Smart Real Estate News & Commentary by Chris McLaughlin December 14, 2010

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HAMP found lacking, again

Last April, the Congressional Oversight Panel found the program to be struggling to get off the ground despite having been in action for a year and a half. The latest evaluation of the Home Affordable Modification Program (HAMP) came out Tuesday and the result was — same deal.  HAMP has undergone tweaks since April. But the Congressional Oversight Panel, created to issue periodic reports on the TARP bailout program, found little improvement in performance.  Instead of helping 3 million to 4 million struggling mortgage borrowers keep their homes, as originally projected, HAMP will prevent only about 700,000 to 800,000 foreclosures. That number is dwarfed by the 8 million to 13 million foreclosures expected to occur by 2012.  Through the end of October, there have been 519,648 permanent modifications made.  And, since the Treasury Department lost the authority to further restructure the program at the end of October, bolstering its prospects is no longer likely, the report said. In fact, banks are offering more modifications through their own process than through the government’s.  The new report cited several reasons for the program’s failure. For one, servicers, the companies hired by banks to manage the loans, earn extra profits through fees imposed during foreclosure. Because of that, servicers were preventing or delaying modifications.  Another big obstacle was that many loans in trouble often came burdened with second mortgages — home equity loans or lines of credit — that had to sign off on potential deals.  Because so many homes are worth less than the borrowers owe, there is little money to cover the first loan, let alone a second mortgage. So many banks in the second position refused to sign off unless they were paid something.  The oversight panel also faulted Treasury for not having effective means of collecting and analyzing HAMP data. The department, said the panel, did not even set meaningful goals against which to weigh the program’s effectiveness.  Because participation has been so limited, HAMP will probably only spend about $4 billion of the $30 billion allocated for it.  even the loans that have been permanently modified through HAMP have not performed well. Many have already re-defaulted, and that means taxpayer money down the drain.

 Retail sales up

The Commerce Department said total retail sales rose 0.8% last month, fueled in part by deep discounting on holiday merchandise.  Economists surveyed by Briefing.com on average had forecast an increase of 0.5% for November, compared to a revised 1.7% jump in sales the prior month. October sales were originally reported to have increased 1.2%.  Sales excluding autos and auto parts rose 1.2%, compared to a revised 0.8% gain in ex-auto sales in October. Ex-auto sales were originally reported to have increased 0.4%.  Economists had forecast a rise of 0.6% in the measure for November, according to Briefing.com.  The government report showed sales at clothing stores rose 2.7%, were up 2.3% at sporting goods and hobby stores, increased 2.8% at department stores and climbed 1.3% at general merchandise sellers. Online sales rose 2.1%.  Higher gasoline prices fueled gas station sales to a 4% increase in November.  But there were a few weak pockets as well in last month’s report. Electronics sales dipped 0.6%, a figure also reflected when Best Buy, the No. 1 electronics seller, reported a miss on its sales and profit last quarter earlier Tuesday.  Furniture purchases slipped 0.5%.

 BOA finds new way to profit

 Bank of America (BOA) and hedge fund firm Fortress Investment Group have found a new way to profit from foreclosures – by collecting the tax debts of people who can’t afford to pay their property taxes.  Then they package the debts as securities and sell them to investors.  The investigative journal for the Center for Public Integrity noted that BOA’s securities division bundled $301 million worth of owed taxes which Fortress then converted into bonds to pitch to private investors.  Tax debt buyers can assess interest charges and a host of other fees and expect an estimated return of seven to ten percent from the deals.  If the debt still isn’t paid after a certain period of time, buyers can seize the properties through foreclosure.  Public records won’t show who purchased these securities, at what prices they were traded, or the anticipated returns they bring it, because the bonds were sold in private.  A BOA spokesman, William Halldin, denied that the bank and Fortress had acted together in bidding in the auctions.  Halldin said, “Our bids were made independently of any other organization.  Any suggestion that they weren’t independent is simply incorrect.” 

 The journal further claims that financial institutions, including several beneficiaries of federal bailout funds, are energetically finding new money-making avenues from the hot foreclosure market.  They stand-in as tax collectors and as an extension of that role, help local governments to significantly improve their budgets by also finding new owners for abandoned properties.  For example, in Florida, Miami-Dade County, raked in more than $274 million in June last year from the sale of approximately 60,000 property tax liens.  The property tax lien market, estimated at $5 billion and growing, has not come under much scrutiny or legislation.  There is no industry watchdog and regulations have simply not been able to keep up with the fast pace of foreclosures.  Buyers of property tax debts typically hop from state to state to take part in quick online auctions without having to reveal their association with Wall Street, and without registering their operation.  It seems like government officials are not only used to selling property tax debts to these virtually unknown limited liability companies but that their only interest is the large cachet of money the business reaps in.  The only thing required by the government is a tax identification number.

