real estate

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We’re not allowed to release her name. Because she used to

work for the enemy.  And she knows all their dirty little

tricks.  Just call her the Short Sale Sensei…

 

This gal used to be well respected by banks.  She processed

nearly 10,000 short sales for lenders too big to name here.

 

She was one of them.  She attended their office parties.

She’s sat down to dinner beside them.  Socialized and went

to sporting events with them.

 

If there’s a tactic or strategy the bank’s kept hidden from

investors, she knows it.

 

And she’s ready to spill the beans, TODAY at 3 PM ET, NOON

PST, on a fr-ee webinar, right here:

https://www1.gotomeeting.com/register/815788648

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

Fannie Mae seeks $15.3 billion in bailout money

Fannie Mae, the country’s largest mortgage financier, says it needs another $15.3 billion to tide over the current housing crisis. The company posted a staggering loss of over $ 70 billion in 2009 compared to $ 58.8 billion losses in 2008. Fannie’s losses were mainly on account of $11.9 billion in credit expenses, which included bad loans and costs incurred in maintaining foreclosed properties. The company also took a $5 billion write-down on low-income tax-credit investments. About 5.38% of Fannie’s single-family loans were more than 90 days delinquent, up from 2.42% a year earlier. Total nonperforming loans of the company were $216.5 billion at year-end, compared with $119.2 billion in the prior year-end. Fannie has so far received over $ 60 billion in bailout money. While the company expects to see an improvement in its performance this year, losses are likely to continue through 2010. Fannie and Freddie Mac have played a key role in implementing the Obama administration’s initiatives to stem the rising tide of foreclosures. Michael Williams, Chief Executive of Fannie Mae, said foreclosure prevention was a top priority. “Our overriding objective is keeping people in their homes whenever possible.”

Orleans Homebuilders files for bankruptcy

Orleans Homebuilders, a Pennsylvania-based housing developer has filed for bankruptcy under Chapter 11. Orleans had $440 million of assets and $498.8 million of liabilities as of December 31. Jeffrey Orleans, Chief Executive, said the company is looking for a buyer through a negotiated sale or court-supervised auction. The company’s revenue dropped by about two-thirds over the last three years — from $1 billion in 2006 to $322 million in 2009. The company defaulted on a $350 million credit facility last month after failing to get an extension of maturity of its debt. Orleans said it had $311 million of cash borrowings outstanding, excluding letters of credit. Orleans joins a long list of real estate companies that have filed for bankruptcy so far. “There’s been an enormous bubble in commercial real estate, and it has to come down,” said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog that monitors financial bailout. “There will be significant bankruptcies among developers and significant failures among community banks.”

Mortgage insurance claim-denials on the rise

According to Moody’s Investors Service, claim denials by mortgage insurance companies have risen to 25% in the recent past from a historic average of about 7%. In the face of drop in new business, mortgage companies are increasingly getting finicky about honoring claims on defaulted loans, and this in turn is increasing transaction cost to servicers and investors. According to Moody’s, Bank of America (BoFA) recently filed a lawsuit against MGIC, a mortgage insurer, claiming the insurer improperly denied claims from BofA’s servicer unit. While the lawsuit is still on, mortgage insurers are becoming more confident in denying partial or whole claims from servicers and Moody’s says the industry can expect continued high rescission rates for the future. According to the Mortgage Insurance Companies of America, the 14,378 mortgage insurance policies issued in January 2010 had a total value of $4.16 billion, and this was lower in volume and dollar terms than any month in 2009. While the BofA-MGIC lawsuit continues, Moody’s believes servicers’ rebuttal efforts “will be less forceful and will have little impact on claim denials. RMBS transactions that carry pool policies (partial or full) are likely to receive little benefit from them.”

