realtor

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

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

All New for 2010 … This Thursday Night: Short Sales Riches! 

 ”You Thought Short Sales Were Hard to Close?

Sorry -  You Thought Wrong…”

This automation miracle finds listings, negotiates

low-ball price with the bank, and sells them to investors

without you doing anything more than signing the papers.

 You don’t even pay for marketing!

 Find out more for fr-ee right here tonight at 8:30 PM ET, 5:30 PM PST:

 https://www2.gotomeeting.com/register/204274506

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

Foreclosures down – but not for long

Foreclosure rates fell in January compared with the previous month, but remained sharply higher than a year ago, according to a new report by the foreclosure tracking Web site RealtyTrac.  The month-to-month decrease in foreclosures is most likely a temporary improvement, said Rick Sharga, vice president of marketing at RealtyTrac, and has to do with the holiday season.  “Because of the holiday season, offices that do the processing are closed,” said Sharga. “The drop in foreclosures [in January] is something we’ve seen a couple of years now. I don’t think this the beginning of a downward trend.”  The number of Americans receiving foreclosure notices was down 9.7 percent in January from December 2009, but 15 percent higher than last January. In all, 315,716 properties generated a foreclosure notice. That means one in every 409 homes in America received a foreclosure notice. (Foreclosure notices are defined as a default notice, bank repossession or auction sale notice.)  Real estate Web site Zillow.com also released a report last night that found one in five US mortgages were “underwater” during the fourth quarter. The ten states with the highest foreclosure rates were little changed from the previous month. According to the RealtyTrac report, Nevada remains No. 1, with one in every 95 properties in the state getting a foreclosure notice, even though the state showed a 18 percent decrease in foreclosures from the previous year.  Arizona ranked second with one in every 129 households receiving a notice, followed by California (one in 187 households), Florida (one in 187 households) and Utah (one in every 231 households).  South Dakota had the lowest rate, with one in every 25,820 properties receiving a foreclosure notice.

Jobless claims drop

According to the Labor Department, there were 440,000 initial jobless claims filed in the week ended Feb. 6, down 43,000 from a revised 483,000 the previous week.  Economists were expecting initial claims to drop to 465,000, according to a consensus estimate from Briefing.com.  The 4-week moving average of initial claims, which smoothes out volatility in the measure, was 468,500. That’s down 1,000 from the previous week’s revised average of 469,500. The government said 4,538,000 people filed continuing claims in the week ended Jan. 30, the most recent data available. That’s down 79,000 from the preceding week’s revised 4,617,000 claims.  Economists were expecting continuing claims to have declined 2,000 to 4,600,000.  The 4-week moving average of continuing claims was 4,603,500, a drop of 17,750 from the preceding week’s revised average of 4,621,250.  As usual, many economists say the decline in continuing claims reflects a growing number of filers who have dropped off the jo  bless rolls into extended unemployment benefits.

Commercial real estate is the next crisis

The Congressional Oversight Panel said in a report that mounting commercial real estate losses could endanger the banking system and thwart economic recovery.  A total of $1.4 trillion in commercial real estate loans will require refinancing in the next four years, and more than half of those loans are underwater, written for properties whose value has dropped like a rock.  The expected losses when loans go bad could hit between $200 billion to $300 billion and threaten 3,000 small and mid-size banks with a disproportionate share of commercial real estate assets on their books, according to the panel.  The report is intended to “wave a red flag” to the White House and Congress that the commercial real estate loan market is going to get a lot worse before it gets better.  “We’re at a point where even as TARP is ramping down another major challenge in our economy is ramping up,” said Elizabeth Warren, the oversight panel’s chairwoman. “We need to start now, before the system is  on the brink of collapse to figure out a plan,” she added.  The panel’s research found that 2,988 banks are heavily invested — with more than three times their assets tied up — in commercial real estate loans. Of that number, 2,500 banks each have less than $1 billion in assets.  The panel offers a number of possible solutions for policymakers to head off a commercial real estate crisis, including stress tests for banks, injecting capital into these small banks, buying their toxic assets, or guaranteeing loans.

White House Council of Economic Advisers issues annual report

The annual report by the White House Council of Economic Advisers will be delivered to Congress today, and will look at the actions President Obama took to deal with the recession over the past year.  The report will examine the current economic crisis, including the steps the government took to shore up the financial and housing markets. It also looks at the need to reduce the federal government’s deficit and to tackle long-standing problems such as health care costs, climate change and living standards.  Obama has made job creation his central focus in his second year in office. He has recently traveled the country promoting tax credits for small businesses, the source of many new hires. And on Tuesday, he brought together congressional leaders to push for a bipartisan agreement on legislation to boost hiring.  Council Chairwoman Christina Romer expects an average of 95,000 jobs a month to be created in 2010 and the nation’s GDP to expand at a 2.5% rate.  Romer called the report “a page-turner.” Good to hear – if it’s like everything else coming out of the White House these days it’ll be an enthralling work of fiction.

