real estate investing

Smart Real Estate News & Commentary by Chris McLaughlin August 30, 2010

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Foreclosure relief – great for banks; for consumers not so much

Mark Gimein of Daily Finance makes the following points about why HAMP actually hurts many borrowers while helping banks:

1.  Foreclosure relief in many cases simply stretches out borrowers’ slow bleed of resources. By keeping borrowers in limbo while letting lenders delay repossessing houses they can’t sell, foreclosure aid is now benefiting borrowers less than the lenders who created the mortgage mess. For lenders, mortgage modification is the waiting room in the mortuary, a convenient place to hold borrowers while the banks deal with the overflow of houses already repossessed.

2.  Most borrowers behind on their mortgages are already overburdened with other debts. After the mortgage reduction, the typical modification recipient, despite an average $513 drop in monthly payments, has to devote 63.5% of his or her income to mortgage payments, other debt, and taxes.

3.  Banks don’t have to kick people out quickly.  Banks have steadily slowed down the foreclosure process: The average homeowner in foreclosure now is an amazing 461 days behind in his payments. Barry Ritholtz of financial blog The Big Picture calls banks’ reluctance to take over houses “strategic non-foreclosure.” Taking a leisurely path to repossession lets lenders avoid the costs of maintaining properties they can’t sell in a market that remains in free fall in much of the country.

4.  The last insult added to this mess comes from Fannie Mae, which has promulgated new rules that lock those who don’t make the effort to modify their mortgages out of the Fannie-backed mortgage market for seven years.  So ultimately this comes full circle, and what started as an effort to help borrowers has become another cudgel in the hands of lenders.

Spending up more than income

Consumer spending is critical because it accounts for 70% of economic activity.  The Commerce Department says spending fell 0.1% in April, rose a tiny 0.1% in May, was flat in June, but rose 0.4% in July.  Personal incomes were up 0.2% in July, less than expected but at least an improvement over June when incomes had not risen at all.  With spending rising, the personal savings rate slowed to 5.9% of after-tax income. That’s down from 6.2% in June, the highest in nearly a year. Even with the July decline, the savings rate is nearly three times higher than it was before the recession began in December 2007. 

The July spending gain was the highest since a 0.5% rise in March. But the concern is that demand could taper off in the second half of this year if unemployment remains near double digits.  If Americans don’t have jobs, they don’t have the income to support spending. the economy is growing too slowly to support sustained job growth and some fear it could fall back into a recession. Economic growth slowed to 1.6% in the April-to-June quarter, the government reported Friday. That was revised down from the initial estimate of 2.4%.  A string of weak economic reports in recent weeks has prompted economists to trim their growth forecasts for the rest of the year and next.

Fannie Mae portfolio up 4.1%

Fannie Mae’s mortgage portfolio through July is up 4.1% from the year ago yet down somewhat from June, and the GSE issued nearly half the mortgage-backed securities during the month than in did last July.  Fannie ended July with gross holdings of nearly $812 billion. That figure stood at $770.4 billion last year and $817.8 billion in June.  The agency issued $42.7 billion of mortgage-backed securities during July, a nearly 48% decline from $79.7 billion a year earlier but up 6.4% from June. Fannie’s MBS issuances peaked in June 2009, when more than $130 billion was issued.  The serious delinquency rate in Fannie Mae’s portfolio fell to 4.99% in June, which is the latest month data is available, from 5.15% in May. For the year-ago July, the agency’s delinquency rate was 4.17%. The rate peaked at 5.59% in February and was as low as 3.42% in April 2009.  “Fannie Mae and FHLB are taking advantage of better funding from callables as bullet LOAS widens due to renewed corporate issuance and calmer short LIBOR levels,” said Jim Vogel of FTN Financial. “The gain can be as much as 10bp.  The obvious result is that both need less funding from bullets and floaters.  The superior funding stems primarily from the constant demand for new callables to replace those redeemed at close to a $100 billion monthly pace.”

NABE – economists mixed on what to do

The National Association of Business Economists (NABE) said Monday that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to an August survey of the nation’s economic policy.  However, nearly the same number of NABE economists said they do not think another stimulus package is necessary to halt the economic slowdown and get the economy back on track. At the same time, a majority believe that policymakers should do more to boost job growth.  The survey, based on responses from 84 NABE economists who work for private-sector firms and industry trade associations, comes as economic growth in the United States has slowed significantly after rebounding from a deep recession.

