010, bringing the total decline to 36 percent since the housing market peaked.  Between the quasi-nationalization of housing finance companies Fannie Mae and Freddie Mac, the Federal Reserve’s $1.45 trillion commitment to buy mortgage-related assets, and an $8,000 tax credit offered to entice first-time home buyers, the amount of public money propping up housing is massive. Three reports due this week are likely to show these efforts are helping to reduce the glut of unsold homes and restore at least some confidence: The National Association of Home Builders releases its U.S. housing market index, and it’s expected to be better; figures on September housing starts and building permits are expected to inch up; and existing home sales for September is also expected to be up a bit.

Obama and job creation

Unemployment stands at 9.8 percent, with more than 4 million jobs lost this year. The deficit has reached $1.4 trillion and the national debt $11.9 trillion.  President Obama is considering another stimulus package, while trying to deal with a record deficit.  Adviser David Axelrod cited progress on reviving the economy, with expectations for growth in the third quarter this year. But he warned that the government should not make the mistake of ending its recovery initiatives too early at the risk of sending the economy back into recession.  Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee, said the latest deficit figures are evidence of an expanding government.  “This deficit is driven by us. I mean, you talk about systemic risk. The systemic risk today is the Congress of the United States,” he said. “We’re creating these massive debts which we’re passing on to our children. We’re going to undermine fundamentally the quality of life for our children by doing this.”

No to Interest-Only Mods

The Mortgage Investors Coalition, a trade group of asset managers holding more than $100bn in residential mortgage-backed securitizations (RMBS) on behalf of pension funds, college endowments, and other investors, is calling on the Treasury Department to reject a proposal to offer distressed borrowers interest-only payments for a certain length of time as part of the terms of a Making Home Affordable Modification Program (HAMP) workout.  The coalition said the proposal fails to address the issue of negative equity, and that it is not in the best interest of the housing industry and consumers.  “Modifying homeowners into mortgages that have future payment increases and adjustable interest rates will not improve a homeowner’s situation,” said Micah Green, a partner at Patton Boggs and coalition spokesman. “Doing so would ignore the fact that many of these homeowners are already in interest-only or other non-traditional mortgages and owe more on their mortgage than their home is currently worth.”

 Motley Fool:  Government not the answer to a recovery

It’s not clear when the economy will recover. America’s Gross Domestic Product now seems to be flattening out from a previous plummet, but that isn’t a great indicator of a recovery. After all, without a complete financial collapse, GDP can’t keep shrinking for ever. A big part of the decline in GDP has been from inventories, which have been falling since October last year, but manufacturers eventually have to increase output, or they’ll run out of widgets to sell, and that boosts GDP figures.  What’s more, the government has been throwing money at the economy to try to reverse the vicious cycle of layoffs resulting in lower corporate sales, which is leading to more layoffs. This, too, props up GDP, so it’s not really surprising that GDP seems to have bottomed.  But funding a recovery with huge government spending and massive debt is like using a defibrillator to treat a heart attack. It can work well in short doses, but it’s completely unsustainable over the long term.  The government isn’t the key to recovery. Neither are corporations. Consumer spending is what really matters, accounting for 70 percent of the GDP. But right now, consumers are acting as cheap as a Congressman who has to spend his own money.

 $8000 Tax Credit extension likely?

Diana Olick, CNBC’s Real Estate Reporter, thinks the administration is going to extend the $8000 Home Buyer’s Credit.  “I was on the fence for a while as to whether Congress would extend the $8000 first time home buyer tax credit and whether the Administration would stand behind that, but I’m getting some clues that have pushed me over the side,” Olick says.  “I think it may happen.”  She names a couple of insiders who deflected her questions about an extension, but cites Secretary Geithner as saying, “We’re not going to make the mistake many countries made in the past of putting the brakes on too early and creating risk that we have a, you know, weaker recovery with even higher levels of unemployment going forward.”  And Geithner again:  “…[we are] looking at a set of programs like unemployment insurance, other sets of things that have–that are set to expire. And there’s a good case for extending them. And I think a lot of support fundamentally for doing it.”  Olick also cites a report by the Joint Committee on Taxation on extending and even broadening the credit that Capital’s Washington Research Group says, “strongly suggests that a mere extension of the program will be much less and refutes whispers in Washington that an extension alone could cost more than $15 billion.”

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

What’s Better – Short Sales or an Annuity?