NAR – Home sales surge

According to the latest survey by the National Association of Realtors (NAR), sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.  Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate 1 of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008. Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.  Lawrence Yun , NAR chief economist, said the first-time home buyer tax credit was the dominant factor. “The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels t  rending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”  NAR President Vicki Cox Golder , owner of Vicki L. Cox & Associates in Tucson, Ariz., said near-term market conditions will remain favorable. “Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she said.

Double dip in house prices?

According to data compiled by Zillow, a real estate sales and data services provider, there are signs that the feared “double-dip” in house prices may have taken hold of US housing prices in as many as one in five major housing markets.  While some individual markets have experienced a bottoming out and increase in prices, 29 of the 143 markets Zillow tracks is now showing signs of a possible double dip in home values. In those markets, home values have flattened or have begun to decrease again after showing at least five consecutive monthly increases during 2009 — what Zillow called early signs of what could a double dip.  The Zillow Home Value Index put the national median price at $186,200 in Q409, a 5% decrease from Q408. Compared to Q309, prices declined 0.5% during the last quarter of 2009. The index is a measure of median home values of all single-family residences, condominiums and cooperatives, both on the market and not for sale. Q409 marked the 12th consecuti  ve quarter of year-over-year declines, Zillow said.  “The good news is that, for those markets that will see a double dip in home values before reaching a definitive bottom, this second dip will not be a return to the magnitude of depreciation seen earlier, but rather will look more like a modest aftershock of the earlier downturn,” said Zillow chief economist Stan Humphries.

Now on to our real estate investing educational section…

The Return Attribution of Real Estate

More money has been made in real estate than all industrial investments combined.

— Carnegie

Traditional investors often overlook real estate in preference to stocks or bonds but even a precursory examination of the return attribution of real estate provides sufficient evidence to support the inclusion of real estate in even the most conservative portfolio. In fact, there is a large body of evidence that demonstrates a 15 percent investment of real estate considerably reduces total portfolio risk…a fact not lost on large retirement funds who have historically invested between 15 to 20 percent into real estate. The return attribution of real estate contains both unique and common characteristics when compared to other investment vehicles each of which will be detailed below:

Capital Appreciation – Without a doubt, capital appreciation combined with leverage has made well maintained real estate a favorite among investors for generations. The long term growth in value is similar to that typically associated with equity asset classes but with increased use of leverage.

Bond-Like – Persistent and predictable cash flow from rental real estate mimics interest paid on bond coupons or similar investments. Investors seeking safety coupled with long term income often look to real estate in order to diversify from bonds or annuities.

Performance & Credit Profile – This frequently overlooked aspect of real estate investment cannot be underestimated in importance especially in a tight credit market; real estate has a credit profile much like the credit rating of a bond. Residential versus commercial holdings and the quality of the location, tenant etc all enter into the credit profile of the property. Savvy short sale investors learn how to maximize the credit profile in order to increase leverage and overall return for the entire portfolio.

Externalities – These are outside influences that impact the desirability and value of a property. Common examples include physical attributes unique to each property, zoning, etc… Even during the most dramatic economic decline, these attributes are what make some properties retain (or increase)  in value even as others rapidly lose valu

Tax Benefits – Real estate enjoys very favorable tax benefits including the use of depreciation, capital gains, tax exempt status, the ability to sell/transfer some tax benefits and other incentives designed to maximize investment potential.

Inflation Hedge – Real estate has historically outperformed nearly all other asset classes during period of inflation. Not only does it tend to act as a hedge against inflation but it tends to hold value during deflationary periods as well. Once the “bubble” has popped, real estate reverts back to its former norm as consumers reign in spending and focus on the basics of shelter, food and medicine.

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.

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

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

All New for 2010 … This Thursday Night: Short Sales Riches! 

“You Thought Short Sales Were Hard to Close?

Sorry -  You Thought Wrong…”

This automation miracle finds listings, negotiates

low-ball price with the bank, and sells them to investors

without you doing anything more than signing the papers.

You don’t even pay for marketing!