The NABE survey showed that just under half of those polled see deflation as the main threat facing the economy in the short term, but respondents were less certain about whether inflation or deflation is the biggest threat over the next three years.  In a sign of the challenges currently facing Fed policy makers, there was little consensus among the NABE economists on when the central bank will raise interest rates and begin selling off assets it bought during the financial crisis.  After cutting rates to historic lows near 0% in December 2008, the Fed has been without its main tool for supporting economic activity for nearly two years. It has since bought billions worth of Treasury bonds in an effort to bring down rates for home and other consumer loans. But some central bankers are worried about adding to the $2 trillion worth of assets the Fed has acquired over the last few years.  A clear majority of economists said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire.

DSNews.com – Homebuyer’s tax credit coming back?

After a worse than expected falloff in home sales during the month of July, buzz about a possible revival of the federal homebuyer tax credit has begun to surface.  The National Association of Realtors (NAR) reported last week that sales of previously owned homes plummeted 27 percent in July, hitting their lowest mark in 15 years. New home sales also took a dive, dropping nearly 13 percent from June to July.  Both reports were clear indications of the frailty of the housing market post-stimulus. Although, the steep declines were actually considered a by-product of the tax credits themselves, which expired on April 30 – payback for the incentives that pulled sales forward into the spring months. 

HUD Secretary Shaun Donovan said on CNN’s “State of the Union” program this weekend, “The July numbers were worse than we expected, worse than the general market expected, and we are concerned. That’s why we are taking additional steps to move forward.  Donovan said it was too early to say for sure, after only one month’s numbers, whether the administration would revive its popular homebuyer tax credits to give the housing markets another much-needed boost, but he didn’t wholly rule it out as an option.  “All I can tell you is that we are watching very carefully,” Donovan told CNN. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”  Two U.S. Senate candidates from Florida, one of the hardest hit states by the housing downturn, spoke out in favor of bringing back the federal tax credits for homebuyers on the CNN program.

Now for our real estate education section…

Take the Mystery Out of Time Mastery

One of the most frequently cited reasons for not actively pursuing short sale investments is a lack of time; work schedules, family obligations and other day-to-day activities simply seem to take every available moment. So, where does everyone else find the time to invest? Surely they all can’t be retirees with nothing else to do all day. You are right – they aren’t. Research shows that busy people are more likely to remain busy and get even more done because they have mastered the mystery of time management.

For those of you who have read (and failed) at the 4-Hour Workweek or the 7 Habits of Highly Effective People and other popular time management books, the first step is to determine why you are out of control in the first place. Are you overwhelmed with work, home or other obligations? Chances are you may not even realize the extent of the problem but instead spend your days going from one urgent task to the next.  Although urgency is a great motivator, it can go too far. When the daily “to-do” list tends to pile up into a never-ending series of activities without an end in sight, you can be sure it has gone too far.

Rather than trying to figure out how to schedule enough time to attend a time-management course or sit down and re-prioritize the entire week or work through the weekend in yet another vain attempt to “get organized” try this instead; get control. Sounds simple doesn’t it? Well in some respects it really is simple. Today is Monday…give this a try for five days and see how it works for the remainder of the week:

1. Begin by asking yourself what really constitutes the most important actions for the day…the ones you would stay late in order to finalize…then work on those first. Be careful not to confuse “important” items with “urgent” items.

2. Next on the list are those “opportunity” items. These are tasks which are either time sensitive or require some level of consistent work in order to bring about.  If you find the opportunity list growing too large, it’s time to step back and get a reality check. Keep the list small and only add items once the original ones are accomplished. If an item is no longer a priority then delete it; don’t leave it on the list waiting for another day.

3.  Delegate. Learning how and when to delegate takes a bit of patience and persistence. Contrary to popular belief, hiring someone else to handle the mundane tasks in life isn’t always as simple as it seems. Finding the right person can be time consuming and fraught with frustration especially for those that have a tendency to micro-manage. Let go and let others do their job so you can do yours!

