Real Estate News & Commentary by Chris McLaughlin, April 20, 2009
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Freddie Mac says housing sales are near bottom
Frank Nothaft, chief economist of Freddie Mac, said on Saturday that housing sales are nearing a bottom, with foreclosures accounting for a third of all sales. But you knew there’s a “but” coming, right? Yup…Nothaft added that unemployment and house price declines will trigger foreclosures as prime borrowers become delinquent and add to foreclosure risk. But he did point out that Federal Housing Administration lending is up sharply, with FHA loans at the largest share of the U.S. housing market since 1942, and mortgage rates at a 50-year low.
BoA reports profit-sort-of-maybe
Bank of America joined the parade of sort-of-profitable banks, reporting a first quarter profit of $4.2 billion — well ahead of expectations. But like the others, it warned of “deteriorating credit quality,” which drove the stock sharply lower in early trading. Lewis cited growing credit problems at the bank, specifically the firm’s consumer-related loan portfolios, as more and more Americans found themselves out of work or filing for bankruptcy. Bank of America’s credit card division, for example, swung to a net loss of $1.8 billion during the quarter, hurt by rising credit costs. The bank also added $6.4 billion to its loan loss reserves in the quarter. No one knows the extent of the credit card meltdown – the next wave of trouble to hit the economy, and even printing bundles of money won’t help that. Ken Lewis, Bank of America’s chairman and CEO said in a statement: “We understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment.”
Key survey says recession slowing
The key National Association of Business Economics’ (NABE) April Industry Survey “provides fresh evidence that the U.S. economy’s recession is abating,” said Sara Johnson, an analyst on the survey and an economist at IHS Global Insight. “Declines still out number gains, but fewer firms are reporting declines and more are reporting gains,” Johnson said in a statement. “This suggests that the economy is at an inflection point but has not yet reached a turning point.” Employment also remained depressed in the first quarter, with 39% of firms reducing payrolls, and only 14% adding workers. But the outlook for jobs in the near future is slightly better: 33% of companies plan to reduce payrolls over the next six months, while 16% plan to increase employment. More telling is that income levels were dismal in the first quarter. For the first time in the history of the survey, more firms were reducing wages and salaries than raising pay. The survey is based on data from 109 businesses and industry groups from the first quarter of 2009.
Paul Volker says recession will slow
Adding to NABE’s prognosis, Paul Volcker, senior economic adviser to President Barack Obama, said that the U.S. economic recovery will be a “long slog” but that the rate of decline “is going to slow.” Speaking at a financial markets conference at Vanderbilt University in Nashville, Tennessee, Volcker called it a “great recession,” as opposed to a Great Depression. “The lack of a good strong recovery works against a strong financial system,” he said. The financial system “is not quite comatose, but it’s on life support.” Volcker warned against a rush by Congress to act too hastily on financial reforms and an overhaul of the financial system. “The temptation is to act quickly, but we have to act comprehensively,” he said.
Now on to our real estate investing education section…
Fighting Fair – Foreclosure Requirements Take Toll on Short Sales
Short sale investor are increasingly confronted with the prospect of losing out on a short sale deals as sellers seek to maximize the time they are able to live in a home for “free.” A plethora of informational items are advising sellers to fight foreclosure and use stall tactics including entertaining multiple short sale offers and fighting foreclosure technicalities.
Learn how to identify stalling tactics and avoid wasting time on sellers playing the waiting game by understanding the basics of foreclosure requirements and delay techniques.
Foreclosure Requirements
- Notice of Default – must contain information on money owed and time allotted for payment.
- Recording of Notice of Default
- Notice of Property Sales Date
- Notification of Redemption Period
- Notification of Foreclosure Commencement
- Publication of Intended Foreclosure in public forum/legal notices.
Each of these may be governed by specific state requirements but should provide a general overview of the major steps. If any of the above are not specified or fail to conform to time or other legal requirements the current homeowner has the right to petition or file a complaint, effectively extending the time period to comply.
Short Sale Steps
Short sale investors may be able to spot potential delay tactics merely by asking if the seller is entertaining other offers; be cautious when working with a seller that seems minimally concerned with the details and overly concerned with obtaining a written offer of any type. While it could simply be an indication of a motivated seller, it may also be a play designed to keep the stream of offers rolling in while they are busy at work elsewhere.
Some short sale investors have the opportunity to actually review paperwork held by the seller. If you are fortunate enough to do so, keep an eye out for glaring inconsistencies which could trigger a protracted dispute. The last thing you need to become involved with is an extended closing or convoluted scheme designed to keep the seller in a home rent free while your time and money is tied up with a trip to nowhere.
Learn how to qualify and quantify your positions. Just like any good investor, short sales should have a time and profit potential in mind prior to actually making an offer. Use deadlines and escapes clauses to your benefit in order to maximize returns and minimize headaches. Sweeten the pot by offering a few hundred dollar reward for a quick closing or negotiate other items important to the seller and/or bank to get the deal done in a timely manner. Don’t be afraid to think out of the box but avoid unnecessary complications that could become a stumbling block in their own right.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
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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
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