Find out more for fr-ee right here:

https://www2.gotomeeting.com/register/204274506

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

20% of homes underwater

Real estate website Zillow.com says one of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter.  The percentage of American single-family homes with mortgages in negative equity rose to 21.4% in the fourth quarter from 21% in the third quarter, according to the Zillow Real Estate Market Reports.  U.S. home values declined again in the fourth quarter, as the Zillow Home Value Index fell 5% year-over-year and down 0.5% quarter-over-quarter, to $186,200. It was the 12th consecutive quarter of year-over-year declines, the reports showed.  “The prevalence of markets in or near a double-dip situation shows that we are not yet at the bottom, in terms of home values,” Stan Humphries, Zillow chief economist, said in an interview. 

One in five, or 29 of the 143 markets tracked by Zillow, had at least five consecutive month-over-month increases in home values during 2009 before values began to flatten or fall again in the second part of the year. These markets included the Boston, Atlanta and San Diego metropolitan areas.  Zillow said it defines a “double dip” as two periods of sustained declines in home values separated by a brief period of stabilization or recovery.  Foreclosure resales remained high, making up 20.3% of all U.S. home sales in December. Foreclosure resales also made up the majority of sales in several metropolitan areas, including Merced, California, at 68.3%; Las Vegas, at 64 percent, and Modesto, California, at 62%. Additionally, 28.5 percent of home sales nationwide sold for less than what the seller originally paid.  Home values increased year-over-year in 27 of 143 markets and remained flat in 15.

DSNews.com – Jumbo market getting worse

Delinquencies on prime jumbo loans continue to climb, and Fitch Ratings says they could reach 10 percent as early as next month.  Loan performance among high-end mortgages within private residential mortgage-backed securities (RMBS) showed further weakness in January, as serious delinquencies rose for the 32nd consecutive month, Fitch said.  According to Fitch’s data, overall, prime jumbo RMBS at least 60 days past due swelled to 9.6 percent in January, up from 9.2 percent in December 2009. The prime sector of the jumbo market was the only one in which new delinquencies increased from a year ago, Fitch said.  Although prime jumbo delinquencies began to rise in the second quarter of 2007, the company says they accelerated in 2009 nearly tripling over the course of the year. Fitch notes that delinquency rates on pre-2005 loans remain well below that of more recent originations.  The five states with the highest volume of prime jumbo loans outstanding – California, New York, Florida, Virginia, and New Jersey – comprise approximately two-thirds of the $381 billion jumbo loan market.  Florida saw the biggest monthly jump of these states. It holds only 6 percent of the market share, but now has the highest serious delinquency rate at 16.6 percent, according to Fitch’s analysis. 

MBA – mortgage applications down

The Mortgage Bankers Association (MBA) said rates on 30-year fixed-rate mortgages, the most widely used loan, fell below 5 percent for the first time since the week ended Dec. 18, but U.S. mortgage applications dipped last week.  The MBA’s Weekly Mortgage Applications Survey for the week ending February 5 decreased 1.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 0.6 percent compared with the previous week.  The Refinance Index increased 1.4 percent from the previous week and the seasonally adjusted Purchase Index decreased 7.0 percent from one week earlier.  The unadjusted Purchase Index decreased 1.1 percent compared with the previous week and was 7.5 percent lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 3.8 percent.  The four week moving average is up 0.8 percent for the seasonally adjusted Purchase Index, while this average is up 4.8 percent for the Refinance Index.  The refinance share of mortgage activity increased to 69.7 percent of total applications from 69.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.5 percent of total applications from the previous week.

Economy to cool

According to a Reuters poll of 80 economists, U.S. economic growth is set to cool after a burst of activity late last year and expectations for a jobless recovery will prompt the Federal Reserve to keep interest rates on hold until well into the second half of 2010.  Gross domestic product is forecast to grow by an annualized 2.7 percent this quarter, nearly halving from a 5.7 percent expansion between October and December last year.  For all of 2009, the world’s biggest economy contracted by an estimated 2.4 percent but economists expect it to grow 2.9 percent this year. Those median forecasts are similar to a poll of the same analysts taken last month.  Forecasts for the first quarter varied widely, from a contraction of 0.4 percent to 4.5 percent annualized growth. Two economists predicted the economy would contract again at some point in the first half of the year.  “The economy shows signs of recovery in terms of activity and volumes, but persistent challenges in bank lending and policy-making will probably translate into a slow recovery for the job market,” said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago.  “Long-term rates are likely to benefit from renewed volatility in international markets, and we anticipate a strengthening in the dollar.”  Consumer price inflation is expected to average 2.1 percent in 2010 and 2.0 percent in 2011, according to the poll. Core inflation, which removes volatile food and energy costs, is seen at 1.4 percent in 2010 and 1.5 percent in 2011.