A $150 billion package to reinstate jobless benefits

According to the Department of Labor, about 400,000 people will lose unemployment benefits in the next few weeks on account of the Senate blocking the extension of jobless benefits. Sen. Jim Bunning (R., Ky.), blocked the extension, saying the cost of extension (around $10 billion) is not offset by cuts elsewhere to the federal budget. Senate Democrats are now seeking to get around Bunning’s objection by pushing a bill containing several measures aimed at stimulating job growth. The $150 billion measure includes $81 billion to extend unemployment benefits, such as Cobra subsidies to help the unemployed buy health insurance, for the rest of this year and $25 billion to help prevent layoffs. Senate Finance Chairman Max Baucus, a Democrat, said the bill would “put cash in the hands of Americans who could spend it quickly, boosting economic demand.” The other measures in the bill include provisions unrelated to job creation, such as a $7 billion plan to prevent, for seven months, a 21% scheduled cut in Medicare reimbursements to doctors, a $1-per-gallon tax credit for biodiesel fuel and a $6.6 billion credit promoting corporate research and development programs. The bill is likely to be sent to the House for approval this week or next.

Treasury says government finances deteriorated in 2009

The Treasury Department said in a report the government’s financial position, reported on an accrual basis, continued to deteriorate in fiscal 2009. On a net basis, the government had a shortfall of $11.46 trillion in the year ended September 30, 2009, compared with $10.2 trillion in 2008. The net operating cost rose to $1.3 trillion in 2009 from $1 trillion in 2008. Treasury Secretary Tim Geithner said: “The increase was largely due to increased costs for mandatory spending programs, such as unemployment insurance, Social Security, Medicaid and Medicare benefits, continued investment in the economic recovery effort, and more than a $400 billion decrease in tax revenue due to the economic downturn.” According to the report, “in the absence of policy changes, large and increasing primary deficits” will lead to an increase in the government’s debt burden. While there is a need to stimulate the economy, economists are concerned about the deteriorating fiscal situation. Federal Reserve Chairman Ben Bernanke has warned that if deficits are not brought under control, the confidence of investors who buy government debt will drop.

Now on to our real estate investing educational section…

“Must Know” Metrics for Real Estate Investors

The daily news is filled with economic indicators but which ones really matter  the most to the average real estate investor? Of course, they all contain valuable information but data doesn’t mean the same thing to every industry. Reduce the mental clutter and learn how to focus on the data that does matter with these “must know” metrics for real estate investors.

1. Housing Starts – Published by HUD and/or the Census Bureau, housing starts are one of the most important long term metrics every real estate agent, broker and investor should know and understand. The number of housing starts provides a very clear indication of future growth as well as supply and demand.

2. Inflation vs Interest Rates – It is essential to know the true inflation rate versus the current interest rate. Negative “real” interest rates (ie, when inflation is higher than short term market rates) is a red flag that a downturn in the economy is a likely.

3.  Vacancy/Rental Rates – Whether you buy and hold or simply flip every property, knowing the current supply/demand for units helps keep prices in order. New home buyers and investors alike often desire homes in specific area of a specific size so don’t just glance at the raw numbers; instead, obtain up to date data on specific zip codes or neighborhoods of interest.  Obtain this information from the Census Bureau and the Bureau of Labor Statistics.

4. Impact Fees & Other Taxes – Although local in nature, here is an often neglected area that can add thousands to the bottom line especially in areas that experienced rapid growth over the past several years. Impact fees in many areas now exceed the original purchase price of a vacant piece of property making even the most downtrodden homes profitable investments.  Likewise, regional growth (or lack thereof) as well as in-filling or expansionary trends remains an important indication for real estate trends in any given area.

5.  Consumer Sentiment – Every investor knows consumers are fickle; never underestimate the power of psychology and consumer sentiment to move a market. Nationwide and local data are equally important. People tend to feel less optimistic during winter months especially during the holiday season…more optimistic in summer months after those heavy credit card bills are paid off from the year before. Use it to your advantage when buying or selling.

6. Home Sales – New and existing home sales remain a fundamental measure both as a nationwide indicator and local indication of real estate “health”. Be sure to differentiate between site built homes, manufactured homes, condos and other forms of real property as well as various price levels.

7. Mortgage Applications – The Mortgage Bankers Association or MBA tracks this index in order to provide up-to-date information on the housing market. Four week moving averages provide a much more robust picture than weekly averages so it’s best to get a general update each month rather than focus too closely on any given week.