As investors seek safety against a falling dollar and declining stock market, annuities are an option increasingly explored by fearful investors but are annuities all they are cracked up to be? Let’s take a few minutes to compare and contrast annuities versus short sales to see which makes the most sense.

Annuity Defined

An annuity is essentially an insurance product that pays an income for a specified period of time. In a nutshell, you hand over a lump sum and/or regular contributions to an insurance company that is able to use and invest that money in exchange for a guaranteed payment in the future.

Reward vs. Risk

The “reward” portion of an annuity is the ability to secure a reliable, steady source of income outside of your ability to work. This is one reason it is a popular option among retirees or others seeking “safety” from the prospect of outliving their ability to work without having to depend solely upon Social Security.

While superficially this sounds like a great idea, the actual reality is often not quite as advantageous as it may initially sound. This is due to several reasons including the inherent risk associated with dealing with an insurance company (indeed, nearly any company) over an extended period of time. If the near default and subsequent bail-out of AIG didn’t teach investors anything it certainly highlighted the potential for insurance companies to take on more than their ability to pay and remain solvent. While the AIG fiasco did not directly concern individual insurance contracts, the basic premise remains the same…there is a risk associated with total reliance upon a company over an extended period of time.

Unfortunately, this is not the only risk. The risk versus reward ratio in terms of actual returns falls short especially given the ultra-low interest rates in the current market. For example, consider the following example where you invest $100,000 into an annuity paying an annual interest rate of 5% for 30 years (roughly the same period of time you would finance an average mortgage). Annuity Payments ($ / Year). The annuity would pay roughly $6,200 per year or just over $500 per month for placing $100,000 in cash at their disposal.  At the end of 30 years you would have zero remaining – nada, nothing, zilch. Unfortunately, during that same period of time, the $6,200 would have lost value due to inflation; in fact, if inflation follows a historic average, that same $6,200 annually would be worth just about $2,000 in purchasing power.

Now, let’s see what happens if you were to purchase just one short sale property for $100,000 cash. You rent it out for 30 years and make the exact same $500 per month or $6,200 (remember, No mortgage!) plus you have tax write-off’s for depreciation. For 30 years you collect the same amount of money but at the end of 30 years instead of the payment stopping leaving you with absolute nothing…you still own a paid-in-full, income generating property.  Since real estate tends to keep pace with inflation, that same $100,000 property will be worth roughly $300,000 using standard historical estimates. Now, ask yourself one simple question…which would you rather own in 30 years? An annuity controlled by someone other than yourself that leaves you empty handed or a paid-in-full property that continues to generate income as long as you own it? Call us crazy but seems like short sale real estate is a clear winner.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

*************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

About the author:

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

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

Real Estate News & Commentary by Chris McLaughlin, April 27, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and reselling short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar this

Tuesday at 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/500640410

———

 

Housing messages mixed

 

The Obama administration keeps telling us things are looking up, but the real players in both the economy and real estate are all over the map in both results and predictions.  The National Association for Realtors has pulled together some of those confusing housing indicators from last week:

 

- The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported that home prices rose 0.7 percent from January to February 2009. 

- The February 2009 RPX Monthly Housing Market Report said home sales increased month over month in 22 of 25 key metropolitan statistical areas and 13 of these areas posted the largest gain in February 2009 since 2006.

- The National of Association of REALTORS® reported that existing home sales dropped in March 2009, and median prices fell 12 percent from a year earlier.

- First American CoreLogic announced that national housing prices declined 12.2 percent in February from a year earlier and have been in decline for 24 straight months.  It predicted that home prices would continue to decline through 2010.

 

Clarification or more mixed messages?

Just to keep up the confusion by trying to explain it, The National Association of Home Builders reported that production of single-family homes is unchanged, despite falling housing starts.  “Today’s numbers are right on target with NAHB’s forecast, which anticipates that housing starts will bottom out in the second quarter, after new-home sales have stabilized,” said NAHB Chief Economist David Crowe.  “Single-family starts remained virtually unchanged over the past three months, indicating that we are closing in on a bottom.  Multifamily starts – which tend to bounce around from month to month — were responsible for the decline in total starts as they readjusted following a substantial gain in February.”  But he warned, “A substantial recovery in housing of the kind that’s required to help get the national economy back on its feet will not happen until the logjam in acquisition, development and construction financing has been broken.