Trade deficit widens

The US Commerce Department says the trade deficit surged to a larger-than-expected $40.18 billion in December, the biggest imbalance in 12 months. The wider deficit reflected a rebounding economy that is pushing up demand for imports.  The December deficit was 10.4 percent higher than the November imbalance and much larger than the $36 billion deficit that economists had expected.  For December, exports of goods and services rose for an eighth consecutive month, climbing 3.3 percent to $142.70 billion, reflecting strong gains in sales of commercial aircraft, industrial machinery and U.S.-made autos and auto parts.  Imports were up 4.8 percent in December to $182.88 billion, led by a 14.8 percent surge in oil imports which rose to the highest level since October 2008.  For all of 2009, the deficit totaled $380.66 billion, the smallest imbalance in eight years, as a deep recession cut into imports. However, economists believe the deficit will rise in 2010 as U.S. demand for imports outpaces U.S. export sales.  Last year’s decline in the value of the dollar against the euro, the joint currency of 16 European nations, and several other major currencies has helped make American goods more competitive on overseas markets. That will help lift the fortunes of America’s beleaguered manufacturing sector.  However, the export gains are expected to be outpaced by an even larger rebound in imports.

Builders bet on spec houses

Home builders are ramping up speculative construction to attract last-minute home buyers who want to tap the soon-to-expire tax credit.  “We know that we’re going to have more people out now,” says Lance Wright, co-owner of CastleRock Communities in Houston, Texas. “Buying is an emotional decision. Seeing the actual product that you’re moving into will certainly make it easier.”  Ken Campbell, chief executive of California-based Standard Pacific Corp., agrees. Buyers trying to beat the tax credit’s expiration “will buy a house somewhere,” he says. “It does make a difference if the home is ready, available to go.”  Late last year, builders lost sales because they didn’t have enough houses to satisfy a flurry of demand from buyers looking to take advantage of a federal tax credit for first-time buyers before they expired on Nov. 30.  Builders expect buyers will wait until the last minute. ”

As we roll into March and April, more people are going to become aware of the fact that there’s a deadline, and it’s for real,” says Rob Bowman, president of Lancaster, Pa.-based Charter Homes & Neighborhoods.  It’s difficult to measure the total number of spec homes nationwide, but according to a survey conducted by John Burns Real Estate Consulting, based in Irvine, Calif., home builders have about three finished homes with no buyer per community. That’s up slightly from 2.8 finished homes in November but much lower than the peak of six finished homes in July 2008.  “Every builder I talk to around the county is starting a spec home or two [per community] for the spring season, provided they have the cash to do it,” said Jody Kahn, a John Burns vice president.  The strategy is risky. If the buyers don’t materialize, builders could be saddled with unsold homes that will require heavy discounting to sell, hurting profits and slowing the housing recovery. New homes may also continue to lose market share to lower-priced foreclosed houses. Indeed, some economists expect an avalanche of foreclosures in the months ahead as lenders release homes they have been keeping off the market.

DSNews.com – FHA Defaults hit 9%

The latest numbers from the Federal Housing Administration (FHA) show that the percentage of loans it backs that are at least 90 days past due hit 9.12% at the end of 2009. That figure is up from 6.82% one year earlier – a 34% increase.  FHA officials have repeatedly cited a rise in loan defaults as inevitable given the agency’s exponential growth in market share. The FHA currently backs about 30 percent of all new loans for home purchases and 20 percent of refinanced loans. Those figures represent an increase of nearly 1,000 percent since 2006, when private lenders began to pull back and the credit crunch set in.  According to the agency, the bulk of its problem loans stem from originations made in 2007 and 2008. 

Officials say tighter underwriting standards make more recent and new loans less likely to default. In fact, HUD said in its fiscal year 2011 budget that it expects new business from FHA to generate a $6 billion overall profit, although that number will be eclipsed by projected losses of $19 billion from insuring soured loans.  In the fourth quarter of 2009, lenders originated $86.1 billion in FHA single-family loans, up 21 percent compared to the same period in 2008. Sixty percent, or $51.8 billion, of the fourth-quarter financing was used to fund home purchases.  For the full 2009 year, FHA insured 5.8 million loans, with an aggregate balance of $752.6 billion – a 24 percent increase compared to 2008’s business.