8. House Prices – The HPI or House Price Index is published by the Office of Federal Housing Oversight and is considered the gold standard for resale data.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

http://www.smartrealestatenews.com (subscribe to this newsletter)

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

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

About the author:

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

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

Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

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

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

Woops!  We had a major gotowebinar meltdown Tuesday … and

we apologize!  The technical glitches have been fixed and gotowebinar assures us it won’t happen again!  So we’re bringing back an Encore:

Short Sale Automation … The Paperless, Easy Solution.  Join us

TODAY at 3 PM ET, NOON PST as we unveil a new

way to manage what used to be chaos:

https://www2.gotomeeting.com/register/231942947

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

Home prices falling

According to Fiserv, a division of Moody’s Economy.com, the average home price in the United States will fall by about 6% by September 2011.  Most of the projected home price decline will occur during the usually slow summer months of 2010. After that, prices should begin to stabilize, according to Fiserv, and stay almost flat through fall of 2011. The main reason for continued decline, according to Mark Zandi, economist and co-founder of Economy.com, is foreclosures — the same thing that’s plagued markets for the past three years.  He figures there are at least 4.5 million mortgage loans either in foreclosure or clearly headed in that direction. When that additional inventory hits the market, it will provide numerous choices for buyers and encourage sellers to drop their listing prices.  The end of two federal programs, which have been propping up markets, will also tamp down prices. The Fed’s program to buy mortgage securities lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates, and a month after that, the homebuyer tax credit will start to expire.  Of course, home prices are ultimately decided by employment. “If [the job market] improvement is stronger than expected, prices will get better. If it’s weaker than expected, prices will be worse,” Zandi said.

Jobless claims up

The Labor Department said in its weekly report that there were 496,000 initial job claims filed in the week ended Feb. 20, up 22,000 from a revised 474,000 the previous week,. The prior week, there were 442,000 claims filed.  A consensus estimate of economists surveyed by Briefing.com expected new claims to fall to 460,000. The government said 4,617,000 people filed continuing claims in the week ended Feb. 13, the most recent data available. That’s up 6,000 from the preceding week’s revised 4,596,500 claims for a jump of more than 12% over the past two weeks. A Labor Department official said the unexpectedly large rise could partly reflect a backlog of claims that were unable to be processed in four Mid-Atlantic and New England states because of heavy snowfall. Still, the increase is likely to amplify concerns that the job market is weakening, potentially slowing the economic recovery.  Dan Greenhaus, chief economic strategist at Miller Tabak, said the claims data has been unusually distorted in recent weeks. As a result, “we are concerned about the upward pressure on initial claims but not overly concerned.”  The four-week average, which smoothes volatility, rose by 6,000 to 473,750.  The four-week average has risen by about 30,000 in the past month, raising concerns that job cuts are continuing. Initial claims had fallen sharply over the summer and fall but the improvement has stalled since the year began.

New home sales down

The Census Bureau says the seasonally adjusted annual rate of new home sales fell 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December.  It was the lowest rate since the government began keeping records in 1963 and comes after declines in November and December.  The drop surprised many industry analysts. A consensus of economists surveyed by Briefing.com had expected January sales to rise to an annual rate of 354,000. “Some people were expecting a surge in demand because of the tax credit,” said Patrick Newport, an economist at IHS Global Insight. “But that surge isn’t materializing.”  New home sales fell in all U.S. regions except the Mid-west, where sales edged up 2.1%. The Northeast was the hardest-hit last month, with sales plunging more than 35%.  “Distressed inventory continues to hit the market at cut-rate prices, drawing potential buyers away from new product,” said Mike Larson, real estate analyst at Weiss Research. “And let’s face it, the job market is nothing to write home about, either.”  There were an estimated 234,000 new homes for sale at the end of December, according to the report. At the current sales rate, it would take 9.1 months to sell through that inventory. That’s up from December, when there were 8.1 months of inventory on the market. Prior to December, inventory levels had been steadily declining since May 2009. IHS Global Insight’s Newport said he also expects sales to pop this spring. However, he may reduce his full year forecast for new home sales in light of Wednesday’s report. “Builders are putting up homes,” he said. “But what these numbers are telling us is that those homes aren’t selling.”