 

Swine Flu hits the market

World stocks tumbled after seven weeks of gains, and both oil and the euro fell on Monday as concerns intensified the spread of swine flu would hit the global economy.  Mexico seems to be the center of the outbreak, although cases have spread to countries around the world.  As many as 103 deaths in Mexico are thought to have been caused by swine flu, CNN reported.  In the United States, the largest number of cases has been reported in New York City.  “The swine flu seems to be one of those ‘Black Swan’ events that has caught the market by surprise.  This is a concern as to whether it might impact any potential…recovery chances,” said Martin Slaney, head of derivatives at GFT Global Markets.  The MSCI world equity index fell 0.7 percent.  The U.S. government plans to issue a travel warning later Monday urging Americans to avoid all “nonessential” trips to Mexico because of an outbreak of swine flu, a U.S. official said.

 

GM slashes jobs, debt, and dealerships

In its latest bid to stay out of bankruptcy, General Motors announced plans to drop Pontiac, cut 23,000 U.S. jobs by 2011, and slash 40% of its dealer network.  GM is also offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal.  GM’s first plan was turned down by President Obama’s auto industry task force in February, but this restructuring announcement goes much further. 

 

The company had announced many of the job cuts in February, but Monday’s news that GM would have about 38,000 hourly U.S. employees by 2011 represents an additional reduction of 7,000 to 8,000 jobs beyond what GM disclosed in its previous viability plan.  The Obama administration’s task force said today that the new plan “reflects the work GM has done since March 30 to chart a new path to financial viability,” but added that it “has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company.”  Not exactly a rousing endorsement, is it?

 

 

Wall Street Journal explodes at regulators

In perhaps its harshest language yet, the Wall Street Journal takes a crack at mismanagement by Paulson and Ben Bernanke.  Here’s how the article opens:  “The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It’s a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.  In the name of containing “systemic risk,” our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.”

 

Now on to our real estate investing education section…

 

Derivatives – The Next Shoe to Drop?

 

About the time short sale investors have started to grow weary of watching the evening news a new economic threat is beginning to rear its ugly head – derivatives. While most of the media has been content to talk about falling real estate prices (which are beginning to look good in comparison to other investment options), faltering currencies, corporate bankruptcies and bail-outs only the most fearless dare to mention what is on everyone’s mind…the dreaded derivative market.

 

To get a perspective on the situation consider these startling facts:

The total value of residential real estate in the United States is estimated to be roughly $10 Trillion.  

 

The annual GDP of the USA is roughly $15 Trillion.

 

The global GDP for the entire world is roughly $50 Trillion.

 

The total value of all real estate in the entire world is roughly $75 Trillion.

 

The derivative market is roughly $516 Trillion…excluding private transactions between non-reporting entities.

 

Obviously the problem is huge which is one reason big banks are eager to settle the real estate related problems as soon as possible in order to position themselves – with cash in hand – for the next stage of the economic playbook. By now there should be one burning question on the minds of every savvy short sale investor; “Which banks are heavily invested in derivatives?”…well, that is a good question and one in which we have an answer. In order of shock and awe are the derivative investments of some of the biggest names in the banking industry as of the end of 2008 as represented by a percentage of their risk based capital is as follows:

Wachovia: Approximately 53 percent

 

Bank of America: 194 percent

 

Citibank: 258 percent

 

JPMorgan Chase: 430 percent

 

HSBC: 595 percent

 

Scary isn’t it? This means that for every dollar of capital held by HSBC, they have nearly $6 of exposure to the derivative market however, all of these banks are above the suggested maximum of 25 percent exposure so at what point does it even matter? This type of scenario is what has many economic experts calling for the end of the historic strategy of buying and holding stocks, bonds and even dollar based currency for the foreseeable future as one bubble after another continues to burst.

 

Remember, the entire global GDP is only $50 trillion….which would not even be enough to “bail-out” Citibank alone should the derivative market collapse. Now ask yourself, where do you intend to park your hard earned money over the coming years? Stocks? Bonds? Currencies backed by governments forced to bail-out one bad investment after another?

 

How about putting it into the one tangible asset that provides the fundamentals required for a great return, flexible financing, long term tax breaks and a historical precedent unlike all others…real estate. The choice is yours – listen to the same media pundits that lead you down this path and believe the rhetoric about the market moving upward or cash out while you still can and invest in something safe for the long haul. Just remember, when the derivative shoe finally does drop…you heard it here first.

