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

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

NAR – short sales key to solving crisis

Stabilizing and restoring the health of the housing market is critical to a broader economic recovery, according to a white paper released yesterday by the Federal Reserve Board. Many of the issues and recommendations outlined in the paper support key principles established by the National Association of Realtors (NAR) to help revitalize the housing industry and economy.

The white paper, The US Housing Market: Current Conditions and Policy Considerations, calls for increased lending to creditworthy home buyers and more loan modifications, mortgage refinancings, and short sales to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry; an approach long recommended by NAR to help spur the housing market recovery.  “As the nation’s leading advocate for homeownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” said NAR President Moe Veissi. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”

For homeowners who are unable to meet their mortgage obligations, NAR has urged lenders and servicers to quickly approve reasonable short sale offers so these people can avoid foreclosure. The short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from the transaction.  “Loan modifications and short sales help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers, which is good for everyone,” said Veissi.

Jobs report strong

Non-farm payrolls jumped 200,000 in December, according to the Labor Department, pushing the jobless rate to a near three-year low of 8.5%. Economists polled by Reuters expected a gain of 150,000.  “Today’s figure should not come as a great surprise,” said Todd Schoenberger, managing director of LandColt Trading, adding that recent macro data had been pointing to good results. “The wildcard is January as retailers trim seasonal staff. An upside surprise for this month will validate the argument that an economic recovery is, indeed, talking place.”  The report comes after a handful of employment reports on Thursday that boosted sentiment as the number of planned layoffs at US firms fell to its lowest level since June last year, according to the report from consultants Challenger, Gray & Christmas. Private sector employment climbed 325,000 in December, much stronger than expected, according to payrolls processor ADP.

Bove – mortgage refinancing will hurt banks

Speculation that a new mortgage refinancing plan may be introduced drove bank stocks higher Thursday, but noted banking analyst Dick Bove believes investors actually got it wrong. He told Larry Kudlow that a program like that would actually “harm” banks.  “It’s bad for banks, it doesn’t help them in any way, shape or form,” Bove said.  The speculation was fueled by reports that suggested the White House may be preparing a new trillion-dollar plan to refinance home loans. However, administration officials told CNBC’s Dana Olick that they are not considering a $1 trillion refinancing program.  The fact that bank stocks went up on the possibility of such a program makes no sense whatsoever, Bove said. In fact, he thinks a mortgage refinancing plan would cause banks to lose money.  “If you add up all the sources of profit or loss,” he said, “they lose more than they gain.”  So why did the banks, like Bank of America, shoot up higher? Bove thinks it was a simple misreading of what a mortgage refinancing program would do for the banking industry.

He believes investors may have thought it might affect foreclosures, putbacks to the banking industry and the service income of the industry. However, Bove said it would do none of that.  “It harms the banking industry,” he said. “All it is, is taking a lot money from one class of people and giving it to another class of people under the theory that the second class of people would spend the money more than the first class.”  And banks aren’t the only ones which could be hurt, Bove said. Only 21% of the mortgages in the US are held by the banks. 55% held by Fannie Mae, Freddie Mac and mortgage pools, and the remainder is held by investors, he said.  “So the net affect is the people you are taking the money away from are the taxpayers and the investors.”

Unemployment down

The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5%, the lowest since February 2009. The rate has dropped for four straight months.  The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn’t happened since April 2006.  For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9% last year, down from 9.6% the previous year.  Economists forecast that the job gains will top 2.1 million this year.

The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers. And hiring was strong across almost all major industries.  Manufacturing added 23,000 jobs. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.  A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.  Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for US auto sales.  Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.

Olick – renter nation

“Despite record low mortgage rates reported today and rising affordability in most US housing markets, rent is the new reality for former home owners and new households alike.  For some it is post-traumatic stress from the housing crash, for others it is the inability to get financing to buy a home. Either way, the rental market continues on its tear.  In the last quarter of 2011, the apartment sector saw its largest quarterly increase in occupied stock of the year, according to Reis, Inc.  The vacancy rate dropped to 5.2%, the lowest since 2001 and lower than the last cyclical drop in 2006.  This bucks the historical seasonal weakness typical of the colder months of the year. The fourth quarter also tends to be a weaker leasing period, according to Reis, given that most households make moving decisions in the second and third quarters.

This surge in occupancy pushed asking and effective rents up 0.4 and 0.5% respectively, which Reis calls the only disappointing figures for the sector, missing expectations. Reis blames that on slow economic growth and still high unemployment.  ‘Higher quality properties in the most desirable locations posted rent gains in excess of 5-10%, while class B/C properties, catering to lower income tenants, found it relatively more difficult to raise rents,’ notes Victor Calanog, head of research at Reis.  Nowhere is that more evident than in the Washington, DC metro area where rents are way up across the city, and developers are rushing to erect new multi-family buildings and rehab old ones.  ‘Everybody wants to be in DC,’ beams Richard Key, district manager for Camden Property Trust, one of the largest publicly traded multifamily REITs in the nation. ‘Whereas in other markets there are deals, when you get to DC area, all the REITs want to be here, and so we’re all competing for the same piece of land, and that’s driving the price up. That is really is a challenge for us.’  Key is convinced that there has been a fundamental shift in attitudes toward home ownership that will last for several more years. He is not concerned that the pendulum will swing back to buying, just as all that new rental stock hits the market around 2014. Camden has seen rents on its DC properties rise over 5% in just the past year.  ‘The nice part is we haven’t seen a drop in occupancies with that rent growth, and so the hope is that we’re able to maintain our historical occupancies and continue to see that 5, 6, gosh, 7% is not out of the question in the next couple of years,’ says Key.

Washington, DC will likely see those higher rents because home prices didn’t fall very high during the housing crash and are already rebounding. It and Detroit were the only major markets posting annual gains on the latest S&P/Case-Shiller Home Price Index.  Other markets, like Las Vegas, where home prices are rock-bottom thanks to a huge supply of foreclosures, the rental market is tougher for developers and landlords.  As for renter society, it is also being fueled by tight mortgage underwriting. Rates may be at record lows, but only if you can get them. In a paper released Wednesday, Federal Reserve Chairman Ben Bernanke noted, ‘Continued efforts are needed to find an appropriate balance between prudent lending and appropriate consumer protection, on the one hand, and not unduly restricting mortgage credit, on the other hand.’  Until that balance is found, potential home buyers will stay on the sidelines, those sidelines being rental apartments. A new twist to watch, however, may be that rental nation will go single family.  With so many bank owned homes left to clear, and so many in government and the private sector looking at bulk rental investments, apartments may have big competition in the same neighborhoods where they used to compete against single family buyers.”

IRS audits millionaires

The Internal Revenue Service (IRS) audited one in eight millionaires who filed taxes last year while only auditing 1 in 100 individuals earning less than $200,000 in an effort to “assure that there’s equity in the system.”  Just 1 in 100 individuals earning less than $200,000 had their income tax returns examined, the IRS said.  The 12% of millionaire earners audited in 2011 was appreciably higher than the 8% who were audited in 2010. IRS officials said the high ratio was part of an effort to demonstrate that tax laws are applied fairly.  “That has been something we’ve concentrated on to assure that there’s equity in the system, to assure that those at the lower end of the spectrum know that those at the higher end of the spectrum are subject to the same rules and enforcement as everyone else,” Steven Miller, deputy IRS commissioner for services and enforcement, said in an interview.  In recent weeks, President Barack Obama and congressional Democrats have sought to boost taxes on the wealthy as a way to pay for jobs programs, a theme they are expected to continue in this presidential and congressional election year. IRS spokeswoman Michelle Eldridge said the growing portion of millionaire earners’ returns audited is not related to politics.  Yeah right.  Message to Americans:  Achieve the American dream and we’ll audit you.

WSJ – business using more space

The US office market showed modest signs of improvement in the last three months of 2011, as employers slowly expanded in an uncertain economic climate.  The national office-vacancy rate stood at 17.3% in the fourth quarter, slightly down from 17.4% three months earlier, according to real-estate research firm Reis Inc. But the rate remains stubbornly high, down just slightly from the post-downturn peak of 17.6%, reached in mid-2010.  The office market generally reflects employment trends and companies’ views on growth over the next few years. With job growth slow, companies have been reluctant to add new space.

The sector is still struggling with high levels of vacancy not seen since the early 1990s, a hangover from the sharp pullback by businesses during the downturn. The amount of space occupied by businesses fell by 137 million square feet from 2008 to 2010, according to Reis, which tracks 79 metropolitan areas.  By contrast, employers occupied just an additional 20.7 million square feet in all of 2011. “We’re not seeing huge moves down in vacancy,” said Chris Connelly, who heads the Chicago office for CBRE Group, a commercial-real-estate brokerage. “We’re just niggling away at it.”  Overall rents have been creeping up, with landlords seeking an average rent of $27.97 per square foot per year in the fourth quarter, up 0.4% from the third quarter.

Still, markets vary widely, depending on whether they are home to growing industries. Cities hard-hit by the housing crisis, such as Las Vegas and Phoenix, have among the highest vacancy rates in the country, above 25%.  Meanwhile, growth in the technology and energy sectors has accelerated a recovery in areas such as Northern California and cities in Texas. Last month, landlord Brookfield Office Properties Inc. signed a 141,000-square-foot lease in Houston with Italian energy company Eni SpA, which is taking a space that is 42% larger than its current lease, according to Brookfield.  “If those drivers aren’t there, you’re probably pretty much seeing a very slow, gradual recovery,” said John Sikaitis, director of office research for brokerage Jones Lang LaSalle.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Foreclosures down in Colorado

According to a report re-leased Tuesday by the Colorado Division of Housing, foreclosure auction sales in Colorado’s metropolitan counties were up 7.9 percent in November compared to November of last year.  Foreclosure sales in Larimer County rose 47 percent in November compared to a year ago but filings dropped 37 percent.  Overall, sales and filings dropped in Larimer County in the first 11 months of the year compared to the same time frame in 2010.  However, comparing the first 11 months of this year to the same period last year, foreclosure filings were down 28.6 percent through November while foreclosure auction sales were down 20.7 percent.  New foreclosure filings fell year over year during November with total filings dropping 21.7 percent from 2,932 filings in November 2010 to 2,296 filings in November of this year. Foreclosure auction sales increased during the same period from 1,195 to 1,290.  From October 2011 to November 2011, foreclosure filings fell 2.3 percent, and foreclosure sales at auction rose 37.5 percent.

Foreclosure auction sales through November fell year over year from 2010’s 11n-month total of 18,728 to 14,854 during the same period this year. Foreclosure filings were also down through November, falling to 23,556 filings year-to-date this year from last year’s 11-month total of 32,982.  Year-to-date through November, the counties with the largest decreases in foreclosure filings, year-over-year, were Mesa County and Denver County, where filings decreased by 35.2 percent and 32.2 percent, respectively. Pueblo County reported the smallest decline in filings with a decrease of 12.5 percent from the first 11 months of 2010 to the same period this year. All counties surveyed reported year-over-year decreases in foreclosure filings.  For the first 11 months of this year, all counties also showed decreases in foreclosure auction sales when compared to the same period last year.