4. Appointments versus Tasks. Understand the difference. Appointments are traditionally the last thing you can delegate but many of the tasks required in the process of an appointment can easily be delegated. Create a list of significant outcomes that can be tracked and put into effect immediately.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin August 27, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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

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

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MBA – delinquencies down overall but first time delinquencies up

According to the latest data from the Mortgage Bankers Association (MBA), the nation’s overall delinquency rate dropped to 9.85% in the second quarter, down from 10.06% of all loans outstanding three months earlier.  he percentage of seriously delinquent loans — ones 90+ days late or already repossessed by lenders — dropped to 9.11% from 9.54% in the first quarter.  The drop in loans 90 days or more late was the biggest the MBA has ever recorded, according to the MBA’s chief economist, Jay Brinkmann. “That shows we’re making headway,” he said.  He cited three reasons for the improvement: Fewer loans are coming into the default process; The homebuyers tax credit, which increased demand for homes, generated many pre-foreclosure sales, removing the attached delinquent loans from the statistics;  The government and lender-led mortgage modifications “cured” some payment problems. 

However, even with those bright spots, there was one troubling finding: First-time delinquencies increased after four quarters of decline. It inched up to 3.51% in the second quarter from 3.45% in the first quarter. According to Brinkmann, the reversal reflects the weakness in both the housing market and the overall economy.  “It’s a question of jobs,” he said. “It takes a paycheck to make a mortgage payment.”

No taxes for the middle class?

Well, we knew it was too good to be true, and now so do the politicians.  Obama asked his tax reform task force to examine ways to simplify the code, reduce tax evasion, and close corporate loopholes — and to do so with an eye to raising more revenue.  The trouble is they can’t…not with Obama’s campaign promise not to increase taxes on any married couple making less than $250,000 or any single individual making less than $200,000. 

The panel wasn’t allowed to consider anything that would tap 98% of the country.   In order to both simplify the code and raise more revenue, lawmakers would need to jettison or scale back many of today’s credits, deductions and exemptions. But Obama’s pledge would make that very difficult.  “Tax breaks are not limited to people making over $250,000,” said Rutgers economics professor Rosanne Altshuler, who served as the senior economist for President Bush’s bipartisan tax reform commission in 2005.  Really?  Do tell.

Olick – MBA too optimistic

“Barely an hour after I reported the somewhat positive delinquency survey from the Mortgage Bankers Association, I received a soon-to-be released report from Lender Processing Services that threw a bucket of water on the cautious optimism of the Bankers. The MBA reported a drop in overall delinquencies and foreclosures.  The big focus was a drop in the pool of loans 90 days+ past due.  That was due to fewer loans coming into the pool, modifications and bank repossessions, and the home buyer tax credit (which helped a lot of troubled borrowers to sell).  The MBA warned that the one rough patch in the report, a rise in new delinquencies, could push the numbers back up again if the employment situation doesn’t improve.  The Realty Check got a first look at an upcoming report from Lender Processing Services which shows a huge jump up in foreclosure starts in July.

“July showed an astounding 24.5 percent month-over-month increase in foreclosure starts, which dovetails with Treasury’s latest report on HAMP [Home Affordable Modification Program] cancellations (approx. 50% according to Treasury’s numbers).” It also reports that seriously delinquent (6 mos.+) cures have declined by 25 percent. Cures are loans that are made current again. So with fewer cures and more newly delinquent loans, that 90-day delinquency bucket is increasing, hence more foreclosures again. We’ve been noting the improvement in new delinquencies as a sign of recovery for several months, but all this new data turns that tenet on its head.”

GDP slower than expected

Gross domestic product expanded at a 1.6 percent annual rate, the Commerce Department said, instead of the 2.4 percent pace it had estimated last month.  However, the reading was a touch better than market expectations. Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, revised down to a 1.4 percent growth rate. The economy grew at a 3.7 percent pace in the first three months of the year.  The revised GDP data will likely fuel analysts’ concern that slowing growth is putting the economy at growing risk of slipping back into recession. Federal Reserve policymakers were meeting on Friday at their annual retreat in Wyoming to ponder the economy’s direction and hear from Fed Chairman Ben Bernanke.  “There is no doubt we are losing momentum in the economic recovery,” said Robert Dye, senior economist at PNC Financial Services in Pittsburgh. “But if we define recession as two or more consecutive declining quarters of GDP, I think we are not going to go there.  “We are going to see a pattern where we may have declining GDP in one quarter followed by smaller gains in the next quarter, bouncing along the bottom as it were,” Dye said. 