 

See you at the top!

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss our webinar Tuesday night at 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/500640410

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 
http://www.sixfigurebpo.com *************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

About the author:

 

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

 

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook:

http://www.facebook.com/addfriend.php?id=709199143

—

Real Estate News & Commentary by Chris McLaughlin, April 9, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and flipping short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar tonight where

we explain it all at 8:30 PM ET, 5:30 PM PST::

 

https://www2.gotomeeting.com/register/474558050

———
Banking sector improving — for today, anyway

 

In a glimmer of hope for the banking sector, Wells Fargo shares soared nearly 32% in early market trading on news that it had a better-than-expected profit of approximately $3 billion in the most recent quarter.  Wells Fargo attributed the latest results to strong performances in its traditional banking and mortgage businesses.  The news sent bank stocks higher across the board — including Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley — driving the Dow up over 200 points in early trading. 

 

Economy beginning to turn?

 

According to the Wall Street Journal, there’s a growing body of evidence that the economy is beginning to make a cyclical turn: wholesale inventories fell by the largest increment on record, and the inventory-to-sales ratio, the most direct measure of supply and demand in the economy, showed that the latter is gradually catching up with the former.  Treasury prices declined, with the 10-year note sliding 16/32 to yield 2.921%, oil prices gained and gold prices fell, while the dollar strengthened against the yen and the euro.

 

Unemployment numbers slow, but unemployment stays high

 

If jobs were dollars, this would sound a lot like the national deficit, except that unfortunately the president can’t just print more jobs to make up for it.  The number of people filling for unemployment benefits dipped to 654,000, but continuing claims hit a record high.  In the week ended April 4, a total of 654,000 people filed initial jobless claims, lower than the previous week’s upwardly revised 674,000, the Labor Department reported.  The 4-week moving average of people filing initial claims for unemployment benefits was 657,250, a decrease of 750 from the previous week’s revised average of 658,000.  A consensus estimate of economists polled by Briefing.com expected 660,000 first-time filers last week.  

 

Trade deficit shrinking

 

A new government report reveals that the U.S. trade deficit shrank in February by 28.3% to its smallest level since November 1999 as imports slowed and exports grew slightly in the face of shrinking global demand.  The monthly trade gap dropped to $26 billion, down more than $10 billion from the revised $36.2 billion deficit in January, and about $10 billion less than Wall Street economist polled by Reuters had forecast.  The February percentage drop was the steepest since a 34.9% fall in October 1996.  Overall world trade is expected to fall this year for the first time since 1982 as businesses and consumers cut back on spending in response to growing job losses and a continuing credit crisis.  Imports fell across all major categories, with crude oil imports falling to $39.22 from $39.81 the prior month.  Exports increased slightly across all major categories:  food, feed and beverages, industrial supplies, capital goods, automotive and consumer goods.

 

What to do with toxic assets?

 

As part of its plan to sell toxic assets, the Obama administration is encouraging several large investment companies to create bailout funds, not unlike the war bonds sold to finance WW II.  Well, except that one was for a noble cause and the other is for banks…  The idea is to share the risk, and give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars.  Or lose, and there’s the rub.  If, as some analysts suspect, the banks’ assets are worth even less than believed, the funds’ investors could lose.

 

Berkshire Hathaway downgraded

 

Tell me it ain’t true!  Berkshire Hathaway, the legendary company owned by Warren Buffett, has lost its coveted top-level credit rating from Moody’s Investors Service.  Moody’s downgraded Berkshire by two notches to Aa2 from Aaa, claiming that severe stock price declines and the U.S. recession have weakened National Indemnity Company — an important Berkshire reinsurance subsidiary.  Moody’s says the outlook for its rating is now stable and says it has no plans to make further cuts over the next 12 to 18 months.  Before we all panic, hedge fund manager Whitney Tilson said that the Moody’s downgrade will have no effect on Berkshire’s holdings, and only a very small potential impact on its earnings.  It may face slightly higher borrowing costs, but Tilson notes that Berkshire has lots of cash and doesn’t do much borrowing anyway.