The counties with the largest decreases in foreclosure auction sales, year-over-year, were Broomfield County and Adams County, where auction sales decreased by 40.3 percent and 27.0 percent, respectively. Pueblo County reported the smallest decline in auction sales with a decrease of 9.1 percent from the first eleven months of 2010 to the same period this year.  The county with the highest rate of foreclosure sales during November was Adams County with a rate of 681 households per foreclosure sale. Mesa County came in second with 792 households per foreclosure sale. The lowest rate was found in Boulder County where there were 3,402 households per foreclosure sale.

Mr. Geithner goes to Germany

U.S. Treasury Secretary Timothy Geithner arrived in Germany on Tuesday for a three-day blitz of euro zone officials to urge them to take decisive action to backstop their currency union and resolve a crushing debt crisis.  Geithner will press French President Nicolas Sarkozy, the new leaders of Spain and Italy and Germany’s finance minister to agree at a crucial European Union summit on Friday to take steps that will give markets confidence that no euro zone countries will default, and that the region’s banks will stay solvent.  Geithner has made several trips to Europe in recent months as U.S. concerns over the crisis grow and, judging by comments from both him and President Barack Obama, the Treasury Secretary may add to a growing chorus calling for the European Central Bank to take more decisive action to resolve the crisis.

The need for action was underscored by Standard & Poor’s warning on Monday that 15 of the 17 euro zone countries now face an unprecedented mass downgrade if they fail to reach a satisfactory agreement at the Brussels summit—all the way up to AAA-rated Germany and France.  The Federal Reserve joined with the European Central Bank and others in action to ease dollar funding strains a week ago and Obama and Geithner have both pointed to the option of the ECB backstopping European governments and the banking system. That idea is viewed by many economists as the key to any comprehensive solution to the crisis, but resisted by Germany.

Olick – why are cancellations even higher?

“For the past several months, Realtors across the nation have been reporting an ever-increasing number of cancelled existing home sale contracts. The latest Realtors Confidence Index now puts the cancellation rate at 20 percent, way up from the historical norm of around four to six percent.  ‘On-time settlements were reported as declining from 65 percent to 47 percent,’ according to the Realtors. It’s not why you think, or at least not why I thought. Inability to get a mortgage was reported by just 9 percent of respondents to the Realtor survey. Bigger issues were failed inspections, buyers with cold feet and adverse economic conditions. I’m sure appraisals figured in there as well.  It begs the question then, if these are just delays or true cancellations?

Anecdotally, I was doing a report on a residential street in Northwest DC last week, an area that is still holding its own and didn’t lose much in the housing crash. I was standing in front of a ‘For Sale’ sign, when the Realtor from the sign came out of the house. She wanted to know what we were saying about the neighborhood, concerned of course that there were any signs of cracking. I assured her there were not, but asked about the house she was selling.  The Realtor told me it was actually under contract, after about 35 days on the market. I asked why there was no ‘under contract’ sign, which used to be so commonplace before the ‘sold’ sign goes up. She said they hadn’t had the inspection yet, although the house looked, at least from the outside, to be in very good condition. When I asked if she worried about that, her answer was, ‘You never know these days.’ Apparently the jitters are widespread, even in one of the nation’s most secure housing markets.

With so much of the current housing market comprised of distressed property sales, and with the Realtors unable to capture so much of that share in their data, uncertainty is certainly understandable if not mandated. I read a report today citing Barclay’s analyst Stephen Kim of Barclays Capital, who is upgrading builders and raising price targets on the premise that we will see a housing ‘rebound’ in 2012.  ‘In the absence of a government homebuyer incentive, prices for non-distressed home sales have stabilized for almost a year. In our opinion, this is the most important trend in the housing industry right now,’ notes Kim. ‘We are amazed at how little attention it has been getting from the media and the Street. This stability on the part of non-distressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.’

I’m not sure where he’s getting that stabilization. CoreLogic reported home prices in September, excluding distressed sales, fell 1.1 percent in September. Their chief economist Mark Fleming cites a supply and demand imbalance and adds, ‘Distressed sales remain a significant share of homes that do sell and are driving home prices overall.’  We obviously have to be very careful reading today’s housing market tea leaves. There are so many different indicators and so many different entities reporting these indicators, that it’s often hard to find out what’s really going on. That’s why I always go back to the Realtors on the front lines. They are telling us that this market, distressed or not, is skittish and undependable. A 20 percent cancellation rate for existing sales is shocking and does not suggest a rebound on the horizon. At best, I’m looking for simple stabilization.”

Euro down against dollar

The euro edged lower on Tuesday, as traders reacted to news that Standard & Poor’s (S&P) put 15 euro-zone countries on a negative “credit watch” late in the prior session.  The euro traded at $1.3369 compared with $1.3386 in North American trade late Monday.  The dollar index, which measures the U.S. unit against a basket of major rivals, traded at 78.702 compared with 78.654 late Monday.  The move by S&P killed a risk rally that had been fueled in part by a pledge by German Chancellor Angela Merkel and French President Nicolas Sarkozy to quickly seek a new treaty that would automatically impose sanctions on violators of the euro zone’s fiscal rules.  The warning applied to triple-A Germany and France and all other euro members other than Cyprus, which was already on negative watch, and Greece, whose CC rating already implies a high probability of default.

Toll Brothers Q4 profits down 70%

Luxury homebuilder Toll Brothers said Tuesday its fourth-quarter profit fell about 70% to $15 million, or 9 cents per share, compared to $50.5 million, or 30 cents per share, a year earlier.  The homebuilder said its profit drop is attributed to inventory and joint venture write-downs, as well as debt retirement charges. In addition, the firm enjoyed a significant tax benefit in the fourth-quarter of 2010, which buoyed last year’s 4Q income.  The company said without the charges, fourth-quarter pretax income would have hit $33.9 million, up from $18.1 million last year. On the other hand, the firm’s overall fourth-quarter revenue grew to $427.8 million from $402.6 million last year.  For its entire 2011 fiscal year, which ended Oct. 31, the company earned $39.8 million, or 24 cents per share, compared with a loss of $3.4 million, or 2 cents a share, for fiscal year 2010.  The Horsham, Pa.-based homebuilder experienced another positive in the fourth quarter with home building deliveries hitting $427.8 million and growing to 757 units, compared to $402.6 million and 700 units, a year earlier.  The average fourth-quarter contract price for a Toll Brothers home hit $606,000, up from $565,000 last year, suggesting values are going up in the high-priced home segment.  In the fourth quarter, the firm signed contracts worth $390 million, up 24% from last year.

It’s Obama’s tone, not taxes, says tycoon

Leon Cooperman, a 68-year-old Wall Street veteran, says he is for higher taxes on the wealthy. He would happily give up his Social Security checks. He voted for Al Gore in 2000. He says the special treatment of investment gains, or so-called carried interest, for private equity and hedge fund managers is “ridiculous.” He says he even sympathizes, at least to some extent, with the Occupy Wall Street protesters.  And yet, Mr. Cooperman, a man with a rags-to-riches background who worked at Goldman Sachs for more than 25 years in the 1970s and 1980s before starting his own hedge fund, Omega Advisors, which has minted him an estimated $1.8 billion fortune, is waging a campaign against President Obama.

Last week, in a widely circulated “open letter” to President Obama that whizzed around e-mail inboxes of Wall Street and corporate America, Mr. Cooperman argued that “the divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them.”  He went on to say, “To frame the debate as one of rich-and-entitled versus poor-and-dispossessed is to both miss the point and further inflame an already incendiary environment.”  The letter comes as President Obama is planning to give a speech on Tuesday in Osawatomie, Kan., about the economy and the middle class, following in the path of President Theodore Roosevelt, who campaigned a century ago in that very city against the wealthy and big business.  Mr. Cooperman’s complaint has less to do with the substance of taxing the wealthy than it does the president’s choice of words in promoting it, an emphasis that he says is “villainizing the American Dream.”  While many executives have complained about what they perceive as the president’s antibusiness bent, Mr. Cooperman’s letter has gained credibility and attention in political and business circles because of his own seemingly liberal stances on taxes and the like.  He said, in an interview, that he had been deluged with hundreds of e-mails and phone calls about the letter, “99.9 percent of it positive.”

Mr. Cooperman, who recently signed the Giving Pledge, Bill Gates’s and Warren Buffett’s effort to press the world’s billionaires to give away at least half of their wealth, said he felt he came into his money honestly and said proudly, “I spend more than 25 times on charity what I spend on myself.” Asked whether he had received any response from the president for his letter, he replied with a chuckle, “I’m not optimistic I’ll hear from him.”

New Jersey foreclosures wait for deliberations

Hundreds of New Jersey foreclosure cases are waiting in the wings for the state’s Supreme Court to issue what will be a landmark decision in the Garden State.  Legal scholars suggest lenders are waiting to see what the court will do with the U.S. Bank National Association. Guillaume case before moving forward with thousands of pending foreclosures.  The issue in the case causing lenders to pause is the question of whether a foreclosure notice is made invalid because the lender filed a notice of intent to foreclose with the servicer listed on the notice instead of the lender.  In the original complaint, the Guillaume’s argue the lender, U.S. Bank NA, violated the Fair Foreclosure Act by not including the lender’s information in a spot that ended up containing contact information for the servicer.  Linda Fisher, a professor at Seton Hall Law School who has been following the case, said the foreclosure process is “kicked off by filing the notice of intent to foreclose.” Fisher filed an friend-of-the-court brief with the New Jersey Supreme Court in support of the Gillaumes’ claim.  Fisher says the intent to foreclose form has 24 data points, including the name of the lender and contact information for the lender.

The Guillaumes, who challenged the foreclosure on several fronts, initially claimed the lender “violated the FFA because although the notice of intent to foreclose listed plaintiff as the holder of the note, it did not list plaintiff’s address, but rather, listed the address and telephone number” of the servicer.  An appellate court ruled for the lender and against the plaintiffs saying “directing the Guillaumes to contact ASC (or the servicer) fulfilled the purpose of the notice provision under the FFA — making the debtor aware of the situation, and how and who to contact to either cure the default or raise potential disputes.”  But the case now awaits the New Jersey Supreme Court decision, causing some lenders to pause before launching foreclosures.

Fisher said the initial notice of intent to foreclose claimed the servicer was the lender and the holder of the obligation. Later in the case, the issue became the fact that the lender’s name was listed but with the servicer’s address.  “The banks are contending it is OK to enter only the name of the servicer,” Fisher said. “The Guillaumes are saying the servicer is not a substitute for the lender because the statute is quite clear, and it specifically mentions inclusion of the name of the lender.”  Banks are likely delaying some of their foreclosure actions in the state because they want to know how the Supreme Court will rule on this limited issue, Fisher contends. A rule against the lender’s argument could mean banks will have to review their intent to foreclose notices.  Fisher said if it turns out that Guillaume forces the 24 data points to be filled out perfectly, banks will have to retrace their filing steps to ensure they don’t end up facing sanctions.