Radar Logic – “Overwhelming supply”

According to Radar Logic’s June RPX composite price index, which measures per-square-foot home pricing trends in 25 metropolitan statistical areas, is showing fresh signs of housing weakness. Over half of the MSAs tracked by the company posted month-over-month price declines during June, compared to just two markets last year. On a year-over-year basis, only seven MSAs posted price gains during June.  The 25-MSA RPX Composite price for June 24 was $197.09 per square foot, just $1.09 (0.6%) higher than a month earlier and flat year-over-year. This was the second-worst performance for the month of June since the beginning of Radar Logic’s data. The average May-to-June increase over the last ten years has been $2.75 (1.4%), the firm said.  “In a sign of weakness to come, the RPX composite price for the Western region hit its peak for the year in May and declined sharply in June,” the firm’s report said. “The Western region has been the source of much of the recent strength in the 25-MSA RPX Composite, outperforming the other regions year-to-date and year-over-year on a composite-price basis. The end of seasonal price gains in the West suggests that the 25-MSA RPX Composite will soon start to decline as well.”

Now for our real estate education section…

Friday File – 15 Minute Resolution: 7 Best Internet Marketing Commandments

This week we have explored online marketing with an emphasis on what agents and investors can do to enhance the effectiveness of their Internet presence. Today we will turn our attention toward those “black hat” techniques that can actually detract visitors – or get the site banned entirely. Use this list to steer clear of troublesome techniques and avoid getting blacklisted by major search engines.

1. Thou shall not use link farms. You know how annoying it is to perform a search then find a page filled with vague links that don’t really match the original criteria…or worse, do match the search criteria but are all but impossible to use. Don’t perpetuate this on prospective clients. It will only irritate them.

2. Thou shall not duplicate content. Repurposed content is fine once in awhile but visitors expect something fresh and new…so do search engines. Give it to them!

3. Thou shall not use spinning software. Not only does most of it yield less than impressive results but it’s simply not worth ruining your reputation by using stale information.

4. Thou shall not use keyword stuffing. If you have ever read an online article full of hyperbole’, excessive adjectives and simply verbose nonsense it’s easy to understand why this should be avoided at all cost. Use the KISS formula….keep it simple stupid and just write another article.

5. Thou shall not cloak content. It’s tempting…after all, who will see it? Well, Google for one. Although this can be effective at times, it’s usually not worth the time and effort. Instead, focus on getting it right the first time around.

6. Thou shall not use hidden text. If cloaking is tempting then imagine how easy it is to add a bit of hidden text to a page so Google indexes it. What’s the drawback? Well for one, it’s easy to forget about it in the future especially when you want to update pages. Again, the bit of a bump isn’t worth the extra effort for the average investor or agent.

7. Thou shall not use redirects. There are legitimate uses for redirect pages but

keep their use to an absolute minimum. The last thing you want is for visitors to bookmark the wrong website or forget the name. Use doorway or gateway pages with redirects sparingly and only for legitimate uses.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin August 25, 2010

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/

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

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

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

You asked for it. You get it: Part 2 of

“Demystifying Fraud in the Short Sale Fog.”

https://www2.gotomeeting.com/register/862050594

Chris McLaughlin, Florida attorney and short sale expert,

and Ron Ballard, best known as The California Short Sale

Lawyer, return to continue clearing the fog surrounding

issues of legality and fraud in short sales TODAY at

2 PM ET, 11 AM PT in a LIVE webinar.

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

MBA – refinances increase

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, increased 4.9% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 4.5% compared with the previous week.  The Refinance Index increased 5.7% from the previous week and is at its highest level since May 1, 2009. The seasonally adjusted Purchase Index increased 0.6% from one week earlier. The unadjusted Purchase Index decreased 1.1% compared with the previous week and was 38.8% lower than the same week one year ago.  “The volume of refi applications last week was up 26% over their level four weeks ago.  Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“We are at a new 15 month high for the Refinance index.  With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity.”  The four week moving average for the seasonally adjusted Market Index is up 5.0%.  The four week moving average is down 0.3% for the seasonally adjusted Purchase Index, while this average is up 6.2% for the Refinance Index.  The refinance share of mortgage activity increased to 82.4% of total applications from 81.4% the previous week, which is the highest share observed since January 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% from 5.7% of total applications from the previous week.