 

Now on to our real estate investing education section…

 

Delays – Why the Long Wait

Just ask any real estate or short sale investor about the most frequently overheard complaint would be and you are certain to receive the same answer – long waits. Lenders tend to take their time when reviewing and approving a short sale offer. Some are certainly better than others but as the short sale arena goes into overdrive, savvy short sale investors would do well to understand what is taking place behind the delays and how to address the most common causes.

1. Multiple offers. One of the main reasons for a lender to take their precious time before approving a short sale is to consider multiple offers. Homeowners are increasingly entertaining several short sale offers in an attempt to get the best deal and maximize the likelihood of sealing a deal on their own timing. Ask homeowners if they are currently entertaining other offers or plan to do so in the future. Many short sale investors require contracts stipulating they are the only current offer on the table.
2. Lack of staff. Many banks are simply short on staff and unable to keep up with growing demand. Make it easy on overwork workers in every way possible; not only will they appreciate the reduced work but it certainly helps to present your offer in the best light possible.
3. Failure of the homeowners to prove financial hardship. Keep the lines of communication open and help the homeowner provide the appropriate paperwork in a timely manner. While it might seem a bit obvious, don’t expect every homeowner to have the motivation required to follow-up even on something that is likely to help their own situation. Many people simply shut-down when overwhelmed.
4. Lack of other offers. While entertaining multiple offers is more frequently the cause of delays when processing short sale offers, the lack of any other offers especially on an otherwise, “attractive” property may also result in longer approval times or outright procrastination on the part of the lender. It’s not uncommon to encounter a lender that rejects a short sale offer only to receive a lower net when a property goes to auction. Depending on your personal level of chutzpah, you may opt to date an offer then return with even lower offers until the property is accepted or rejected but don’t expect threats to make any appreciable difference in the responsiveness – or lack thereof – of the lender. In fact, rather than speed things up you are probably more likely to get on the last nerve of some overworked bank employee.  Either way, remain analytical and don’t fall in love with any one house or property…remember, it’s a numbers game.

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar Thursday at 8:30 PM EST, 5:30 PM PST:

https://www2.gotomeeting.com/register/474558050

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 
http://www.sixfigurebpo.com *************************************************
Finally, a blog for Real Estate professionals
that want up-to-the-minute news, & how it impacts
us and our market…
http://www.shortsalesriches.com/blog

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

About the author:

 

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

 

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook:

http://www.facebook.com/addfriend.php?id=709199143

—

Real Estate News & Commentary by Chris McLaughlin, April 6, 2009
http://www.shortsalesriches.com/welcome.html

——–

“2 Careers That Boom in a Recession!”
I’ll tell you about one of these for fr*ee
in my no-charge, no-cost, no-obligation
webinar right here at on Tuesday:

 

https://www2.gotomeeting.com/register/798281842

 

Why would I do that for no charge?  Because
I want a chance to tell you about the other
high-income opportunity, too.

 

And I can’t do it in an email.

 

But if you’re finally ready to blast out of
this economic mess, then get a move on… I’d
hate for you to miss out, because we always fill
up a day or so early.  See if there’re any spots
left for this coming Tuesday:

 

https://www2.gotomeeting.com/register/798281842

———

Mortgage refinances up

Fannie Mae said on Friday that its mortgage refinancing volume nearly doubled in March from the prior month to $77 billion.  Tom Lund, executive vice president of Fannie Mae’s single-family mortgage business, said “A majority of our business volume in March was in refinanced loans, and we anticipate that volumes will increase even more as millions of additional homeowners become eligible to refinance under the President’s Making Home Affordable plan.”  Under the program, Fannie Mae can refinance loans up to 105 percent of a home’s value, allowing borrowers, some of whom owe more than their home is worth, to refinance.

 

Treasury Department extends deadline for PPIP

The Treasury Department says it will extend the deadline by two weeks, until April 24, for private fund managers to participate in the administration’s Public-Private Investment Program (PPIP), to purchase distressed assets from banks.  Department officials also say fund managers will not have to satisfy all three criteria released last month to participate in the program, which provides government capital and guarantees to spur purchases of the toxic assets.

 

Bailout goes surreal

Ok, this is getting weird.  Now several U.S. banks that have already been bailed out by the government because of toxic assets, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are thinking about buying more toxic assets — the assets about to be sold by rivals under the Treasury’s $1 trillion plan.  John Mack, Morgan Stanley’s chief executive, told staff his bank was considering how to become “one of the firms that can buy these assets and package them where your clients will have access to them,” according to the Financial Times.  Spencer Bachus, the top Republican on the House financial services committee, said it would mark “a new level of absurdity” if financial institutions were “colluding to swap assets at inflated prices using taxpayers’ dollars.”  For some reason the banks have declined to comment.