LPS – house price declines across the board

Lender Processing Services, Inc. (LPS) today announced that its LPS Applied Analytics division updated its home price index (LPS HPI) with residential sales concluded during September 2011. The LPS HPI summarizes home price trends nationwide by tracking sales each month in more than 13,500 ZIP codes. Within each ZIP code, the LPS HPI tracks five price levels from low to high.  “Home prices in September were consistent with the seasonal pattern that has been occurring since 2009,” explained Kyle Lundstedt, managing director for LPS Applied Analytics. “Each year, prices have risen in the spring, but revert in autumn to a downward trend that has not only erased the gains, but has led to an average 3.7 percent annual drop in prices to date. The partial data available for October suggests a further approximate decline of 1.1 percent. Partial data from last month proved to be a good indicator for September’s performance: it showed a preliminary 1.1 percent estimated decline, compared to the 1.2 percent as shown by the full-month’s data.”

The LPS HPI national average home price for transactions during September was $202,000 – a decline of 1.2 percent for the month. As in previous years, this decline follows a 0.9 percent decline during August.  The September national average price is down 1.8 percent from the average price at the beginning of the year.  LPS HPI average national home prices continue the downward trend begun after the market peak in June 2006, when the total value of U.S. housing inventory covered by the LPS HPI stood at $10.6 trillion. The value has declined 30.2 percent since that peak to $7.56 trillion.  During the period of most rapid price declines, from June 2007 through December 2008, the LPS HPI national average home price dropped $56,000 from $282,000, which corresponds to an average annual decline of 13.8 percent.

Since December 2008, prices have fallen more slowly, interrupted by brief seasonal intervals of rising prices. During this period of more slowly declining prices, the national average price has fallen approximately $24,000 from $226,000. This corresponds to an average annual decline of 3.7 percent. The national average home price has declined 4.4 percent over the most recent year to September 2011.  Price changes were consistent across the country during September, declining in all ZIP codes in the LPS HPI. Higher-priced homes had somewhat smaller declines: -1.2% percent for the top 20 percent of homes (prices above $317,000), compared to -1.4 percent for the bottom 20 percent (below $102,000).

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

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 150 high-value, high-profit

properties

* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

* In 2010, Chris’ 4 Central Florida real estate offices

closed 2,786 sides for a closed sales volume of

$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Banks offered deal

Big US banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal to limit part of their legal liability in return for a multibillion dollar payment.  According to five people with direct knowledge of the discussions, state prosecutors have proposed settlement language in the “robosigning” case that also might release the companies from legal liability for wrongful securitization practices.  Some state officials have expressed concern that they have offered the banks far too broad a release from liability. Others say the broad language was perhaps inadvertently crafted and will be tightened as negotiations continue. Participants on both sides stressed the talks remain fluid.  However, the banks – some of whose share prices have been battered by concern about their exposure to mortgage-related litigation – are pressing for immunity from a raft of alleged civil violations and have called the latest proposal a “non-starter”.

They say the proposals from state prosecutors will need to be expanded before striking a deal, which is expected to involve a total penalty of $10 billion to $25 billion.  The two sides will meet again this week to iron out their differences. They are close to an agreement on future standards governing the servicing of home loans, yet remain far apart on other issues, such as legal liability claims, compliance and enforcement, and the amount of cash it will take to settle the allegations.

World Banks sees no recession

World Bank President Robert Zoellick said yesterday that the US economy will likely limp along with slow growth and high unemployment but avoid a recession.  “I don’t believe the US and the world will go into a double-dip, but there is a high degree of uncertainty,” he told reporters in Singapore. “Events in the eurozone can have ripple effects all around the world, not only in terms of financial markets but also confidence, whether it be consumers or businesses.”  Zoellick said European countries may need to deepen fiscal integration — implying governments should sacrifice some control over their budgets so spending policies can be coordinated among countries using the euro.  He said recent government bond purchases by the European Central Bank have provided temporary monetary liquidity to markets.  “The policies that have been pursued by the EU up to now can buy time, but parliaments and the public have to come to terms with fundamental questions,” Zoellick said. “One direction is to deepen the fiscal union.”

Singapore Finance Minister Tharman Shanmugaratnam, who is also chairman of the International Monetary Fund’s policy advisory committee, warned that the EU must solve the structural differences of its members rather than simply react to each new crisis.  “We’ve now reached a critical juncture where further postponement of solutions could lead to the possibility of an outcome that Europe wouldn’t like to contemplate, with very large costs to its citizens,” Tharman said.

WSJ – advertised rate vs what you get

The gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years, save a single week last September. As of last week, the lowest available rate—according to a survey of more than 200 lenders by LendingTree.com—was 3.75% for a 30-year fixed mortgage, but the average rate was 4.39%. At the current 0.64 percentage-point spread, the difference in rates could mean an extra $53,000 in interest payments over the life of a 30-year, $400,000 mortgage.  While there is always a spread—not all borrowers qualify for the lowest rate, after all—it is usually much smaller: An average spread is usually around 0.40 percentage point.  The bigger discrepancy of late has little to do with borrowers’ credit scores, which historically have largely decided what rates lenders choose to offer. Instead, it is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informal Research Services, by offering borrowers slightly higher rates.

Lenders say they haven’t lowered rates further because, simply, they don’t have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost. And there is still plenty of demand given that rates are still historically very low. As it is, lenders are able to make loans that, while still cheap, are more profitable, says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, a trade organization that represents mortgage lenders.  The lowest advertised rates are available for only those borrowers with pristine credit. Anyone else could consider waiting, as the rates they get may be lower as soon as the current surge in demand ebbs, possibly as soon as the end of September. For those looking to refinance or buy a home now, mortgage analysts suggest taking the lowest rate offered and shopping it around to other lenders. In particular, regional, rather than national, outfits, may be more willing to negotiate.

Obama down in the polls ahead of speech

According to a number of polls released yesterday, Barack Obama’s job approval ratings plunged to a new low ahead of his major economic speech Thursday, with widespread discontent among Americans over his handling of the economy and jobs.  An NBC News/Wall Street Journal poll of 1,000 US adults showed Obama’s overall job approval rating at a low of 44%, down 3 percentage points since July, while his handling of the economy stands at 37%.  An ABC News/Washington Post poll of US adults showed that six in 10 Americans rate the president’s job on the economy and jobs negatively, while one in three say they are now worse off financially since Obama entered the White House. It has a 3.5 percentage point margin of error.  A third poll of 1,000 likely voters by Washington-based Politico and George Washington University found that 72% of voters believe the country is either strongly or somewhat headed in the wrong direction, a jump of 12% since last May. That survey’s results have a 3.1 percentage point error margin.  “Obama is no longer the favorite to win re-election,” said Democratic pollster Peter Hart, who conducted the NBC/Wall Street Journal survey with Republican pollster Bill McInturff.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Home prices up, but…

The Standard & Poor’s/Case-Shiller home-price index shows prices  increased in June from May in 19 of the 20 cities tracked.  A separate figure shows prices rose 3.6% in the April-June quarter from the previous quarter. Those numbers aren’t adjusted for seasonal factors.  Over the past 12 months, home prices have declined in all 20 cities after adjusting for seasonal factors.  Chicago, Minneapolis Washington and Boston posted the biggest monthly increases. Metro areas hit hardest by the housing crisis, including Las Vegas and Phoenix, reported small seasonal increases.

Despite the uptick, the numbers contain “really no hope of any kind of surge,” David Blitzer, S&P Index Chairman David Blitzer said.  “None of the fundamentals look that good,” he said. “People still have difficulty getting mortgage loans, they still have difficulty in refinancing. The banks got a lot tougher and haven’t gotten any easier no matter how you measure.”  Blitzer said the housing market is taking on a more regional perspective, with the Sun Belt continuing to languish and other areas of the country stabilizing.  “You have to look much more into details,” he said. “You’ll some good times here and there but it’s a thin river of hope overall.”

Fed for more “easing?”

According to Chicago Fed President Charles Evans, the Federal Reserve may get even more aggressive in its easing policies than it has been so far unless the economy shows significant improvement.  In his view, QE needs to stay in place until unemployment plunges to 7% or if inflation gets past 3%. Core inflation, which strips out food and transportation, is about 1.8%, though the number is 3.6% including the more volatile measures.  “Strong accommodation needs to be in place for a substantial period of time,” he said. “If we could sort of make everybody understand that this is going to be in place for a longer period of time, we could knock out some of that restraint that comes about when people talk about premature tightening.”  Since the financial crisis hit in 2008, the Fed has expanded its balance sheet past the $2.5 trillion mark and kept its funds rate near zero in an effort to stimulate the economy.  It has not worked – the housing market is worse than Great Depression levels, recent manufacturing readings have been around contraction levels and weekly jobless claims have stayed above 400,000.

NAR – pending sales slip

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, slipped 1.3% to 89.7 in July from 90.9 in June but is 14.4% above the 78.4 index in July 2010. The data reflects contracts but not closings.  The PHSI in the Northeast declined 2.0% to 67.5 in July but is 9.7% above July 2010. In the Midwest the index slipped 0.8% to 79.1 in July but is 18.8% above a year ago. Pending home sales in the South fell 4.8% to an index of 94.4 but are 9.5% higher than July 2010. In the West the index rose 3.6% to 110.8 in July and is 20.6% above a year ago.  Lawrence Yun, NAR chief economist, said sales activity is underperforming.  He followed that observation with his typical hopefulness:  “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy.  [But we] also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

Irene hits sales

Hurricane Irene hit the US East Coast at the most inopportune time for many businesses, keeping millions of shoppers away from stores and auto dealerships during what should have been a busy weekend.  As much as a fifth of US auto sales are often generated in states affected by Irene, said Paul Taylor, chief economist with the National Automotive Dealers Association. And in those states, August sales will likely be down about 10%.  A bigger problem related to Irene may hurt September sales as well, Taylor said.  “The real issue is going to be flooding,” he said.  The average forecast of 44 economists surveyed by Reuters was 12.1 million vehicles were sold on an annualized basis, up from 11.5 million a year ago, but off slightly from 12.2 million in July.  Honda appears to be struggling the most. Edmunds.com and TrueCar.com expect Honda’s sales for August to drop at least 22% to 25% from last August, and for Toyota’s sales to fall at least 11% to 14%.

Retailers that sell back-to-school items likely felt Irene’s pinch as the storm essentially shut down malls on a weekend when parents normally shop for clothes and notebooks, not bottled water and flashlights.  “This is a major weekend of sales that were planned, but that won’t happen, in one of the most densely populated regions,” said Joel Bines, a managing director of consulting firm AlixPartners.  The damage could take 1%age point off August same-store sales, said Bines, adding that leftover merchandise will likely be discounted, damaging gross margins.  A large portion of back-to-school sales, retailers’ second-most important season after the winter holidays, could be lost for good, especially if it takes time for the transportation infrastructure to get back in place.  “There are millions of dollars in economic activity and productivity that were lost and simply will not and can not be recouped,” said weather tracking firm Planalytics.