Manufactured Goods Jump 3%

The Commerce Department reported Thursday that orders for durable manufactured goods jumped 3 percent in January, the biggest increase since a 5.8 percent increase last July. However, excluding transportation, durable goods orders fell by 0.6 percent, a weaker showing than economists had expected.  The strength came mostly from a surge in demand for commercial aircraft, while demand for autos, machinery and a host of other products fell last month, indicating manufacturing is still facing hurdles that could slow the economic recovery.  The drop in orders excluding transportation followed solid gains of 2 percent in both December and November.  Analysts were not too concerned by the drop in demand outside of aircraft, noting that the government revised higher the increase in orders excluding transportation in December to show a gain of 2 percent, stronger than the initial estimate of a 1.4 percent rise.  Paul Ashworth, an economist at Capital Economics, said the January durable goods report provided further evidence that “the manufacturing sector is enjoying a healthy rebound, driven by restocking and a sharp turnaround in world trade.”  The 0.6 percent drop in orders outside of transportation reflected a big 9.7 percent plunge in demand for machinery, which offset a 1.9 percent increase in orders for primary metals such as steel.  Orders for non-defense capital goods, excluding aircraft, fell by 2.9 percent in January following solid gains in the two previous months. This category is considered a proxy for business plans to invest in new equipment to expand and modernize.

MBA proposes forbearance program

The Mortgage Bankers Association (MBA) says it has developed a concept for a new forbearance program that would allow qualified borrowers who had lost their jobs to remain in their homes while they seek new employment.  According to the proposed program, loan servicers would reduce the borrower’s mortgage payment to an affordable amount for up to nine months while the homeowner looked for employment.  “The vast majority of new distressed borrowers we are seeing involve the loss of income,” said John A. Courson, MBA’s President and CEO.  “This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.” Loan servicers who participate in this program would reduce monthly payments to an affordable level based on household income, and borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be reemployed within nine months of losing his or her job at 75 percent of the borrower’s previous salary.  The borrower would be reevaluated as to employment and income status every three months for a total forbearance of nine months.   Once reemployed, the borrower would be evaluated for a modification under the Obama Administration’s Home Affordable Modification Program (HAMP). “Recent statistics show that the average unemployed U.S. worker stays unemployed for between six and seven months,” added Courson.  “That is a long time for a borrower with a dramatic drop in income to stay current on their mortgage.  Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job.”

Now on to our real estate investing educational section…

LinkedIn LifeHacks for Realtors & Investors

By now nearly every real estate agent, broker or investor in the nation has a LinkedIn account…but are you making the most of it? According to LinkedIn, the majority of people create a profile, invite a few friends and family then let it go dormant. Learn how to supercharge your LinkedIn profile and let it begin really working for you with these quick tips:

1. Pick a professional name. Select the title or name you want to use for all of your business dealings to put on your LinkedIn profile. Be sure to make sure your name shows up on the Google search results whenever you perform a search for that name. Because LinkedIn is a large website that is constantly indexed by Google, your LinkedIn profile should show on the first page.

2. Pimp our your profile. LinkedIn comes with a standard “my blog” and “my website” links on the profile page…rather than use these rather lame and generic equivalents, put them both to maximum productivity by customizing each. Simple log into LinkedIn, click on the “edit” button then “other”. The system will now allow you to customize the phrase so people can more easily find your business. For example, replace with your name and city or type of real estate you specialize in for enhanced search engine visibility and marketing.

3. Add the options. Link to your Facebook account (remember, use a strategic name!) and import your Wordpress blog into your LinkedIn profile page. Not only does it keep the content fresh and focused in one easy to access location but it reduces the amount of time you spend updating information. Another important option to consider is LInkedIn’s Direct Ads campaign where you can target professionals for as little as $50 per month. It works a lot like Google’s adwords but for LinkedIn. Find out more at https://www.linkedin.com/directads/start.

4. Include your email contact list. Sounds like a no-brainer but a surprising number of people fail to follow through with this one simple step! If you are like most real estate agents, chances are you have hundreds or even thousands of email contacts in your address book. Put them to good use!

5. Join a group. There are many LinkedIn groups ranging from specialized interest areas, geographic location or simply to share and expand networking connections. While some shudder at the thought of joining a link-building group, keep in mind these are all willing participants who act like virtual networking promoters on steroids. Six degrees of separation demonstrates the best connections are often those most distant from our typical circle of influence so take time to develop both close and far connections.