10 year yield sets new low

The yield on the benchmark 10-year note was 2.49% at 4:30 p.m. yesterday in New York. That’s down from 2.6% late Monday and is the lowest level since the 10-year yield closed at 2.4% on January 20, 2009, according to data from the Federal Reserve.  The yield on the 2-year note dropped to 0.48%, holding near an all time-low, while the 5-year yield slid to 1.33%. The yield on the 30-year bond was 3.56%, down from 3.66%.  The flight to safety boosted demand for the $37 billion worth of 2-year notes that the government sold Tuesday, with investors submitting bids totaling $115 billion for the notes. 

The bid-to-cover ratio, a measure of demand, was a relatively strong 3.12. But the ratio was higher at the last 2-year sale in July, and has averaged 3.17 so far this year.  It was the first of three auctions this week totaling $102 billion in U.S. debt. On Wednesday, the U.S. will offer $36-billion in 5-year notes and will offer $29 billion in 7-year notes on Thursday.  Treasuries are widely considered one of the most secure assets available. As a result, prices often rise when investors are nervous about the economic outlook. Stocks, however, fell sharply after the housing report came out.

Low home sales could sink the recovery

With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the recovery.  Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Two months after the end of the tax credit, sales are 34% below April’s tax incentive-induced peak.  “Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics. “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.” 

The sales pace of all homes — single-family homes, town homes, condominiums, and co-ops — is at the lowest since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.  Inventory has also continued to climb, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.  The housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.  “Falling housing prices strain the overall confidence in the economy and discourage Americans from spending,” Dales said. “They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.

Durable goods fall more than expected

The Commerce Department reports that new orders for long-lasting U.S. manufactured goods, excluding transportation equipment, posted their largest decline in 1.5 years in July, while overall booking rose far less than expected.  The report was the latest to indicate subdued U.S. economic growth and an increased risk of a slide back into recession, though most analysts still do not believe a double-dip recession is imminent.  The Commerce Department said durable goods orders excluding transportation dropped 3.8%—the biggest fall since January 2009—after rising 0.2% in June. Overall orders rose 0.3% following a revised 0.1% fall in June.  Analysts polled by Reuters had forecast orders increasing 2.8% last month from June’s previously reported 1.2% fall.

Orders excluding transportation had been forecast to increase 0.5% from a previously reported 0.9% fall.  Defense aircraft orders dropped 8.3 after rising 5.7% in June, while motor vehicle orders rose 5.3% after June’s 4.0% rise.  Orders outside transportation were depressed by weak bookings for machinery, electrical equipment and computers and related products and Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, fell 8.0% last month after a 3.6% increase in June. Markets had expected a 0.4% rise last month.  Durable goods inventories rose 0.6% after increasing 1.3% in June. It was the seventh straight month of gains in inventories.  Shipments, which go into the calculation of gross domestic product, last month rose 2.2%, adding to June’s 0.2% gain.  Unfilled orders slipped 0.1% after rising for three straight months.

DsNews.com – 2/3s of mortgages untouched

According to a new report from state attorneys general and bank supervisors from across the country, more than 60% of homeowners with seriously delinquent loans are still not involved in any form of loss mitigation with their servicer.  The ratio is disconcerting considering the group also found that one of servicers’ primary loss mitigation options today, loan modifications, are resulting in significant payment reductions with fewer redefaults.  The State Foreclosure Prevention Working Group says loans modified in 2009 are 40 to 50% less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008.  “This improvement in loan modification performance suggests that dire predictions of high redefault rates may not come true,” the group said in a paper released Tuesday. “This positive trend suggests that increased use of modifications resulting in significant payment reduction has succeeded in creating more sustainable loan modifications.” 

The consortium of state regulators and chief attorneys also found that recent modifications that significantly reduce  the principal balance of the loan have a lower rate of redefault compared to loan modifications overall, suggesting that servicers should strategically increase their use of principal reduction modifications to maximize prospects for success.  Principal writedowns, though, have been slow in finding their way into the mod equation. The group’s study shows that only one in five modifications reduce the loan principal, and in fact, some 70% actually increase the loan amount by adding servicing charges and late payments to the loan balance.