 

GM

Speaking of gaming the system, GM’s new CEO Fritz Henderson keeps changing his mind about bankruptcy, depending on the day of the week, or the weather, or whether he needs taxpayer money or not.  Last week it was bankruptcy, this week it’s not.  Henderson said on CNN’s State of the Union that there would be more job cuts and plant closings, but that bankruptcy was not inevitable.  GM has already received $13.4 billion and requested an additional $16 billion.  Says Henderson:  “We are planning to get the job done.  Our preference would be to do it outside of the bankruptcy process, [but] if it cannot be done outside a bankruptcy process, it will be done within it.”  Thanks Fritz — good to know you have a plan.

 

Chrysler and Ford

Chrysler has also asked for a new round of aid.  David Axelrod, a senior adviser to President Barack Obama, said, “We want these to be going concerns — not wards of the state.”  Is it just me or is decorating the nursery and offering billions of dollars worth of baby food NOT the best way to encourage independence in potential wards of the state?  The only bright spot in all of this is that Ford says it completed a tender offer and reduced its debt by $9.9 billion.  The auto maker says an offer to purchase notes from its financing arm produced $3.4 billion in securities tendered.  Ford Motor Credit will use $1.1 billion to purchase that debt.  But don’t start jumping up and down quite yet — U.S. auto sales fell by 37 percent in March, the 17th month in a row of declines.

 

Now on to our real estate investing education section…

 

Big Bank Losses & the Future of Short Sales

Recently released data by the Office of the Comptroller of the Currency (OCC) reports commercial banks lost well over $3.4 billion in interest rate derivatives during the last quarter. This is an especially unsettling number when you realize this is the first time in the history of the USA that bets on interest rates have failed.

 

To understand the significance of this it is important to first realize the CDO or credit default swaps represent less than 8 percent of the derivatives market…with over 80 percent of the remaining portion of the derivative market represented by interest. To date, most of the banking crisis has been concerned with bad mortgage loans and even a few credit default swaps…together they comprise only a small portion of the total derivative market which represents an estimated $200 Trillion (yes, trillion!).

 

So, how does this relate to short sales and other investments? In plain language…

 

Banks are losing money from betting on interest rates. If banks and other lenders can’t make money from current business practices what is the likely outcome? Change of course. Change is likely to come in the form of higher rates, tougher lending standards and more stringent down payment or other requirements…it won’t happen overnight so savvy short sale buyers will recognize the writing on the wall to take action now.

 

The current national (and even global) financial melt-down is likely to grow worse before getting better. Yes, the Federal Reserve was put into place to prevent a major banking crisis from wrecking havoc on the nation in a 1929 style run but keep in mind, despite the stabilizing efforts of the Fed, inherent differences also place the system at risk. For example, derivatives were all but non-existent. According to the Office of the Comptroller, the five biggest banks in America control 96 percent of the total derivatives. This means a new round of failure, bail-outs and banking crisis could hit the nation at any moment should even one of these banks be exposed to major losses. Remember, banks must “make good” on those losses but with only 10 percent or even less of the capital required to pay out a claim, banks are simply unable to do so; creating the risk of a domino like default scenario.

 

This is another reason banks are not lending – they are frantically attempting to hoard as much cash reserve as possible in order to hedge against the risk of a default looming in the future. Again, savvy short sale investors should recognize the ongoing threat of tighter lending standards far into the future –without government intervention (and even with it), purchasing a home for decades into the future may simply be out of reach for many Americans.

 

Make sure you are doing business with a solid bank. Short sales investors have two options; deal with small local banks that have strong bottom lines, didn’t engage in derivatives or other risky investments and are able to work with you personally…or, work with one of the A rated big banks. To find out how your bank is rated, visit www.TheStreet.com or www.MoneyandMarket.com with publishes a list of the best and worst banks across the nation.

 

See you at the top!

 

 

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html  

 

P.S.

 

Don’t miss out webinar Tuesday at 8:30 PM EST, 5:30 PM PST:

https://www2.gotomeeting.com/register/798281842

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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Finally, a blog for Real Estate professionals
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About the author:

 

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

 

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

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