If this sounds like a lot of work, don’t despair. Find out how to put Social Media to work for your professional goals without the hassle or headache.  Join us tonight at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/819732522

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

http://www.smartrealestatenews.com (subscribe to this newsletter)

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

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

About the author:

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

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

Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

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

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

Short Sale Automation … The Paperless, Easy Solution.  Join us

tomorrow (Tuesday) at 3 PM ET, NOON PST as we unveil a new

way to manage what used to be chaos:

 https://www2.gotomeeting.com/register/231942947

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

Home prices fall

Home prices fell, but just 2.5% during the last three month of 2009 compared with the fourth quarter of 2008, according to the S&P/Case-Shiller Home Price Index. That was a big improvement over the past three years.  “As measured by prices, the housing market is definitely in better shape than it was this time last year, as the pace of deterioration has stabilized for now, said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “However, the rate of improvement seen during the summer of 2009 has not been sustained.”  The index did rise 1.6% on a seasonally adjusted basis during the fourth quarter compared to the previous three months, for the third consecutive quarter of increase.  S&P reports the national statistics quarterly and an index of 20 cities monthly. The 20-city index inched down in December, falling 0.2% compared with November. Only four cities showed improvement.  One of those was Las Vegas, where prices rose 0.2% — the first monthly gain for that city in three years.  The future of home prices remains difficult to forecast, though, as the market at some point will have to weather the withdrawal of government measures to boost home buying, Yale economist Robert J. Shiller told CNBC.  “This isn’t a forecast, but it’s a worry that home prices might drop substantially from here forward once this support is taken away,” Shiller said in a live interview after the report was released. “Mortgage rates will go up, the economy might double-dip, the expectations for housing which helped drive the market might change suddenly once people see this support being withdrawn.”

Jobs bill passes

The Senate voted Monday to push forward a $15 billion jobs creation bill that would give businesses a tax break for hiring the unemployed. The 4-prong bill will:  Exempt employers from Social Security payroll taxes on new hires who were unemployed; Fund highway and transit programs through 2010; Extend a tax break for business that spend money on capital investments like equipment purchases; and Expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.  The final legislation is a scaled-down version of an $85 billion bipartisan draft bill that was crafted by Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa.  However, the bill does not extend the deadline to apply for unemployment benefits and the COBRA health insurance subsidy. Some 1.2 million people will run out of benefits after Feb. 28 if the deadline is not extended. Lawmakers are looking to pass a separate, 15-day extension to give them time to enact a longer fix.  And unlike the House’s bill, the Senate measure does not provide additional assistance for states. Many governors, who are holding their annual meeting in Washington, want the Obama administration to send more federal dollars their way so they can cope with yawning budget gaps.  Labor leaders and left-leaning think tanks all say the Senate must do more to spur job creation – as if the Senate can fabricate jobs out of thin air somehow.

Commercial real estate prices up

US commercial real estate prices, as measured by Moody’s Investors’ Service/Real Estate Analytics, Commercial Property Price Indices (CPPI) increased for the second month in a row in December, rising 4.1%, as the commercial real estate (CRE) market continues to face several challenges, such as the rising tide of defaults and subsequent foreclosures.  Moody’s said the index’s improvement was the largest month-over-month increase in the nine-year history of the CPPI and followed a small, 1% gain in November. The volume of transactions also rose in December, typical for the end of the year, Moody’s added. In December, 716 transactions totaling $9bn were recorded in the month. At the end of December, CRE prices are down 29.2% from a year ago and 39.8% from two years ago. They are 40.8% below their peak values.  But, Moody’s said, it’s uncertain whether the recent price increases represent CRE passing the bottom of the market or are only the “volatility of a market in transition.”

Underemployment at 20%

According to a Gallup poll released today, nearly 20% of the U.S. workforce lacked adequate employment in January.  Gallup estimated that about 30 million Americans are underemployed, meaning either jobless or able to find only part-time work.  This is a big deal, because underemployed people spent 36% less on household purchases than their fully employed neighbors in January, while six out of 10 were not hopeful about their chances of finding adequate work in the coming month.  Gallup surveyed more than 20,000 U.S. adults from Jan. 2 to 31. The results have a 1% point margin of error.  Gallup found that underemployed Americans were more likely to have a favorable view of Obama, with 55% approving of his performance as president against 49% of the wider public.  Hopefully this doesn’t give President Obama ideas for a campaign strategy – to put people out of work to increase his popularity.  The poll’s estimate of U.S. underemployment is higher than official statistics, and tends to paint a darker picture of the economy than official statistics. The Labor Department, for its part, disagrees with Gallup and claims only 16.5% of American workers were without employment or worked part-time for economic reasons in.  A Labor Department official said the government rate may be lower because it factors out temporary seasonal changes in employment to better reflect the underlying economy.