Now on to our real estate investing educational section…

Understanding YSP & Par Rates

YSP or Yield Spread Premiums are perhaps one of the most misunderstood aspects to the average mortgage. Unfortunately, recent legislation designed to help consumers cut through the complex legal lingo only added to the confusion by differentiating between mortgage brokers versus banks and direct lenders when quoting YSP’s. According to federal law, banks and direct lenders that use their own money to fund the loan are not obligated to report the “overages” or SRP (the banking equivalent to YSP). On the other hand, mortgage brokers must report the Yield Spread Premium and may therefore, appear to be charging more. Since banks and lenders are not held to the same reporting standards, it is imperative for short sale investors to learn what questions to ask in order to obtain reliable rate quotes.

1. What is the Yield Spread Premium or Overage on the loan? If the Good Faith Estimate does not specifically indicate the YSP or overage it is important to request it in writing. Be sure to ask about BOTH the YSP AND Overage – remember, a lender using their own funding is not always required to disclose the YSP and in fact, because of the variation in terminology, they often claim not to have a YSP whatsoever…it’s legally okay because it is technically an overage not a YSP which is a term associated with mortgage brokers rather than banks. By asking about YSP and/or the Overage, you can better determine the premium paid on the loan. Remember, YSP is determined by the interest rate so it may fluctuate from day to day.

2.  What is the Par Rate? The Par Rate is the absolute lowest interest rate available without purchasing discount points to buy down the interest rate. If a mortgage is being sold “at par”, the brokers do not get paid more for selling a more expensive mortgage so you will expect to see a higher up front origination or broker fee…after all, this is how they make their money. Keep in mind, the mortgage loan officer must make money somewhere so it will typically be included in either the YSP/overage, purchasing points etc…your job is to find the lowest possible combination of YSP/overage with a mortgage at/near Par for the lowest possible points.  Because the YSP and par rates fluctuate daily based upon prevailing interest rates, it is impossible to determine the exact amount until you “lock-in” a rate however, it is possible to obtain a fair understanding of the total cost you can anticipate paying by doing business with any one specific provider.

Remember, most lenders expect to make at least $2,000 to $3,000 from originating an average sized loan (more in the case of significantly larger loans). Avoid lenders with excess charges or those that result in double or even triple typical fees. During the height of the real estate bubble it wasn’t uncommon to encounter lenders making thousands or even tens of thousands of dollars extra by packing excess fees, YSP and a plethora of fees into every mortgage…often the same lenders boasting ultra low up-front out of pocket costs. Run, don’t walk, away from these extreme practices and instead arm yourself with the power of information.

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

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

Done For You Lead Machine Unveiled Tomorrow!

You don’t want to miss this webinar … an all new done for you

lead machine with social media!  This is the first time that this new

concept has been unveiled — so don’t miss it!

RSVP here for the webinar Tuesday night at 8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/340133283

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

Permanent Modifications Showing Slight Improvement

According to a report from Barclays Capital, modification rates picked up over December and January as servicers converted more trials into permanent modifications under the Home Affordable Modification Program (HAMP).  According to the latest HAMP progress report from the Treasury, servicers provided more than 66,000 permanent modifications through December. Participating servicers receive more than $35 billion in total capped incentives, but the program could reach as high as $50 billion. Modification rates “turned a corner” in October 2009, according to BarCap analysts, congruent with the rise in HAMP permanent conversion rates. The Treasury recently changed document guidelines for the servicers that go into effect June 1, 2010. After that date, borrowers seeking help through the program must provide certain documentation to enter into a trial modification. At the start of the program, servicers collected the documents during the three-month trial plan, creating a lag time in the permanent conversion rate.  Out of the more than 1 million borrowers in HAMP trials, 34% have been on private-label securitized loans – meaning the loans are not held by Fannie Mae, Freddie Mac or Ginnie Mae. After assuming a similar conversion rate for non-agency loans, analysts found 22,600 non-agency permanent modifications under HAMP.  “This ties in closely with the 25,000 loans modified in past two months that we see using our custom logic on Loan Performance. A higher number based on our logic also makes sense to us as some servicers have non-HAMP modification programs,” according to the report. 

DSNews.com – FTC says no more upfront loan modification fees

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.  “Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent ‘companies’ that don’t provide what they promise,” FTC Chairman Jon Leibowitz said. “The proposed rule would outlaw up-front fees so companies can’t take the money and run.”  The FTC has brought 28 cases against companies suspected of foreclosure rescue and mortgage modification scams, and state and federal law enforcement partners have brought hundreds more. According to the agency, generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs, including the Making Home Affordable program.  “Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered,” Treasury Secretary Timothy Geithner said. “I commend the FTC for proposing a strong set of safeguards to protect consumers from these predatory practices.”  The proposed rule also would bar providers from telling consumers to stop communicating with their lenders or mortgage servicers. It would also require them to disclose to consumers that they are for-profit businesses, the total amount consumers will have to pay, that neither the government nor the lender has approved their services, and that there is no guarantee that the lender will agree to change their loan.