Olick – a curious letter

“A borrower in Michigan recently received a letter from his mortgage servicer, CitiMortgage. It offers to discuss foreclosure alternatives, including potential eligibility for the government’s mortgage bailout program. It is clear, succinct, and gives several phone numbers and contact information. The letter includes the borrower’s name, address, and mortgage loan number. It seems quite reasonable…except that the borrower tells me he isn’t and hasn’t been late on any payments.  ‘I called them and they stated they sent this letter out to all mortgage clients,’ the borrower tells me in an email. ‘I am one of these clients and have had no issues with my mortgage, and they get my direct payment on time every month.’  He says that when he called Citi, the operator said it was a, ‘blanket letter and basically junk mail.’  I called Citi to verify the letter, which arrived in an envelope with a Citi logo.

Obviously lenders/servicers have been sending letters to troubled borrowers, offering assistance to avoid foreclosure, but a blanket letter to all borrowers seems a bit much. There have also been a lot of scammers using fake bank logos.  A Citi spokesman says, ‘I don’t believe it went out to all customers. We are not getting reports from our call centers that they are getting any significant number of calls on this. It is likely a coding error that affected some accounts.’  If the letter had gone out to all Citi customers, most of those customers would have called in, fearing there was a mistake and that their properties were being foreclosed improperly. That didn’t happen, so perhaps this one borrower did just get it in error. What’s so interesting/telling, though, is that the operator at Citi who answered the borrower’s call referred to the letter as ‘junk mail,’ as if it makes sense that a mortgage servicer would send out a blanket foreclosure help letter to every one of its customers. Perception versus reality, I suppose.”

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Short sales on the increase

According to RealtyTrac, short sales are increasing as a percentage of home sales in many states, helping some neighborhoods and homeowners avoid the more devastating impacts of foreclosures.  The increases were sharper in some states, including California, Nevada, Michigan, Georgia and Colorado, the data show.  In Colorado, short sales were 17% of all sales in the second quarter, up from 10% a year earlier. In California, they made up 25% of sales, vs. 18%.  Bank of America, the largest home mortgage servicer, expects to complete more than 100,000 short sales this year — more than double what it did in 2009, the bank says.  Wells Fargo Senior Vice President J.K. Huey says short sales have been “steady to slightly” up in recent months, partly because there are fewer bank-owned houses for sale in some markets, and that has forced buyers to pursue more short-sale properties.

In the second quarter, short-sale homes sold at a 21% discount to non-foreclosure homes, while bank-owned homes went at a 40% discount, RealtyTrac says. Short sales may also reduce losses for loan owners because they avoid full foreclosure costs. Borrowers may qualify for new mortgages sooner after a short sale than after a foreclosure.  Short sales peaked at 16% of the market in early 2009, RealtyTrac says. Realtors say there should be more short sales and that they should get done faster.

Consumer spending, inflation, up

The Commerce Department said consumer spending increased 0.8%, the largest gain since a matching increase in February, after slipping 0.1% in June.  Economists polled by Reuters had expected spending, which accounts for about 70% of US economic activity, to rise 0.5%.  When adjusted for inflation, spending rose 0.5% last month, the largest gain since a matching increase in December 2009, after being flat in June.  Spending on durable goods increased 2.0% last month, likely reflecting a pick-up in motor vehicle sales as the shortage of autos caused by the supply disruptions from Japan ease.

Overall spending in July was lifted by a 0.3% rise in income as employers stepped-up hiring. Income rose 0.2% in June and economists had expected a 0.3% increase last month.  Disposable income increased 0.3%, but when adjusted for inflation fell 0.1% – the first decline since September. With spending outstripping real disposable income, savings fell to an annual rate of $582.8 billion from $638.6 billion in June.  The report showed inflation pressures remain elevated. The personal consumption expenditures price (PCE) index rose 0.4% after slipping 0.1% in June. Compared to July last year, the index was up 2.8%, the largest increase since October 2008, after advancing 2.6% in June.  The core PCE index—excluding food and energy—rose 0.2% for the second straight month.  The core index, which is closely watched by Federal Reserve officials, increased 1.6% in the 12 months through July, the largest increase since May 2010, after rising 1.4% in June. The Fed would like to see it close to 2%.

Lending shrinks

Analysts at Bank of America Merrill Lynch doubt government attempts to improve the mortgage refinancing process will help lenders build capacity.  “The economics of the mortgage lending industry have changed,” the analysts said. “Originators used to have 2-3 points of upside with very little downside. With putback risk taking center stage, they now face 2-3 points of upside and 40-50 points of downside. This change in economics has caused the lending industry to shrink by half.”  BofAML said participation in the government’s HARP has been limited to higher-quality borrowers. Whereas, focusing on refinancing high-loan-to-value and low-FICO borrowers “can have a bigger impact on the economy.” And any new federal effort to boost the number of mortgage refinancings must help build out lending capacity, according to BofAML.  “Lift the specter of putback risk and the pieces fall into place: banks are freed to compete over riskier borrowers; GSEs get updated information about loans on their books and reduced default risk; mortgage financing finds its way to homeowners who have been on the outside; and Washington’s involvement is minimal,” according to Bank of America Merrill Lynch.

Hiring slows

Intuit, a payrolls processing company, said small businesses added 35,000 jobs after increasing employment by 40,000 in July.  The survey is based on responses from about 66,000 employers at businesses with fewer than 20 employees that use the Intuit Online Payroll system and covered the period from July 24 to August 23.  According to a Reuters survey, nonfarm payrolls probably increased 80,000 this month after July’s 117,000 gain.  Three of the 62 economists polled predicted a contraction in nonfarm employment this month, citing the erosion of business confidence and a strike by 45,000 Verizon Communications workers during the payrolls survey period.  They cautioned, however, that a drop in August employment should not be interpreted as a sign the economy was back in recession. The economy grew at a 1% annual rate in the second quarter after expanding only 0.4% in the January to March period.  The average work week for small business employees fell 0.3% to 24.9 hours, according to the Intuit survey, while the average monthly salary eased 0.08% to $2,649.

Irene’s footprint

According to the most recent government model, projected economic loss from wind damage alone is forecast to top $1 billion. That’s less than earlier estimates that topped $2 billion but it does not account for flood and other storm damage.  More than 4 million people up and down the Eastern seaboard are still without power. “For a lot of folks, the danger still exists,” FEMA administrator Craig Fugate told CNN Sunday. “We still will have trees coming down, heavy rain, strong winds.”  So far, the estimates are nowhere near the $45 billion in private insurance damage that Hurricane Katrina left in its wake in 2005 not including flood losses, according to the Insurance Information Institute.  In hurricanes, damages are often caused by coastal flooding, which is typically covered only if you have federal flood insurance.  But damage can also result from gusts of wind that pick up and throw items like lawn chairs and tree limbs through windows. Fallen trees and utility poles can also damage houses and cars.  Damage from wind gusts, downed trees and the like is often covered by car or home insurance; consumers with damages should call their insurer about claims.  “The Mid-Atlantic and New England have experienced damaging hurricanes in the past, and the growth in coastal population and property values makes today’s storms even more costly,” said Consumer Federation of America Institute president Robert Hartwig in a statement on Thursday.

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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

WSJ – rents up, vacancies down

Apartment landlords are enjoying rising rents and falling vacancies.  The average effective rent, the amount paid after discounting, was $997 in the second quarter of the year, up from $974 a year earlier, according to a report scheduled for release Thursday by Reis Inc., which tracks leasing data for 82 markets. Second-quarter rents rose in all but two markets.  Rent levels rose fastest in San Jose, Calif., to $1,501 in the second quarter. The average effective rent in San Francisco was $1,806; Wichita, Kan., $495, and New York, $2,826.  Vacancies, meanwhile, fell in 72 of the 82 markets during the second-quarter vacancy rate to 6%, the lowest since 2008 and compared with 7.8% a year earlier, according to Reis. Vacancies declined fastest in Charleston, W.Va., Greensboro/Winston-Salem, N.C., and Richmond, Va.

“Rising rents and falling vacancies are the perfect situation for landlords,” said Rich Anderson, an analyst for BMO Capital Markets. “It’s like drinking without the hangover.”  But there were some cautious signs in the data. Landlords filled a net 33,000 units in the second quarter, a slowdown from the 45,000 units they filled in the first quarter. That was somewhat surprising because typically, the net “absorption” rate falls faster during the summer as college graduates leave campus and descend on cities in search of jobs. Some analysts said the slower absorption rate could be linked to slower job growth, although it is too soon to know for sure. The peak apartment renting season runs from May to September.  “When you’re going from big numbers and getting gradually smaller it’s tough to determine if things are in fact cooling,” says Haendel St. Juste, an analyst at Keefe, Bruyette & Woods.

Meanwhile, supply remains constrained. Roughly 8,700 new apartment units opened during the second quarter, the second-lowest quarterly tally for new completions since Reis began collecting data in 1999.  But there is new construction in the pipeline. The CoStar Group, a Washington, D.C.-based real-estate research firm, expects about 22,500 units to be added this year, followed by 94,600 in 2012 and more than 109,000 in 2013.  But as long as employers keep adding jobs to the economy, analysts say, they expect vacancy rates to keep falling and rents to keep rising. “Barring some unexpected shock from the global economy, we expect the recovery to continue through 2011,” Reis wrote in the report. “Vacancies should continue to decline while rents rise at an even faster pace than we observed in the first half of the year.”

Hiring down

The economy gained just 18,000 jobs in the month, the government reported Friday, sharply missing most expectations and coming in even weaker than the paltry 25,000 jobs added in May.  It marked the weakest month since September, when the economy was still losing jobs.  Economists were eagerly awaiting this month’s report, following a dismal report from May.  Since then, predictions for June’s report have varied widely. A consensus of economists surveyed by CNN had predicted a gain of 125,000 jobs for June, but the breadth of forecasts ranged from a meager gain of 21,000 jobs to a solid 237,000.  Bringing further disappointing news, the government also revised the numbers for April and May both downward.  The unemployment rate rose to 9.2% from 9.1% in May. Economists had predicted the rate would improve to 9%.  Overall, the job market is still far from a full recovery.  The economy needs to add about 150,000 jobs a month just to keep pace with population growth.  So far, the nation has only gained back about a fifth of the 8.8 million jobs lost during the recession.

Olick – Fannie Mae offers new financing option

“Remember how we all blamed investor/flippers using faulty financing for the housing crash?  You know, these are all the bad guys who ran up home prices to their own profit, with no concern for the inevitable fallout; they colluded with overzealous, borderline blind, lenders who gave anybody and everybody a loan with no attention paid to their ability to repay said loan.  That’s all over now. You can’t get a loan without pledging your first born in collateral, and if you’re an investor, you rank somewhere just below Angelo Mozilo.  Or do you? Last month Fannie Mae made a little change in the rules for all-cash buyers to apply for mortgages. I don’t recall a press release, and I’m quite sure I’m on their mailing list. But there it is, ‘Announcement SEL-2011-5,’ a ‘Selling Guide Update:’

Currently, Fannie Mae requires a minimum of six months to elapse between the time a borrower purchases a home and subsequently applies for a cash-out refinance.  The Selling Guide has been updated to allow a cash-out refinance within six months of a purchase transaction when no financing was obtained for the purchase transaction.  There are of course all kinds of parameters, including maximum LTV (loan-to-value ratio), documentation, arms-length transaction and ‘all other cash-out refinance eligibility requirements and cash out pricing applied.’ The mortgage cannot be larger than the value of the home of course.  Hands down, this is a boon to investors, who can now get equity out of their investments faster. It’s also a boon to home buyers who couldn’t compete in the long term with all-cash investors, but who might be able to put down the cash for a few weeks before obtaining a mortgage.