DSNews – Subprime securities fall in value

Heightened concerns about the valuation of subprime assets backing U.S. residential mortgage-backed securities (RMBS) has manifested in an across-the-board drop for all vintages, Fitch Solutions reported last week.  The ratings agency’s U.S. Subprime RMBS Price Index fell by just under 6 percent month on month to 7.17 as of February 1, down from 7.62 as of January 1.  All vintages dropped in value, highlighting concerns about the valuation of all RMBS subprime assets. Driving the declines was the 2007 vintage, which dropped by 17.7 percent, followed by the 2005 vintage falling by 9.5 percent month on month. Recent loan level analysis conducted by Fitch Solutions on the indices’ constituents found that the 2007 vintage showed a significant jump in 90-day plus delinquencies rising from 13.7 percent to 14.2 percent.  “The rise in delinquencies is signaling a potential increase in 2007 loan defaults,” explained Thomas Aubrey, managing director at Fitch Solutions.  Further evidence of a potential rise in defaults is in the six-month constant default rate (CDR) for both 2007 and 2005 vintages, both of which fell only marginally, the company said. Fitch explained that this is in stark contrast to much larger declines in the default rates of 2004 and 2006 vintages.

Now on to our real estate investing educational section…

Fiscal Survival of the Fittest

Survival of the fittest applies to economics as well as biology – in fact, some would argue the concept is better applied to the financial arena than any other area of study. Unfortunately, it’s a fact few Americans want to face head on…it goes against the steady diet of “American ingenuity” and the (false) belief that any child born in the good old USA can grow up to be anything they want. While there are exceptions to every rule, survival of the fittest is an economic trend currently undergoing the equivalent of an ice-age extinction as one era gives rise to an entirely new one. Research by consulting firm McKinsey found a few unsettling statistics that demonstrate the depth of the problem:

Over 70 percent of currently employed Americans work in jobs for which there is low or declining demand. This includes both blue collar and white collar. Competition for jobs that cannot be shipped overseas (healthcare for example) has created high competition which is driving down wages and promoting part-time, per diem and other “job sharing” situations.

Mainstream stores are doing double-takes as consumers shift spending habits. Not only are brick and mortar stores under heavy competition from online retailers like Amazon but the bleak economy is finally taking a toll. Violating one of the core marketing principles ‘never undercut your own product’, heavy weight’s ranging from Proctor & Gamble to Macy’s are rolling out discount versions of their more expensive popular items. Cost of Tide got you down? Don’t worry, you can now buy Tide Basic…a discount version. Research shows 1/2 of Americans have already reduced spending and 1/3 plan to do so permanently with 18 percent of consumer switching from name brands to generics in the past two years alone.

So, how are Americans spending their money both today and into the near future?

1. Nearly 34 percent of the average household income goes toward housing. Expect this trend to continue as people downsize into affordable housing options.

2. Just over 19 percent goes toward entertainment and/or miscellaneous items…however, as a discretionary item this is subject to volatility.

3. Roughly 17 percent goes toward transportation – a number experts expect to hold steady as people opt for more affordable options.

4. Just under 13 percent goes toward food; a necessity to be sure but one that is subject to “replacement” purchases as people opt for hamburger instead of steak during tough times.

5. Approximately 11 percent on retirement and personal insurance.

6. Nearly 6 percent on healthcare.

Even a precursory look at where Americans spend their money tells the average investor where to spend theirs…housing, entertainment, transportation, food, financial products and healthcare. Those are the big six that run the American economy. Now stop and consider which are available to the average “little guy” investor…stocks and bonds for healthcare, insurance and finance have been decimated in recent years. The auto industry? Please! Now that’s it’s been nationalized you can count on the same efficiency that brought you the driver license office to run the auto industry. Food is notoriously volatile and forget direct intervention unless you have an unusual level of gardening know how. No, the answer remains the same today as it did 100 years ago…real estate. It’s not easily outsourced, it’s not subject to the market manipulations of stocks and bonds nor is it entirely dependent upon your ability to work yourself into an early grave. It simply requires a willingness to adapt to the new economic environment like all other species that learn to thrive or barely survive.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

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

About the author:

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

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

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Announcing the Limited Re-Opening of FixAFlip!  Learn how to

flip Bank of America and Wells Fargo short sales … and learn how

to sell to FHA buyers!  And if you thought you could flip to FHA

buyers the same day … you thought wrong.  Learn why tonight … our

answer might surprise you!