Geithner says no double dip

U.S. Treasury Secretary Timothy Geithner said yesterday that the risk the U.S. economy will slip back into recession is lower now than at any time in the past year, but that recovery will be slow and uneven.  Even though credit ratings agency Moody’s last week warned that anemic U.S. growth, on top of already stretched government finances, could put pressure on the country triple-A status, Geithner dismissed concerns that rising U.S. indebtedness might put pressure on the United States’ prized triple-A credit rating.  “Absolutely not,” Geithner said when the interviewer suggested rising debt levels could put pressure on the top-notch rating. “That will never happen to this country.”  Former Treasury Secretary Hank Paulson, however, says that reducing the federal budget deficit poses “the most serious long-term challenge” to the United States. He also says he realized as Treasury secretary it was tough to convince lawmakers to tackle controversial issues without a crisis.  Geithner claimed there were even some encouraging signs in Friday’s report on U.S. unemployment for January, which showed another 20,000 jobs lost but a dip in the unemployment rate to 9.7 percent from 10 percent in December.  He said the Obama administration is doing everything it can to enhance recovery prospects and played down chances that growth might stall and push the United States back into recession.

The EU debt crisis and us

“Sovereign debt panic” finally struck last week, causing severe one-day drops in stock markets from New York to London to Toronto on Thursday.  The epicentre of the crisis is Greece, in danger of defaulting on its debt payments to worldwide holders of its government bonds, or sovereign debt.  The world is awash in potentially unsustainable debt, and the U.S. looms largest. President Barack Obama just tabled a budget that projects a doubling in America’s national debt, to $28 trillion (U.S.), by decade’s end. That’s twice the size of the U.S. economy.  Yet it’s the EU who is threatening the wealth of all of us. If Greece defaults on its debts, and it’s followed by Spain and Portugal and possibly Ireland and Italy as well, then the collapse of Lehman Brothers in 2008 will seem like a mere blip.  It isn’t so much the risk of default by these countries themselves that is spooking the markets at the moment, but the possibility that a still-skittish financial system will succumb to another fear-driven contagion. 

Normally Greece would simply devalue the drachma, or allow the markets to do it for them, and that adjustment would rebalance the economy and eventually make it more competitive, while also raising the value of foreign liabilities and making the people poorer.  But that can’t happen, because Greece is part of the monetary union, and the euro is held up by Germany’s strength. There’s talk of Greece leaving the euro, or being kicked out, but that would just make matters worse: outside the euro Greece would go into a downward spiral, dramatically increasing the value of its euro-denominated debts and creating hyper-inflation.  While it’s hard to imagine any of these countries’ governments defaulting on their debts, restoring their budget balances is going to hold back their economic growth for a long time and lead to higher long-term government interest rates around the world.

Now on to our real estate investing educational section…

It is estimated over 95% of millionaires made their money from real estate. On the other hand, the average Realtor earns less than $40,000 annually. Why the discrepancy? Obviously it’s quite possible to make stellar returns from real estate yet each and every year plenty of people barely make ends meet even while working at it full-time.  Yet research shows that success in real estate doesn’t require full-time work, a large private income or many of the other trappings of success typically associated with wealth creation from other venues. In fact, plenty of part-time investors far outperform fulltime real estate associates each and every year. Learn the secret of their success with these quick tips:

1. Accept Success – Seriously! Have you ever stopped to contemplate how easily most people accept failure or fate versus those that take responsibility for their own success? It’s quite remarkable when you stop to think about it. Understand that everyone is capable of making a success from short sale investments – but few people actually do so not because they are helpless but because they wait for help rather than forging their own path. When in doubt about what to do, first find a mentor and then…simple do it. IF it’s wrong you will learn from the experience but if not, you have made progress either way.

2.  Work at home when possible. Set a schedule then stick to it. Don’t allow distractions to clutter up your productive short sale investing time. Hire childcare if needed, find a reputable and reliable virtual assistant and then focus time and energy on building the foundation for your short sale empire by automating as much as possible.

3. Dump dumb rules. Simply your life and investing goals as much as possible. Sit down and think about how much time it takes you to argue with your spouse about some minor situation versus finalizing a deal or making offers on upcoming short sales. Re-evaluate what rules and roles dominate your day then eliminate those that don’t enhance your life.