So is this a ‘loosening’ of standards that could fuel all those nefarious investors of the housing boom? Wait, maybe today’s investors aren’t so dangerous after all (as I’ve been saying over and over).  ‘We continually examine our policies and standards to determine what changes to make to better serve the market, and this is one of those changes,’ said Fannie Mae spokesman Andrew Wilson.  ‘There is a role for everyone in stabilizing the market, including those who invest in properties to repair and improve them, owner occupant buyers, and those that build and maintain quality, affordable rental units,’ Wilson said. ‘We believe our requirements are carefully crafted to ensure that we are financing legitimate buyers who opt to purchase with cash.’  All-cash buyers are now one-third of the market and far higher in the more distressed markets. Most all-cash buyers are investors, but owner-occupants are also trying to take advantage of reduced pricing on distressed properties; trouble is they can’t always compete in the all-cash arena.

A lot of deals, especially short sales (where the bank lets you sell for less than the value of the mortgage), have fallen apart because of buyer financing issues. All-cash buyers also usually get a price break in competitions with financed buyers, as sellers would rather just see the money. This could give some owner occupants at least an even playing field with investors. Obviously they still need the cash up front, but only temporarily.  Will this now create a new breed of quick flippers? Today’s investors tend to hold long-term and rent out in order to make their gains, but now, with a quick financing option, they may take the money out to do upgrades and then put the property right back on the market.  Tough to say, but it certainly changes the lending landscape and signals something of an olive branch to all those real estate investors, who are helping to clear the vast quantity of distressed properties that continue to plague the nation’s housing market.”

US Treasury wilts

Now that the Federal Reserve’s $600 billion Treasury buying spree is over, the bond market is growing nervous.  Barring possible hiccups in August as Congress wrestles with the task of raising the legal borrowing limit, the U.S. government will go on issuing around $166 billion in Treasury bonds and notes a month, and primary dealers aren’t quite sure where demand will come from, and at what price.  One possibility lies in investors such as foreign central banks, insurance companies and fund managers, but pulling them in may be tricky; some Treasury yields are near all-time lows. And for the first time since 2005, JPMorgan is reporting there are no long positions in Treasuries.  And Congress is still struggling to raise the debt ceiling, with the latest talks leaving a wide gulf in place between President Barack Obama and Republican lawmakers, as the Treasury’s Aug 2 deadline for a potential default draws near.

For now, primary dealers, the banks and securities firms authorized to bid on behalf of clients in Treasury auctions, will have to wager on a price without the certainty they had of being able to sell the securities quickly in the secondary market, or to the Federal Reserve.  “People are going to be less willing to take on duration without the certainty of three or four buybacks per week to support the market,” said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York.  Duration is a measure of interest-rate risk.  That has already led to sloppier auctions, with higher borrowing costs for the U.S. government as auction high yields fix at a higher mark than available in the open market, a phenomenon known as a “tail.”  This happened two weeks ago when three separate auctions “tailed” in the worst week for U.S. government debt sales since March 2010.  Auctions tail when bidders insist on cheaper prices for a given security, or when confusion about the demand for that security causes bidders to behave cautiously.  The next test will be next Tuesday when the government sells $32 billion in three-year notes.

Foreclosure settlement deadline extended

A settlement over foreclosure practices between the nation’s five largest mortgage servicers, federal agencies and the states’ attorneys general will not be reached by next Tuesday.  July 13 is the deadline for the banks to submit plans for improving their servicing standards on loan modifications and foreclosures to the Office of the Comptroller of the Currency (OCC). The deadline was extended by 30 days last month at the request of the Department of Justice, which is coordinating the actions of the states attorneys general and the OCC.  There was a possibility the attorneys general and the OCC would coordinate the settlement and the submission of the action plans as both require banks to adopt more stringent standards for carrying out loan modifications and foreclosures. Whether this happens now depends on whether the DOJ asks for another extension.

Fewer bankruptcies

The number of bankruptcy filings in June was 120,623, or an average of 5,483 a day, a drop of 6.2% from May, when filings totaled 122,775, or 5,846 a day, according to a report from Epiq Systems, which tracks bankruptcy filings. There was one additional day to file in June compared with May. Average daily filings are down nearly 10% from June of last year.  Though economic factors like foreclosures and unemployment play a role in bankruptcy, over the long run, the filing rate tends to be more closely tethered to the amount of outstanding consumer debt.  Access to credit, however, can influence the bankruptcy rate over the shorter term: as lenders tighten their standards, filings tend to rise because struggling consumers can no longer rely on credit cards or other loans to get them through a rough period. But when more new loans are being made, filings tend to fall — at least for a while.

So far this year, the vast majority of the bankruptcy cases — nearly 70% — were Chapter 7 filings, which provide individuals with the proverbial “fresh start” because their debts are forgiven. (To qualify, filers need to pass a means test to determine whether they are unable to repay their debts.)   In contrast, a Chapter 13 filing requires individuals to use their disposable income to pay back a portion of their debts through a three- or five-year repayment plan. Some people choose Chapter 13 because it allows them to save their primary homes from foreclosure, though they are required to catch up on their mortgage payments. Slightly more than 27% were Chapter 13 filings. (The remainder were mostly commercial filings.) The overall split between Chapter 7 and Chapter 13 filings is consistent with last year’s ratio.  While the overall number of bankruptcy filings was down last month, there were variations from state to state. For instance, filings in Georgia rose 13% and were up 33% in Delaware, compared with May. But filings in Wyoming fell 30%, in South Dakota 21%, in West Virginia 18% and in Wisconsin 17%.  In both New York and New Jersey, the number of bankruptcy cases dropped by 5%.

WSJ – mortgage rates up

Mortgage rates in the U.S. rose broadly over the past week after showing little movement over the past month, according to Freddie Mac’s weekly survey.  The 30-year fixed-rate mortgage was 4.60% for the week ended Thursday, compared with 4.51% the previous week and last year’s rate of 4.57%. Rates on 15-year fixed-rate mortgages were 3.75%, up from 3.69% last week and down from 4.07% a year earlier.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.30%, up from 3.22% last week and down from 3.75% a year ago. One-year Treasury-indexed ARM rates were 3.01%, up from 2.97% in the prior week and down from 3.75% in the prior year.  “Mortgage rates followed Treasury yields higher over the holiday week but remain quite affordable by historical standards,” said Freddie Mac Chief Economist Frank Nothaft.  To obtain the rates, fixed-rate mortgages required an average payment of 0.7 point, while adjustable rate mortgages required an average 0.6-point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

NAR – existing home sales decline

According to the National Association of Realtors (NAR), Existing-home sales, (completed transactions that include single-family, townhomes, condominiums and co-ops), fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April, and are 15.3% below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.  There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Lawrence Yun, NAR chief economist, explained.  The national median existing-home price for all housing types was $166,500 in May, down 4.6% from May 2010. Distressed homes³ – typically sold at a discount of about 20% – accounted for 31% of sales in May, down from 37% in April; they were 31% in May 2010.  NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum down payment requirements to 20%,” he said. “We don’t need to throw the baby out with the bath water – increasing down payment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”

Bernanke not likely to make big changes

Federal Reserve Chairman Ben Bernanke is unlikely to announce a major change in monetary policy at his second-ever news conference later today, but investors will hang on his every word for clues on whether the Fed will scale back its presence in financial markets, analysts said.  The central bank will release quarterly economic forecasts and analysts expect them to be revised lower to reflect the recent weakness, but they said Bernanke will be quick to say he sees an acceleration in the recovery.  “I’m sure he’ll predict one,” John Wraith, fixed income strategist at Bank of America Merrill Lynch (BAML), said. “I’m sure he won’t announce any reversal of the stimulus.”  The Federal Open Market Committee is likely to take the formal decision to end the second round of quantitative easing – a program under which it pumps liquidity in markets by buying assets – at the end of June but to leave the reinvestment policy in place, according to analysts from Barclays Capital.  Mark Olson, former Fed governor, said he would be surprised if the FOMC did not vote unanimously to stay the course and that he does not expect big changes in the Fed’s statement.

The Fed’s statement is due at 12:30 pm New York time and Bernanke’s news conference is expected to start at 2:15 pm.  The statement is likely to say that headline inflation was pushed higher by a rise in commodity prices but that these have fallen back somewhat and inflation expectations remain stable, Barclays Capital analysts wrote.

MBA – mortgage applications drop

After experiencing a 13% surge in mortgage applications, the mortgage market lost steam last week with applications dropping 5.9% for the week ending June 17.  While homeowners rushed to refinance earlier in the month, that trend reversed itself, with the refinance index and purchase index falling 7.2% and 2.8%, respectively, the Mortgage Bankers Association said Wednesday.  In addition, the four-week moving averages for the market index and the refinance index are up 0.4% and 0.8%, respectively, while the seasonally adjusted purchase index is down 0.7%.  Refinancing activity cooled as the refinance share of mortgage activity fell to 69.2% of total applications from 70% the previous week. In addition, the adjustable-rate mortgage share of activity fell to 5.9% from 6.1% the prior week.  Meanwhile, the average interest rate on the 30-year, fixed-rate mortgage grew to 4.57%, up from 4.51% a week earlier. The 15-year fixed-rate mortgage also rose to 3.70%, up from 3.67% a week earlier.

Mortgage lender CEO sentenced

Paul Allen, 55, the former CEO of Taylor, Bean & Whitaker, or TBW, pleaded guilty in April to one count of making false statements and one count of conspiring to commit bank and wire fraud.  He was sentenced to more than three years in prison.  The Justice Department said the fraud scheme contributed to the failure of TBW, which was one of the largest privately held U.S. mortgage lending companies, as well as the bankruptcy of Alabama-based Colonial Bank, which was one of the 50 largest U.S. banks.  Former TBW Chairman Lee Farkas, who was convicted on April 19 on 14 counts of fraud for his role in masterminding the scheme, is scheduled to be sentenced on June 27. The Securities and Exchange Commission (SEC) also has a civil action pending against Farkas in the Eastern District of Virginia.  Allen’s co-conspirator Sean Ragland, a 37-year-old former senior financial analyst at TBW, was also sentenced today by Judge Leonie Brinkema to three months in prison.  Four other senior officials with TBW and Colonial Bank have also been sentenced to time in prison ranging from three months to eight years for their role in the fraud.