 Join us for a FINAL ENCORE this Saturday at 3 PM ET, NOON PST:

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

Fed raises discount rate

The Federal Reserve said yesterday it is raising the rate it charges banks that borrow from the central bank when they run short of funds by a quarter percentage point, or 25 basis points, to 0.75%. The central bank said in a statement it made the move in response to improving financial market conditions.  Don’t everyone panic here, because the move is largely symbolic – banks do little borrowing at the discount window and the discount rate has no effect on the more widely watched federal funds rate, which measures the rate banks charge each other for overnight loans. That rate is expected to remain between 0% and 0.25% for the foreseeable future, given the slack in the labor market and the still fragile state of the economy.  But raising the discount rate allows Federal Reserve chairman Ben Bernanke to take another small step toward normal monetary policy, after the past two last years of  financial firefight.  The Fed also shortened the term of some discount window loans and raised the minimum bid in the term auction facilities it uses to supply overnight funds to banks. The central bank said Thursday’s increase should “encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve’s primary credit facility only as a backup source of funds” and added that it will “assess over time whether further increases in the spread are appropriate.”  It added: “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”

Another program, another $1.5 billion

President Obama is expected to announce today another $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis.  California, Arizona, Nevada, Florida and Michigan will all share more money to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.  The funds will be allocated based on a formula that takes into account home price declines and unemployment. The agencies’ programs must be approved by the Treasury Department.  The move is the administration’s latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough. A senior Obama official cautioned that the new program is just another tool in the White House arsenal, not a full solution to the housing woes facing the unemployed and underwater.  “As important as $1.5 billion will be to these five states, it’s not going to solve what is a catastrophically large problem,” said the official, speaking to reporters on a conference call. “It’s going to help as many of the other programs do.”  The senior administration official was vague about how the money would help the target audiences, saying mainly that these groups are intimately involved in their local housing markets.  In other words, when in doubt, throw more money at it.

DSNews.com – homeowners pessimistic on home value

According to a new report from real estate data provider Zillow, American homeowners’ confidence in their own homes’ values has fallen to the lowest level on record.  Just one in five homeowners believe their property value increased during 2009, but Zillow says in fact, 28 percent of homes appreciated during the year. It’s the first time in the history of the Seattle-based company’s survey that such a large percentage of homeowners have underestimated their home’s value.  The Zillow Home Value Misperception Index was -2 in the fourth quarter. A Misperception Index of zero would mean homeowners perceptions’ were in line with actual values. The closest it’s ever come to that until now, was in the second quarter of 2008, when the index was at 32.  Zillow says a negative Misperception Index indicates that homeowners are “overly cynical” about their own homes’ values when compared with reality. This is the first time the national index was negative.  However, Dr. Stan Humphries, Zillow chief economist, noted that almost three times as many people currently believe their home’s value will increase over the next six months as believe it will decrease in value – a level of optimism he says is likely to outpace actual performance in the near-term.  Humphries says given recent news about the stabilization of home values in some markets, it’s easy to understand why some homeowners are optimistic. “However, home values in many markets are still under substantial downward pressure from high levels of foreclosures and we don’t believe we’ll see a definitive bottom nationally until the second quarter of this year.