4. Learn to say NO. Stop apologizing and don’t try to do it all yourself. It’s not in your best interest (or that of your family and friends) to tackle more than you are able to deal with on a regular basis. Leave space for down-time as well as impromptu activities. Short sale investments are especially prone to last minute maneuvers where those that win aren’t necessarily the most prepared but simply those in the right place at the right time.

5. List- Buy. The more you list the more they buy and vice versa…the more you buy the more you have to list as a short sale investor. It’s a numbers game so take action and automated it as soon as possible.  Increase your target marketing efforts on a regular basis; once you reach the desired number of homes, begin to switch your strategy to include more affluent clients.

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

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

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

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

***********

“Strange New Automation Strategy Closes Short Sales

Fast and Easy in 2010! 

Think of it!  Our newly revised automatic system for finding and

closing short sales is letting people cut their  work-week in

half… and triple their income!

If you’re ready to say good-bye to endless hours of labor, and far too few dollars in return, find out more for fr-ee – no cost, no obligation.

Just click the link below to join our webinar this coming Tuesday

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

https://www2.gotomeeting.com/register/623302963

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

More foreclosures coming 

The number of long-term adjustments completed under the president’s foreclosure prevention plan rose to 66,465 at the end of December, or 7.4% of all trial modifications started, up from 31,382 a month earlier.  Another 46,056 modifications are pending borrowers’ final signatures, according to Treasury statistics released Friday. Another 48,924 were denied permanent modifications, mainly because they did not make their trial payments on time, did not hand in the needed paperwork or did not meet the program’s criteria.  Meanwhile, the number of delinquent homeowners in trial modifications rose to 787,231, up from 697,026 a month earlier. 

Housing experts remain concerned that the rate of foreclosures still outpaces the help homeowners are receiving under the program. A record three million homeowners received at least one foreclosure filing in 2009, according to a RealtyTrac report released last Thursday.  A lot of borrowers are too far underwater or don’t have enough income to qualify for a permanent modification, said Celia Chen, senior director at Economy.com. Others will not be able to provide all the documentation needed.  Administration officials said they continue to review the program to make sure it is helping those in need, Chen said she doesn’t think there’s anything the government can do to keep these borrowers in their homes. “As more of these loans fail to make it to permanent modifications, a lot will go back on the market as foreclosures and that will depress home prices,” said Chen, who expects home prices to fall another 10% by the third quarter of this year.

President and Democrats trying to whip up populism in Massachusetts

The Democrats and the White House are scrambling to salvage the special U.S. Senate election in Massachusetts by trying to whip up a populist furor over banks.  Amid reports that financial institutions bailed out by the government are enjoying healthy profits and paying generous bonuses, and as a bipartisan commission began hearing testimony on banks’ role in the economic crisis, Senate candidate Martha Coakley (D), Vice President Joe Biden and others used the issue to portray Ms. Coakley, who is vying to succeed the late Edward Kennedy, as tough on bank executives and Republican Scott Brown (R) as coddling them.  This sort of anti-bank populism was popular in the 1930s by demagogues like Father Coughlin, but rarely has a president engaged in this sort of bareknuckle politics to save his agenda.  Polls show declining voter enthusiasm for Mr. Obama’s health-care plan, and Brown has campaigned on a promise to provide the 41st GOP vote to secure a Senate filibuster to scuttle a health-care bill. 

Democratic strategists concede Mr. Obama’s support in the past for a Wall Street bailout has fueled voter anger, particularly among conservatives and supporters of the antiestablishment Tea Party movement who are pouring money and volunteer hours into Mr. Brown’s race.  With the bank tax, “we can take populism back to our side,” a Democratic Party strategist said.  Mr. Brown he opposed the tax because it would most likely be passed on to consumers through ATM fees, among other things. He said banks would have to pay a hefty tax rather than use the money to extend much-needed loans to small businesses.  “If you’re having an uphill battle selling health care in a blue state like Massachusetts, that should send shivers down the spine of Democrats looking at races across the country,” said Brian Walsh, a spokesman for the National Republican Senatorial Committee.  A new Suffolk University poll finds Republican Scott Brown leading Democrat Martha Coakley, 50% to 46%. If Brown wins, ObamaCare dies. He would be the 41st vote to prevent any compromise legislation from coming to the floor of the Senate.

Questionable practices by banks on second liens?