Assistant Attorney General Lanny Breuer said Allen “concealed TBW’s staggering deficits through false financial reports, which ultimately caused investors to lose more than $1.5 billion.”  He said the sentencing sent a “strong message that corporate fraud by senior executives will not be tolerated,” but also showed that plea deals like Allen’s — under which he provided “substantial assistance” to government investigators — would be taken into account at sentencing.  According to court documents and information presented at trial, Allen and Ragland distributed materially false documents to investors in Ocala Funding, a TBW multi-billion dollar lending facility, from early 2005 through August 2009.  As a result, investors in Ocala Funding lost more than $1.5 billion, while Colonial Bank lost $900 million.

Olick – on the distressed property sales drop

“The share of distressed sales in May, that is foreclosed properties and short sales (when the property is sold for less than the value of the loan), fell to 31% of all sales from 37% in April. Investors, who purchase a large share of these distressed properties, also represented a smaller share in May. So what’s going on?  We know there is still a huge supply of bank owned (REO) properties, and we also know that banks are pushing short sales on many more properties than ever before. But they are also pushing REO sales, thanks to new sales incentives from lenders and the GSE’s (Government-Sponsored Enterprises).  ‘Realtors and mortgage loan officers nationwide are driving mid-to-high end organic, short and distressed sales on the fear that buyers will be unable to qualify for loans once the QRM (Qualified Residential Mortgage) rules are in place requiring 20% down,’ says mortgage market analyst Mark Hanson, describing new rules being considered for risk retention by banks (part of the banking overhaul legislation passed last summer).

Some bloggers though, writing in to me after the existing home sales report, claimed that Fannie and Freddie are holding on to REOs, trying to game home prices. Fannie strongly disputes that.  ‘Fannie Mae doesn’t have a shadow inventory of REO properties that are available to be sold. As soon as we acquire a property, we quickly identify a market competitive price, determine whether to make any necessary repairs and list the property. In the first three months of 2011, we sold a record number of REO properties, selling more properties than we acquired,’ said Amy Bonitatibus, Fannie Mae spokeswoman.  ‘We watch taxpayer dollars like it’s our own money. We have an immense responsibility to get the most possible value from each REO property we sell. We are committed to stabilizing neighborhoods and preserving communities across the country,’ she added.

In fact, Fannie Mae recently launched another program of financial incentives to Realtors to sell REO properties. A note from analysts at Goldman Sachs, titled Foreclosure Sales: Federally Backed Lenders Shifting to Net Sellers, states:  ‘Although these entities could hold property off the market to reduce the negative effects of distressed properties on house prices, they do not appear to be doing so…in Q1 the GSEs and FHA became net suppliers of foreclosed properties to the market for the first time since 2009. Moreover, if the temporary slowdown in REO sales over the last two quarters ends, the federal entities seem likely to add roughly 30% to the sales of fore loses property over the next year as compared with the previous four quarters.’

Bottom line, in order for this housing market to recover, the distressed properties need to go, whether by short sales or REO sales. The distress is driving the fear, which in turn keeps buyers on the sidelines. We need investors, and we need first time buyers, and I will say it until I’m blue in the face: These buyers need better access to credit.”

Oil down

Oil prices fell below $94 a barrel today after a crude supply report reflected mixed signs about U.S. demand and the dollar strengthened against other currencies.  By early afternoon in Europe, benchmark oil for August delivery was down 82 cents to $93.35 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 54 cents to settle at $94.17 on Tuesday.  In London, Brent crude for August delivery was down 41 cents to $110.54 a barrel on the ICE Futures exchange.  The American Petroleum Institute (APA) said late Tuesday that crude inventories fell 81,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.0 million barrels.  Inventories of gasoline dropped 1.5 million barrels last week, surprising analysts who had forecast an increase of 1 million barrels. Distillates fell 541,000 barrels, the API said.

May delinquencies down

U.S. mortgage delinquencies are faring much better compared to one year ago, according to Lender Processing Services’ “First Look” report released yesterday.  The report provides month-end mortgage performance statistics from LPS’ loan-level database of nearly 40 million mortgages. The Jacksonville, Fla.-based firm will release more detailed reporting in its upcoming “Mortgage Monitor” report, which comes out at the end of this month.  According to the report, 7.96% of U.S. home loans were 30 days past due but not in foreclosure in May, down a staggering 18.3% compared to the same month in 2010. This figure is down a slight 0.1% from April. LPS estimates there are 4.2 million mortgages in delinquency status, with 1.9 million seriously delinquent, meaning 90-plus days past payment.  Foreclosure pre-sale inventory, on the other hand, continued to stay above last year’s averages. Inventory was up 4.11% last month compared to the year ago period, totaling 2.2 million homes.

Florida posted the highest percentage of noncurrent loans statewide in May, followed by Nevada, Mississippi, New Jersey and Illinois. The states with the least percentage were, in descending order, Montana, Wyoming, Alaska, South Dakota and North Dakota.  In other recent news, LPS recently lowered its second quarter earnings estimate by 31% based on the sluggish mortgage market.

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 150 high-value, high-profit
properties

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

* In 2010, Chris’ 4 Central Florida real estate offices
closed 2,786 sides for a closed sales volume of
$392,912,927!

* 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/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

500 cities see more rentals

In the aftermath of the nation’s housing-market collapse and recession, more than 500 midsize and large cities have seen a rise in the share of homes that are rented rather than owned, according to a USA TODAY analysis of Census data.  Almost 4 million homes have been lost to foreclosures in the past five years, turning many former owner-occupied homes into rentals.

The shift to rental housing is potentially long-lasting and portends changes for neighborhood stability and how people build wealth, economists say.  “The changes are big but glacial,” says Mark Zandi, economist at Moody’s Analytics. 

The swing from owner- to tenant-occupied homes in the past decade has been dramatic in some places:

-  Of the 100 largest cities, some of those with the largest shifts were Irvine, Calif., which went from about 40% of occupied homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7% to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.

-  Twenty-five cities — including Baltimore, Minneapolis, Salt Lake City and Sacramento — swung from having more than half homeowners in 2000 to majorities of renters in 2010. In one — Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up from 49% in 2000.

-  Florida, California and Arizona had the most cities where the share of renter-occupied housing grew by at least 5 percentage points. All three states have been hit hard by foreclosures.

Nationwide, 34.9% of occupied homes — including houses, condos, and apartments — were rented in 2010, up from 33.8% in 2000. The Census data that USA TODAY analyzed for cities covered only housing within the cities’ boundaries, not their much larger metropolitan areas.  Vacant properties, excluding seasonal or vacation homes, accounted for 7.9% of U.S. housing units in 2010. It’s not clear how many of those have since become rentals or owner-occupied homes.  The renter household market remained fairly stable from 1990 to 2006, says Daniel McCue, senior research analyst at Harvard University’s Joint Center for Housing Studies.  Since 2006, when housing prices peaked, the number of renter households in the U.S. has grown an average of 692,000 a year, while owner households have fallen an average of 201,000 a year, Census surveys show.  Several factors will boost rental growth for years to come, Zandi says, including continued foreclosures, continued drops in home prices that frighten buyers and potential cuts to government subsidies supporting homeownership. On the other hand, 74% of renters think owning is superior to renting, said a recent survey by mortgage giant Fannie Mae.  “There’s still a pull toward homeownership, although it’s been diminished,” McCue says.

Jobs growth paltry

U.S. employment rose far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1% as high energy prices and the effects of Japan’s earthquake bogged down the economy.  Nonfarm payrolls increased 54,000 last month, the Labor Department said on Friday, with private employment rising 83,000, the least amount since June. Government payrolls dropped 29,000.  Economists polled by Reuters had expected payrolls to rise 150,000 and private hiring to increase 175,000 in May. The government revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.  Stock index futures plunged following the announcement, while Treasury’s surged in price and sent the yield on the 10-year note to 2.96%.  The report provides one of the best early reads on the health of the U.S. economy and it regularly sets the tone for global financial markets. Worries about the pace of the U.S. economic recovery weighed on stocks on Thursday. 

The unemployment rate rose to 9.1% last month from 9.0% in April as some discouraged workers who had been inspired by the pick-up in hiring in April re-entered the labor market.  The employment report showed weakness across the board, with the private services sector adding 80,000 jobs last month after increasing payrolls by 213,000 in April.  Within the private services sector, leisure and hospitality fell, showing no boost from McDonald’s recruitment of about 50,000 new staff in April, which was after the survey period for that month’s payrolls. Spring is traditionally a strong hiring period for McDonald’s.  Retail employment, which recorded its largest increase in 10 years in April, fell 8,500 last month. Manufacturing payrolls growth contracted 5,000 last month, while construction employment rose 2,000.  The report showed the average work week steady at 34.4 hours and few signs of wage inflation, with average hourly earnings rising 6 cents.

DSNews.com – CMBS delinquencies fall

The delinquency rate on loans held in commercial mortgage-backed securities (CMBS) fell slightly in May from the new record high set the month before, according to Trepp LLC.   The New York-based research firm says the age of CMBS loans 30 or more days delinquent, in foreclosure, or REO has fallen back 5 basis points to 9.60%.  Trepp explained that although small, May’s decline is actually the biggest rate drop for U.S. commercial real estate loans in CMBS in about two years, setting aside October 2010 when the Extended Stay Hotels loan was resolved.  Still, at 9.60%, CMBS delinquencies remain highly elevated, rising more than a full age point over the previous 12 months. Trepp reports that in May 2010, the overall delinquency rate was 8.42%.

According to Trepp’s market analysis, the value of delinquent loans within commercial mortgage bonds now stands at $61.5 billion.  There were seven loans with balances of over $50 million that moved into the 30-plus day delinquent category in May, Trepp reported. That contrasted sharply with April when five loans of over $100 million ($1.07 billion in total) moved into the delinquent bucket.  “[In April] the delinquency rate posted its biggest rate of increase since late 2010 – a 23 basis point jump,” said Manus Clancy, managing director of Trepp. “The increase took many CMBS pros by surprise as it came after three consecutive months of improving results.”  Clancy noted, “While there may be additional bumps along the way, we think the May numbers accurately reflect a leveling off in the market.”  Based on Trepp’s report, the industrial and office delinquency rates worsened last month while all other major property types saw improvement.  The industrial delinquency rate spiked 120 basis points in May, boosting the rate to nearly 12%. Six months ago, the rate was under 7%.  The office delinquency rate was up three basis points in May, yet remains the best performing major property type at 7.23%.  Delinquencies in all other major property types – retail, multifamily, and hotel/lodging – declined for the month.

Moody’s warns of US credit rating

Moody’s Investors Service said yesterday Moody’s it would put the Aaa U.S. rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.  “Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely,” Moody’s said.  The ratings agency, whose announcement follows a similar warning from Standard & Poor’s earlier this year, said if the debt limit is raised and default avoided, the Aaa rating will be maintained. Still, the rating outlook will depend on the outcome of debt talks in Washington, Moody’s said.  “Moody’s downgrade adds pressure on Congressional leaders to work hard at reaching an agreement to increase the debt ceiling,” said Kathy Lien, director of currency research at GFT Forex in New York.  If a downgrade were to occur, Moody’s said it would put the U.S. credit in the Aa range.