Inflation up over year, down over month

According to the Labor Department, the Consumer Price Index rose 2.6% during the past 12 months.  The core CPI, which is more closely watched by economists because it strips out volatile food and energy prices, rose 1.6% over the past year.  For the month of January, overall prices rose 0.2%. Economists surveyed by Briefing.com and Reuters had forecast a 0.3% rise.  However, prices excluding food and energy fell for the first time since 1982, supporting the Federal Reserve’s contention it would keep its benchmark interest rate low for an “extended period.”  Consumer energy costs soared 2.8 percent last month after rising 0.8 percent in December. Food prices climbed 0.2 percent following a 0.1 percent gain in December.  Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation fell 0.1 percent in January, the first decline since December 1982. Core prices rose 0.1 percent the prior month.  Analysts had expected core prices to rise 0.1 percent. Core prices were pulled down by declining costs for new vehicles, shelter and airline fares. High vacancy rates are keeping rentals depressed.  Compared to January last year, the core inflation rate rose 1.6 percent after increasing 1.8 percent in December.  Quarterly forecasts released by the Fed on Wednesday showed policymakers expect inflation to remain muted through 2012.

Foreclosure and modification scams on the rise

The Financial Crimes Enforcement Network (FinCEN), an overseeer of financial activities for the US Treasury, says it received hundreds of suspicious activity reports (SARs) regarding foreclosure and modification scams.  In the third quarter of 2009, depository institution filers submitted 15,697 mortgage loan fraud SARs, a 7.5% increase over the same period in 2008.  The primary suspicious activity surrounding loan modifications deal with occupancy misrepresentation, social security number discrepancies, and altered or forged documentation, the government agency said.  “Subjects of these reports primarily have been borrowers, though filers also reported industry insiders as subjects, including loan officers, underwriters, and purported loan modification agents,” said a FinCEN statement today updating progress made since April’s red flag advisory. “SARs involving loan modifications described potential fraud in either the application for the loan modification, or in the older loan which came under review subsequent to the modification application.”  California and Florida originated the most overall mortgage loan SARs, at 6,444 and 5,077 respectively. New York is a distant third at 1,614.

Now on to our real estate investing educational section…

Double Your Income in Real Estate

Sick and tired of “feel good” motivational books that promise the world but deliver little in terms of your net worth? Good. Perhaps you are ready to make real profits rather than listening to empty promises. Real estate has historically been one of the leading roads to wealth for average American’s seeking a better life but it also has more than its share of casualties lost along the way. Survey’s show the average real estate professional makes less than $50,000 a year…many as little as $15,000 annually….a comparable rate to just one or two quick short sales done right.

Is it really possible to double your income in real estate? Absolutely. The key to any type of sales related area is word of mouth marketing. Duh right…of course! But we aren’t talking about just any word of mouth marketing…no, we are talking about WORD OF MOUTH on steroids; developing the type of “A” list others would only dream about. Creating such demand for your services that the “B” list becomes a secondary source of referral income simply because you are too busy to handle it.

Before we get into the nuts and bolts of what it takes to double your income in real estate, let’s first define what this isn’t…

1. This isn’t a spiel about how “service is its own reward”. Let’s face it, if service were its own reward you could spend more time at the local volunteer center any day of the week. Hard work deserves a real reward – the type you can take to the bank.

2. This isn’t a long term process that promises to pay off in ten, twenty or thirty years. Chances are you have been taught time and time again that there are “no shortcuts in selling”. Bunk! Of course there are shortcuts in selling and they are used all the time by those that thrive rather than barely survive! The rest of the crew is kept in line by scavenging the bottom for the few that fall through the cracks. Move up the food chain and learn to play the game like the big boys.

3.  This isn’t about toxic attitudes or how to “win friends and influence people”; the system works just as well whether you are an untamed punk or stodgy old fart.

4. This isn’t about the history of real estate – knowing that never made anyone richer but it’s bored a lot of people along the way.

What this is about is generating an “A” list that would be the envy of every real estate agent in the nation. The type of list other spend an entire career to generate. Plain and simple it’s all about your sphere of influence – it’s a numbers game in the most literal manner. Numbers don’t lie but they are tough for the average agent to muster. Y’know the rules; begin with friends and family then hit up church groups and social clubs…then wait for others to hopefully mention your name when the time comes for someone to buy or sell. That’s not a strategy – it’s an antiquated popularity contest. Fortunately the rules have been re-written thanks to technology and social networking that expands your reach far beyond anything possible during the days of “business cards”. True exponential growth isn’t just possible but actually probably when used properly. Find out more with a quick visit to www.ordersmr.com to find out how to double, triple or even quadruple your real estate income.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2009.

All Rights Reserved.

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

http://www.smartrealestatenews.com (subscribe to this newsletter)

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

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

About the author:

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

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