Diana Olick of CNBC has exposed an alleged practice by banks to recoup second mortgages by demanding cash, off the HUD settlement statements, from either real estate agents or the buyers in short sales.  Olick says she has personally heard a recording of a phone conversation between a short sale real estate agent and a second lien lender, during which the second lien lender clearly asked for cash outside of the settlement and threatened to kill the deal without it. “AGENT: Well yes, I don’t want to lose my license, go to jail, I mean, I have to sign…  LENDER: You’re not going to lose your license – we have plenty of realtors who do this, who actually understand how this whole process goes – and they realize that OK, if I want to get this done, this will take place.” 

When asked about the practice, these are the replies from three of the biggest banks:  JP Morgan Chase simply answered, “No Comment,” Bank of America denied the practice, and Citi ‘s reply was interesting: “We work very hard to help distressed homeowners find solutions for their financial challenges. In our attempt to amicably resolve the debt, we will generally negotiate a reduced settlement with the homeowner in order to release a second lien. Unlike some lenders who refuse to reduce the payoffs on second liens, we choose to reduce the payoff amounts in some situations to assist the borrower. We do not provide instructions to settlement agents on how to fill out the settlement statement or any other closing documents, and we certainly do not require settlement agents or any other parties to violate applicable laws.”

House List Prices Down 1% in December

Altos Research’s listing price index declined 1% in December and 1.4% during Q409, but the 10-city composite price index was up 5.2% for the year, the company said, adding it projects asking prices to continue to decline during the winter 2010 months.  The average listing price decreased to $494,426 from $499,267 from November to December. The index took a bigger monthly drop in December than it did in November, a result of the season decline in sales activity, Altos Research said.  Miami was the only market of the 26 that Altos Research measures that experienced a gain in listing prices. San Diego and Salt Lake City experienced the greatest listing price declines, down 4.3% and 3.5% respectively. 

Inventories also declined in 24 of 26 markets, the largest drops in Boston and the California markets of Los Angeles, San Francisco and San Jose. New York (2.1%), and Phoenix (0.7%) experienced the only increases for the markets covered. The 10-city composite experienced a 5.1% decrease in listing inventory.  All markets except San Francisco (99 days) had a median days on market of 100 or more days in December. Miami had the slowest turnover with a median of 247 days, more than eight months. The days on market for the 10-city composite was up 8% to 166 days.  The Altos Research study includes existing single-family homes and does not measure condos, town homes or new construction. Each market measured uses results from Census Bureau Metropolitan Statistical Areas (MSA).

Now on to our real estate investing educational section…

In the Know…Startling Starts & Other Frightening Facts

Information is power so it should come as no surprise that savvy short sale investors make a point of staying in the know. Today the ShortSale blog is reporting on startling starts and other frightening facts that should motivate even the strongest procrastinator to begin shopping for short sale deals in earnest.

Housing Starts

Housing starts have traditionally been a lagging indicator for the real estate market but it is a delicate balance at best. On one hand the population continues to grow even as older homes become obsolete. Data recently released by HUD indicates the number of housing starts at the end of 2008 were a mere 905,000…the lowest in recorded history. In fact, the last time housing starts approached this level was in 1975…since then we’ve added several hundred millions to the population. It should also be noted, the late 70′s and early 80′s were marked by rapidly rising interest rates and tremendous price jumps in the rental market. Short sale investors should take note and position themselves for potential gains. Remember, history may not always repeat itself but it often rhymes.

Not Privately Built

For those that point to private builders as possible rationale for the low number of housing starts, it should be noted the number of new privately owned housing units completed has also fallen to one of the lowest rates in recorded history – barely topping 1,119,700 by the close of 2008. In contrast, 1982 recorded the absolute lowest number of private completions with only 1,005,000 yet again reflecting a higher percentage of the total population.

Not Manufactured

Forget manufactured homes – sales are so dismal the entire industry is facing possible ruin. In fact, sales and shipments are so lackluster they are but a fraction of former years with a mere 82,000 units shipped in 2008. Compare to 378,000 ten years ago, it’s easy to see manufactured homes are not picking up the slack when it comes to affordable housing alternatives.

Bottom Line: Although the number of delinquent properties and shadow inventory continue to rise, early indications seem to point toward a day of reckoning in the future. Once existing inventory is purchased, expect a significant lag time to meet growing demand. Currently distressed homeowners have reduced expenses, moved in with family members and made other temporary arrangements in the hope of “riding out the storm” but short term solutions will eventually give rise to the need for permanent housing. The statistics speak for themselves, inventory is no longer growing sufficiently enough to meet long term need. Position yourself for profitable opportunities both today and tomorrow by using short sales to build a long term portfolio from the proceeds of short term profits.

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.realestaterichesnews.com/news (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
–