Olick – 20% mortgages under fire

“To call it an uneasy alliance is too simple, but that’s exactly what the characters were going for when they called their morning press conference in downtown DC.  The new president of the Mortgage Bankers Association, Dave Stevens, arrived carrying a message from Wall Street and Main Street money makers in the breast pocket of his navy blue suit; he was seated in a row just down from Ethan Handelman of the National Housing Conference, who sported a pony tail and an agenda favoring low-income borrowers.  In between them was Ken Edwards, of the Center for Responsible Lending, who referred to the group as, ‘an eclectic mix.’ 

Adversity makes strange bedfellows, and today’s mortgage market is nothing short of adverse. The group came together to argue against what Edwards called ‘draconian requirements’ for a the proposed ‘Qualified Residential Mortgage’ (QRM) standard. The QRM is part of new risk retention rules, mandated by the Dodd-Frank Financial Reform legislation of last year. The proposal, which is under comment period until the end of next week, includes a 20% down payment for a home loan to qualify as a QRM. If the loan does not meet the QRM standards, the lender must hold on to 5% of the risk.  They call that ‘skin in the game,’ but banks big and small say it will make mortgages more expensive and difficult to obtain, while consumer advocates say it is nothing short of discrimination.  ‘We believe that the regulators, while being very thoughtful through this process, have overreached by adding loan to value and DTI (Debt to Income), which will create societal boundaries, which we believe were unintended by those who drafted the law in the first place,’ said Stevens, who as recently as a few months ago headed up the Federal Housing Administration (FHA), currently the only low down payment option available for low-income borrowers.  John Taylor of the National Community Reinvestment Coalition was a tad more blunt: ‘It’s coming from the very agencies who had the job and the responsibility to prevent the predatory lending, the kind of abusive lending products, that got us into this mess. We now get a solution that’s going to constrict access to housing in a way that we haven’t seen since the Jim Crow era.’

These gentleman join nearly 40 Senators who have signed onto a letter calling for the QRM proposal to be re-written more broadly. They characterize the 20% down payment as ‘unnecessarily tight.’  I personally don’t know what the right down payment number is, 10, 20, 5%? I don’t claim to have any better answers than anyone else. I just report what everybody else claims is right. But here’s a thought:  All these organizations, companies, entities, etc. want to see the free flow of credit again. That’s really the only way housing can regain its footing and the economic recovery can start cooking with gas. The nation’s banking system was infected with greed and that infection spread to everyday homeowners and individual investors all over the nation. In the end, it was deadly. Now the government, federal regulators, whoever, are trying to re-invent the market, to make sure it is infection-proof in the future. But now it seems as if many of the players who themselves were hurt by this crisis would rather see the ills of the mortgage market treated with Novocain than with medicine.”

Factory orders decline

According to a Commerce Department report, overall factory orders fell 1.2% to a seasonally adjusted $440.4 billion after an upwardly revised 3.8% rise in March. That was steeper than the 1% fall that Wall Street economists surveyed by Reuters had forecast for April and implied some weakness in the factory sector that had performed relatively well until recently and helped support economic recovery.  Transportation orders plunged 9.3% in April, nearly wiping out a 10.6% rise in March orders. It was the sharpest falloff in monthly transportation orders since an 11.9% fall in December.  But order declines were widespread in April, affecting categories including primary metals, machinery, computers and electrical equipment in addition to cars and other transportation goods.

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 150 high-value, high-profit
      properties

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

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * 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

2011

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

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

More political interference

Calling housing “the biggest headwind on the economy right now,”

Obama broached two relatively new ideas for the White House:

Longer-term mortgage modifications and principal reductions.  “In

addition to these short-term loan modifications, we want to see

if we can get longer-term loan modifications. And in some cases,

principal reduction, which will be good for the … person who

owns the home, but it’ll also be good for the banks over the long

term,” Obama said.  Both ideas would require Congress to pass

laws to force the banks to cooperate, and principal reduction is

sure to stir Wall Street banks, because it is direct interference

by the government in private finance.  When Obama campaigned, he

had talked about pushing for policy to give bankruptcy judges the

ability to write down principal owed on homes whose owners are

bankrupt, but when he took office, he stood on the sidelines of

legislation that would have allowed principal reductions, and his

administration said that current housing policy was good enough.

House Republicans passed a bill to kill the administration

programs that most experts have gauged a failure.

Inflation up

The Consumer Price Index, the government’s key inflation measure,

rose 3.2% over the last 12 months ended April 30, according to

today’s report from the Labor Department. It was the biggest

12-month jump since October 2008. Half of the increase was due to

rising energy prices, the government said.  Meanwhile, so-called

core-CPI, which strips out volatile food and energy prices and is

considered a better long-term predictor of inflation, rose 1.3%

from a year ago.  Gas prices alone surged 3.3% in April, and are

up 33.1% over the past year.

Overall, prices jumped 0.4% in April, in line with forecasts from

economists surveyed by Briefing.com.  Core CPI rose 0.2% during

the month, surpassing economists’ forecasts, which called for a

0.1% tick higher.

MBA – CEO testifies

David H. Stevens, President and CEO of the Mortgage Bankers

Association (MBA), testified before the Senate Committee on

Banking, Housing and Urban Affairs’ Subcommittee on Housing,

Transportation and Community Development on “The Need for

National Mortgage Servicing Standards.”  Following are portions

of his remarks:  “Presently,  servicers face a growing number of

checks and balances, ranging from federal laws and regulations,

such as RESPA and TILA, to fifty state laws, regulations, and

local ordinances, as well as court rulings and FHA, VA, and Rural

Housing servicing requirements. These requirements are in

addition to Fannie Mae standards, Freddie Mac standards, and

other contractual obligations. In short, servicers are faced with

complex and often contradictory rules and regulations, many of

which are still emerging.  What is the answer?  A consolidated

servicing standard that could drive these reforms.  Creating an

industry standard would streamline and eliminate many of these

overlapping requirements, providing clarity and certainty for

borrowers, lenders and investors alike.  It is critical that all

of the federal regulators involved act in a coordinated manner to

establish one national consolidated servicing standard that

applies to the entire industry, rather than piling on requirement

after requirement.”

“A national standard should start with a complete analysis of

existing servicer requirements and state laws governing

foreclosures.  Development should include an open dialog with

stakeholders in the servicing arena, all of whom must ultimately

implement and comply with the national standard.  MBA has

initiated this process by convening a blue-ribbon Council on

Residential Mortgage Servicing.  That Council examined the entire

servicing model and is forming recommendations to improve the

system for all stakeholders.  I am pleased to announce that we

are releasing the preliminary White Paper from the Council today

and ask that it be included as part of my written testimony.  

In the White Paper, the Council aims to examine the current

servicing model, address public misconceptions relating to

servicing practices and incentives, and educate the public on the

role and compensation of servicers.   I believe this White Paper

will provide useful information to you and other policymakers

that are currently debating national servicing standards.  I

encourage this subcommittee to use MBA and it’s Council on

Residential Mortgage Servicing as a resource going forward.  In

conclusion, as we develop servicing standards, I will urge you to

pay careful attention to the interdependence of servicing and the

impact that changes to the servicing system will have on the

economics of mortgage servicing, tax and accounting rules and

regulations, and the effect of the new requirements on Basel

capital requirements and on the TBA market.  Servicing does not

exist in a vacuum; instead it is part of a broader ecosystem

which involves all the varied elements of the mortgage industry.

The housing market remains fragile.  Therefore, when considering

changes to the current model, policy makers must be mindful of

unforeseen and unintended consequences that could ultimately

result in higher housing costs for consumers and reduced access

to credit.”

Retail sales up .05%

Total retail sales increased 0.5% last month, the Commerce

Department said. Sales rose 0.9% in March and have risen every

month since July 2010.  Economists had expected a 0.6% gain,

according to consensus estimates from Briefing. com.  Sales

excluding autos and auto parts were up 0.6%, roughly in line with

estimates.  Despite the overall increase in retail sales,

economists said the data suggest that consumer spending may be

slowing down.  Sales at gas stations were up 2.7% in April. Food

and beverage retailers had a 1.2% increase in sales, while

grocery store sales were up 1.5% last month.  Gas prices have

surged this year, with the national average near $4 a gallon. In

addition, food prices have risen sharply due to poor crop yields

and higher production costs due to the spike in energy prices.

Many economists had anticipated a bump in sales during April due

to the Easter holiday, which occurred later in the month than it

normally does.  But department store sales actually fell 0.2% in

the month, according to the report.

NAR – questions Dodd-Frank Act

The National Association of Realtors (NAR) says that a proposed

rule to define qualified residential mortgages (QRM) under the

Dodd-Frank Wall Street Reform and Consumer Protection Act (the

Dodd-Frank Act) would unnecessarily restrict access to home

ownership.  On July 21, 2010, President Barack Obama signed the

Dodd-Frank Act into law. A provision in the Act requires that

financial institutions retain 5% of the risk on loans they

securitize. The purpose is to discourage excessive risk taking

and create strong incentives for responsible lending and

borrowing. Exempt from the requirement are certain QRMs; FHA and

VA mortgages are also exempted.  Six agencies are developing the

risk retention regulation – the Department of Housing and Urban

Development, Federal Deposit Insurance Corp., Federal Housing

Finance Agency, Federal Reserve, Office of the Comptroller of the

Currency, and the U.S. Securities and Exchange Commission.  The

proposed rule narrowly defines QRMs, requiring an 80%

loan-to-value, which necessitates a 20% down payment. The rule

would also limit mortgage payments to 28% of gross income, a very

tight standard.

Following are some of NAR’s remarks:  “As the leading advocate

for housing and home ownership, NAR firmly believes Congress

intended to create a broad QRM exemption – strong evidence

shows that responsible lending standards and ensuring a

borrower’s ability to repay have the greatest impact on

reducing lender risk, and not high down payments.,” said NAR

President Ron Phipps, broker-president of Phipps Realty in

Warwick, R.I. “Saving the necessary down payment has always

been the principal obstacle to buyers seeking to purchase their

first home. Proposals that require high down payments will only

drive more borrowers to FHA, increase costs for borrowers by

raising interest rates and fees, and effectively price many

eligible borrowers out of the housing market.”

According to NAR Research, 60% of recent home buyers made less

than a 20% down payment, and it would take 14 years for a typical

person to save up a 20% down payment to buy a median-priced home.

 NAR wants federal regulators to honor Congressional intent by

crafting a QRM exemption that includes a wide variety of

traditionally safe, well underwritten products such as 30-, 15-,

and 10-year fixed-rate loans; 7-1 and 5-1 ARMs; and loans with

down payments in the 5% – to 20% range with mortgage insurance,

where required, and with other features found in low-risk loans

such as no prepayment penalties or balloon payments.

Business inventories up

The Commerce Department said inventories increased 1.0% to $1.48

trillion, the highest level since November 2008, after increasing

by an upwardly revised 0.7% in February.  Economists polled by

Reuters had forecast inventories rising 0.8% after a previously

reported 0.5% increase in February.  Inventories are a key

component of gross domestic product changes and March’s

bigger-than-expected gain could see the government raise its

first-quarter GDP estimate.  The economy grew at a 1.8% annual

rate in the first quarter, with inventories accounting for 0.93

percentage point, after a 3.1% pace in the fourth quarter.