Credit card debt lowest in 8 years

The average combined debt for bank-issued credit cards — like those with a MasterCard or Visa logo — fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year ago, according to TransUnion.  The credit reporting agency said it was the first three-month period during which card debt fell below $5,000 since the first quarter of 2002.  More borrowers also made payments on time. The rate of cardholders past due by 90 days or more fell to 0.92 percent in the second quarter, from 1.17 percent last year.  That’s the first time the delinquency rate has been below 1 percent since the second quarter of 2007, before the recession, said Ezra Becker, director of consulting and strategy in TransUnion’s financial services unit.

The rate fluctuates during the year, he said, but the improvement is more evidence that consumers are working to make sure their credit cards remain in good standing.  Becker said the foreclosure crisis could be helping to improve the timeliness of credit card payments and lower balances. When people don’t make mortgage payments, he suggested, they have a short-term cash boost.  “That can provide extra money to pay down credit cards,” he said.  Besides paying down debt, consumers are getting fewer new cards. Nationwide, the number of new accounts opened dropped almost 6.5 percent from last year.

Now for our real estate education section…

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin August 24, 2010

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Existing home sales plunge 27%

Today’s report from the National Association of Realtors (NAR) shows that purchases of existing homes plunged 27.2 percent to a 3.83 million annual rate. The pace compares with the median forecast of a 4.65 million rate, according to a Bloomberg News survey.  The number of previously owned homes on the market rose 2.5 percent to 3.98 million. At the current sales pace, it would take 12.5 months to sell those houses, the highest since at least 1999 and compared with 8.9 months in June. The months’ supply of single-family homes at 11.9 months was the highest since 1983, NAR said.  Sales last month fell in all four U.S. regions.  Foreclosures are boosting the so-called shadow inventory, and competing with owners trying to sell properties.

Home seizures increased almost 4 percent in July from the previous month, with 325,229 properties last month getting a notice of default, auction or bank repossession, RealtyTrac Inc. said Aug. 12.  Residential real estate may keep struggling for the rest of this year, while into “2011 and beyond, it is difficult to determine,” Richard Dugas, chief executive officer at Pulte Group Inc., said in an Aug. 20 interview with Bloomberg Television. Pulte is the largest U.S. homebuilder by revenue.  “Demand is low across the country,” Dugas said. “You have record-low interest rates and excellent pricing, but consumer confidence eased. We really need the economy to improve and job creation to take hold before people feel comfortable stepping into a home.”

Credit card fees up

According to the market research company Synovate, the average interest rate on existing cards jumped to 14.7% last quarter, up from 13.1% a year earlier.  The jump created a dramatic spread of 11.45 percentage points between the average credit card interest rate and the prime rate — the largest margin in 22 years, according to Synovate.  Synovate study director Lauren Guenveur said the increase in interest rates was driven primarily by the Credit Card Accountability Responsibility and Disclosure Act of 2009. She said the so-called CARD Act gave credit card companies a limited amount of time to raise rates, “before they could no longer do so freely.” This put pressure on issuers to aggressively raise rates, she said.  Guenveur added that the recession and nation’s high unemployment were also driving the increase, because it was causing the default rate to go up.

“This is largely due to consumers still charging on their credit cards, but being unable to pay,” she said. “Default rates should remain high as long as unemployment remains high.”  Synovate reported that credit spending has increased, on average, by 6% in the first half of 2010 to $1,559, but still falls short of third quarter 2008 numbers, which Synovate describes as “the quarter prior to the financial meltdown.”  Offers for new cards reached a fever pitch last quarter. U.S. households received 640.3 million credit card offers in the second quarter, a surge of 83% from 349.1 million offers during the same period last year.  “Issuers are desperate to lock-in customers with good credit, so they will mail many offers to these households in order to gain their attention,” Guenveur said.

Real estate rip-off?

Many condo and townhouse dwellers are already familiar with resale fees — a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association’s homeowners.  But now, in some new developments, homebuilder contracts are including a 1% fee to be paid to them every time the house is sold — for 99 years. And the money doesn’t go for improvements or upkeep: It’s just money in the builders’ pockets.  That has the real estate industry and consumer protection groups up in arms. 

“It’s of no benefit to consumers,” said Kathleen Day, of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”  The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. “Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees,” he said.  A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold’s securitization plan to go forward.

It’s time to put grownups in charge

U.S. House Republican leader John Boehner is calling for the resignation of President Barack Obama’s entire economic team, including Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers.  “It’s time to put grown-ups in charge. It’s time for people willing to accept responsibility,” Boehner declared in remarks prepared for delivery in a speech in Cleveland.   “President Obama should ask for—and accept—the resignations of the remaining members of his economic team, starting with Secretary Geithner and Larry Summers, the head of the National Economic Council.” 

Bad U.S. economic data last week heightened concerns about a return to recession. Claims for new unemployment claims rose to a nine-month high and manufacturing activity in the U.S. mid-Atlantic region unexpectedly contracted.  Boehner has been a leading critic of Obama’s agenda, including his overhaul of the U.S. healthcare system, tightening of regulation on the financial industry and what Republicans’ denounce as his failed economic stimulus plan.  If Republicans take control of the House, he is in position to be elected as speaker, a post that would make him the chamber’s presiding officer and in charge of setting its agenda.

Stay away from MBS

Bank of America Merrill Lynch (BofAML) recommends investors remain underweight in agency mortgage-backed securities (MBS) although a widening of the option adjusted spread indicates otherwise.  Chris Flanagan, MBS/ABS strategist at Bank of American Securities, said the “continued bull flattening of the yield curve is the elephant in the room for agency MBS.”  Normally a widening of the option adjusted spread “makes the sector appear attractive,” but Flanagan said this “does not account for the substantial risk that we are on the cusp of a classic Fed-induced refinancing wave, where the magnitude of the wave once again surprises the MBS market to the upside and mortgages underperform.”  And an early indicator of this risk is this week’s break above 4000 in the Mortgage Bankers Association’s (MBA) refinancing index, according to BofAML. 

“Moves higher would be slower and more gradual than in the past, but we think investors should not underestimate the potential to move higher,” Flanagan wrote in the firm’s MBS: Securitization Weekly Overview.  Flanagan said with the Fed indicating the current ZIRP rate will remain in place for awhile, any flattening in the yield curve would require “a further, and still major, back-end rally.” And “by major, we mean something on the order of at least 100-150 bps,” he said.  “While we can think of a few, very good reasons that this scenario might play out,” Flanagan wrote. “We need to be clear that we are not making a rate call here. We are simply highlighting this as an asymmetric risk scenario for mortgages.”

Now for our real estate education section.. 

Does Your Marketing Use a Microphone or Megaphone?

Let’s face it, if you are like most real estate agents or investors, chances are your Internet marketing efforts either resemble a microphone or a megaphone. Both get the word out, but one does it a lot more effectively than the other. Find out if your message is loud and clear with this quick quiz:

1.Hub versus business card. Is your website a one stop shop for everything related to real estate in the area or a glorified business card?

Tip: A glorified business card may be sufficient for some endeavors but real estate is all about relationships. Even if someone isn’t able or willing to do business today, they might be tomorrow. Even more importantly, they probably know someone else who is ready to wheel and deal. Make your online presence felt by providing the information and tools needed to establish a long term relationship; become a central hub for communication.

2. Look Who’s Talking. What you say isn’t as important as what others are saying about you!

Tip: Find out what your reach is with social media and other websites. What good does it do to have a website if people aren’t sharing information with others? Make it simple to share and take the time to monitor what is being said about you from time to time.

3. Check the Pulse. Does your website even have a pulse?

Tip: Many people have no idea where their website or blog ranks, how many visitors they have or even who bothers to visit. Sign-up for some basic tracking software that provides some insight into who is visiting, when and what they are reading…then provide some more of it to keep them coming back. Add an RSS or other feed to allow users to get automatically updates without having to repeatedly visit.

4. What’s Your Grade?

Tip: If you have no idea where you measure up, visit www.website.grader.com (free) and www.37signals.com to see important details about your site or find terrific tools that are simple to use and have already been evaluated by others. Remember, the actual number of visitors isn’t as important as the sharing of information and long term relationships built online.

Make it easy for prospective clients to find you by expanding your total reach through a combination of blogs subscribers, social media websites, links to your site and of course…city specific keyword content.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

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

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

*************************************************
About the author:

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

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