Business sales rose 2.2% to $1.20 trillion in March, the highest

level since July 2008, after rising 0.5% the prior month. March’s

percentage increase in sales was the largest since March 2010.

March’s sturdy sales pace pushed down the

inventory-to-sales-ratio (which measures how long it would take

to clear shelves at the current sales pace) to a record low 1.23

months from 1.24 months in February.

NY foreclosure courts face 7 year backlog

According to RealtyTrac, at the rate the New York court systems

are currently working through the backlog of foreclosure cases,

it will take more than seven years to clear.  New York is a

judicial state, whereby foreclosures are completed through the

court system. But as cases mounted, the state developed the

largest foreclosure timeline in the country.  It currently takes

an average of 900 days for a foreclosure to wind through the New

York system, according to RealtyTrac, which maintains a count of

filings at the county level.  At the end of April, New York held

an inventory of 39,000 properties that received the initial

foreclosure notice or had been scheduled for auction but remain

unsold. Daren Blomquist, the editor of the RealtyTrac’s monthly

reports, said there is some estimation involved because the firm

doesn’t automatically remove a property from the active inventory

if there has been no update or sale within a certain number of

days.  New York averaged 314 scheduled auctions and 224

repossessions to REO per month so far in 2011. That’s down from

roughly 700 auctions and 520 REO each month last year. Assuming

only half of the 39,000 ends up being foreclosed and the rate of

repossession holds, it would take 87 months to clear this

inventory, Blomquist said.  New York implemented new rules giving

homeowners more protection in February, which may further delay

not only the process but a recovery.

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 150 high-value, high-profit

      properties

    * Owner of one of Florida’s largest Real Estate firms,

     running 4 different offices, supporting over

     420 agents, uniquely positioning him to help

     thousands of investors make money in the

     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * 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/ 

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

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

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

Is MAPS legal?  Join Attorney Chris McLaughlin as he discusses the

issues surrounding mortgage assignments TONIGHT at 8:30 PM ET,

5:30 PM PST:

https://www2.gotomeeting.com/register/985130546

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

Home prices showing signs of life

According to the Clear Capital home price index, home prices stopped declining in early January and even increased for the first time since August.  Over the last three months, home prices did decline 1.6% from the previous period. But at the start of 2011, Clear Capital said prices began “showing life.” The company’s senior statistician Alex Villacorta said it is the first uptick since the homebuyer tax credit was in force. It expired in April 2010, and prices have dropped off since.  Villacorta warned however that any conclusions of a recovery would be premature, but he did say it was a positive sign.  “This recent national change in price direction is encouraging for the overall housing sector, yet it is still too early to determine whether this current uptick in home prices is a temporary reprieve or the start of a sustained recovery,” Villacorta said. 

The changes in prices, especially during a point in the year when sales are slow, is a sign that demand may be returning. Even more encouraging, Clear Capital said the main driver of the price increase was the slowing rate of sale of REO properties, those repossessed through foreclosure.  Every spike in REO saturation, or the percentage of REO sales of all activity, has coincided with a drop in prices. But over the past three months, that saturation increased 1.4%, a drop from recent gains of 3.2%. If this deceleration continues, Clear Capital said, home prices could be poised for future gains “ahead of a seasonal spring lift.”  But RealtyTrac‘s Senior Vice President Rick Sharga said from what his company is looking at, major banks currently hold 1 million REO and have kept 70% of that off of the market so far.  Still, Clear Capital reported that thirteen of the highest performing markets posted gains over the last three months. The largest gains came in Cleveland (12.6%) and Dayton, Ohio (9.6%). However, Cleveland prices remain 55% below its peak in 2006.  “Although many markets still remain under significant downward pressure in light of increased distressed sale activities, it is clear that the severity of the downturns observed in October and November have subsided,” Villacorta said.

Initial claims down for the week

There were 415,000 initial jobless claims filed in the week ended Jan. 29, the Labor Department said today. That was down 42,000 from the week before, and better than the 425,000 claims economists surveyed by Briefing.com had expected.  Continuing claims — which include people filing for the second week of benefits or more — fell to 3,925,000 in the week ended Jan. 22, a decline of 84,000 from the week before.  While the latest report shows an improvement, jobless claim figures have been jumping around recently, so economists haven’t been reading too much into the weekly figures, said Robert Dye, a senior economist at PNC Financial Services.  The 4-week moving average of initial claims — a measurement used to smooth out week-to-week volatility — is viewed as a more accurate representation of job market conditions. While that number rose by 1,000 to 430,500, Dye said this is still well below the high levels seen in 2010.  The report comes a day before the government releases its widely anticipated monthly jobs report. Economists expect the report to show that the economy added 149,000 jobs in December and that the unemployment rate rose to 9.5%.

Olick – kicking tires

“Yesterday the folks at online real estate sale and data site Zillow were all a twitter (on Twitter) about how they had reached 15.7 million unique monthly visitors in January. That’s up 75 percent year over year and a new record. While they touted the merits of their web site, I wondered, no offense to Zillow, if part of it didn’t have to do with increasing buyer traffic on the web overall last month. So I asked.  ‘Off the cuff, I’d put the split at about 50/50, with maybe half of our surge in usage coming from greater Zillow brand awareness, and half from more people starting to show interest in real estate,’ confessed Zillow’s CEO Spencer Rascoff. 

‘We’re seeing this increased usage in Zillow Mortgage Marketplace as well. Loan requests from borrowers were up 56% from December to January, so that definitely signals that people are thinking about diving into the market.’  We also saw a surge in mortgage applications last week in the Mortgage Bankers Association survey, with applications to purchase a home up 9.5 percent from the previous week. The MBA, however, cautions that the previous week had a holiday in it and so applications had fallen accordingly; the two week average for purchase applications is basically flat. Refis are down.  January isn’t exactly a hot season for home sales historically, and this year, in many markets, you’d be hard pressed to find any homes under all the snow. Still, the traffic online, where I imagine most folks go before even heading to an open house, is an important sign, as we head into the Spring market. The question mark remains in financing. 

Federal regulators are still working on the definition of a ‘Qualified Residential Mortgage,’ (QRM), which will determine for which loans banks will have to hold some risk on the books and which they will be able to sell off in securities entirely. That’s a pretty big deal, given that Fannie, Freddie and the FHA are still the only mortgage games in town, and a return of private capital to the mortgage world is essential for the future health of housing.  Next week all kinds of banking types will convene at the annual conference of the American Securitization Forum. QRM will be the hot topic, no doubt. It will be interesting to see what the financers of this still-crawling housing recovery think will happen to all that blossoming buyer interest, with a still-uncertain mortgage market.  No doubt there is a cautious optimism in the air, but there is still a very large fence running through today’s housing market, with a whole lot of buyers lodged on it indefinitely.”

Retail sales up in January

According to Thomson Reuters, the retail sector reported same-store sales growth of 4.2 percent on average. That far outpaced the average estimate of 2.7 percent.  Among the surprises were Limited, Zumiez, Wet Seal and Gap, which all reported sales at stores open at least 12 months were higher than analysts’ estimates. Some of these companies also raised their forecasts for the latest fiscal quarter.  Limited, the parent of Victoria’s Secret and Bath & Body Works, reported January sales surged 24 percent, adding to its recent streak of strong results. Analysts surveyed by Thomson Reuters were expected same-store sales to rise 6.7 percent.  Warehouse club store Costco Wholesale also outpaced analysts’ estimates, saying same-store sales rose 9 percent, ahead of the 6.1 percent average analyst estimate.

Shadow inventory will push foreclosures

Two reports from separate credit rating agencies are drawing the same conclusion: Foreclosures will reach new heights this year, even after setting records in 2010.  “DBRS expects foreclosure filings and completed foreclosures to reach record levels in 2011 as alternatives such as modifications for seriously delinquent borrowers are exhausted,” said Kathleen Tillwitz, an operational risk strategist at the rating agency. “Consequently, losses to residential mortgage-backed securities will likely increase as REO inventories are sold at deep discounts causing writedowns in transactions — particularly the subordinate tranches.”  Standard & Poor’s ratings currently estimates that the principal balance of distressed homes amounts to about $450 billion, representing nearly one-third of the nonagency RMBS market currently outstanding, according to the firm’s fourth quarter 2010 report on foreclosure timelines, also released this week.  S&P expects that it will take 49 months to clear the supply of distressed homes on the market in the U.S. — an 11% increase over the previous quarter and a considerable 40% increase from 4Q 2009.  S&P reports that the volume of distressed residential mortgage properties that are not associated with Fannie Mae or Freddie Mac continues to fall, but at an ever-slowing pace. 

The company estimates that the principal balance of these distressed homes amounts to about $450 billion, representing nearly one-third of the private RMBS market outstanding.  And in some markets, clearing the shadow inventory will take a very long time.  “The shadow inventory in the New York MSA will take the longest to clear — 130 months as of fourth-quarter 2010. That is at least twice as long as it will take in any of the other top 20 MSAs and 2.7 times the average time to clear for the U.S. as a whole,” the S&P report states. “This is primarily due to very low liquidation rates in New York.”

Now for our real estate education section…

Taxing Issues at Auction

One of the more common sources of confusion among novice bird dogs and other investors seeking to purchase a property at auction is the issue of tax liens and second mortgages. In fact, many buyers make the (often tragic) mistake of not even realizing the type of auction they are attending. Still others fail to realize that a property with an existing mortgage can still be auctioned via a tax lien sale and vice versa. Today we are going to take a few minutes to sort out these taxing issues surrounding buying investment property at auction.

Step One – Understand the Auction. The very first step is to understand the type of auction. Begin by reviewing the petitioner; who is actually asking for the property to be sold? If it is the bank or lien holder, be sure to identify the position of the mortgage (first mortgage, second, etc…). If it is a government entity, find out what is late (property taxes, special assessment liens etc).

Step Two – Make sure you are bidding at an auction that will actually make you the owner rather than an investor in notes or other form of guarantor. For example, many auctions are “sold” at tax lien sales (government sales for back property taxes) even though there is still a mortgage in effect. 

Step Three – Calculate the cost of “assumables”. A thorough title search is imperative but wise bird dogs and investors still perform their own due diligence in order to understand the total cost of any liens, back taxes, HOA fees or other items for which they may become responsible. Be sure to take these into consideration when bidding on the property; depending upon the type of auction, you may or may not be responsible for additional  liens associated with the parcel.

Step Four – Change the contact information! Once you purchase a property and have it recorded in your name or the name of your investment company, be sure to update the tax records and insurance information with the property mailing address. The last thing you want is to fall behind at tax time.

Step Five – Try out other auctions! Once you have successfully purchased property at an auction, why not try out other forms? It’s not only a great way to expand and diversify into other potentially lucrative areas of real estate investing but it’s actually a lot of fun. Common examples include tax liens, tax deeds and even surplus land sales. Many require at little as $100 to get started.

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 150 high-value, high-profit
      properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  
    * 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
–