 Frugality?  Not so much

 Private sector debt fell by $165 billion in the third quarter. That is just a quarter of the rate of decline a year ago, Capital Economics notes. But what’s more, government debt issuance more than canceled out that drop, expanding by $380 billion during the period ended in September.  That gap, if you can bear it, stands to get even bigger in coming quarters should Congress approve the deficit-expanding tax deal reached this month by the White House and congressional Republicans.  That shift is not exactly reassuring the many fiscal hawks who warn that U.S. profligacy will not end well. They say the wider the budget gap, the bigger the mountain of debt sitting atop U.S. assets. Both of those trends, they claim, will push the dollar toward collapse in an inflationary crisis reminiscent of a banana republic.  If the ever-growing U.S. budget deficit is exhibit one in this lecture, exhibit two is the staggering level of debt piled up on all levels of society, as measured by the ratio of nonfinancial debt to economic output. Though there has been some talk of Americans getting their financial houses in order, there is not a lot of evidence of it to look at this number (see chart, right).  While financial firms have indeed cut their debt by 16% or so since the financial crisis broke out two years ago, nonfinancial debt – that carried by consumers, government and nonfinancial businesses — remains just 2 percentage points below its bubble-era peak, at 243% of GDP.  The unexpected rise in consumer spending is part of the reason economists at the likes of Goldman Sachs and UBS have been raising their U.S. growth forecasts lately.  “This is a pretty important shift,” Goldman economist Jan Hatzius said this month. “This is why are we turning more upbeat on U.S. growth after being downbeat for the past five years.”

 WSJ – it’s taking longer to foreclose

 Two years ago, the state began requiring that banks and borrowers attend settlement conferences before a foreclosure takes place.  While the conferences are popular with borrowers and have succeeded in helping some families keep their homes, banks have been reluctant to participate. That, and recent revelations that some lenders have improperly submitted foreclosure documents, has prompted judges to take a harsher stance with lenders.  The foreclosure process typically begins after a borrower misses three consecutive monthly payments and ends once the lender repossesses the home or the borrower brings the loan current. Nationwide, there were 2.1 million mortgages in some stage of foreclosure as of October, according to research firm LPS Applied Analytics. 

 The average loan in foreclosure had been in default for 492 days as of October, up from 289 days at the end of 2005, according to LPS.  In New York and New Jersey—another state with consumer friendly laws—the waits are longer. The average loan in foreclosure had been in default for 604 days in New York and 544 days in New Jersey as of October.  “We try and help as many people as we can,” says New York Supreme Court Judge Michael Ajello. “We set up a conference and I try and persuade and cajole the banks to reduce the payments,” he says. But the banks, he adds, “are not very cooperative.”  The Mortgage Bankers Association, which represents some of the nation’s biggest banks, said that banks aren’t trying to be uncooperative but in many cases loan modifications won’t help borrowers because they are unable to meet payments regardless.  At Staten Island’s Richmond County Supreme Court, which has one of the biggest foreclosure caseloads in the city, tensions between borrowers, lenders and judges are rising every week.  The court now hosts settlement conferences four days a week—double that of last year—with about 40 borrowers scheduled to appear each day.

 Two more banks prepare to pay back TARP

 Two regional U.S. banks plan to repay their government bailout loans, a sign of health that could put pressure on other lenders to shed government aid.  Huntington Bancshares said it was issuing stock and bonds to help repay $1.4 billion it received under the U.S. Government’s Troubled Asset Relief Program in November 2008.   First Horizon National Corp said it is selling debt and equity to pay off $867 million of TARP aid.  Huntington’s shares fell after the news because the bank will sell so much equity to repay the government, analysts said. First Horizon’s shares rose as investors cheered its move to shed government support.  Analysts said these repayment plans could be the first of another wave of TARP repayments, and suggest that the U.S. banking system is continuing to heal after the 2008 crisis.  Banks that have yet to repay the government should think about doing it soon, said Jeff Davis, bank analyst at boutique bank Guggenheim Partners.  “If you’re a bank that does wait now, the market might be left to assume there are deeper problems,” Davis said.  The offerings from Huntington and First Horizon come one year after the largest U.S. banks — including Citigroup Inc., Bank of America Corp., and Wells Fargo & Co., raised tens of billions of dollars to repay their government bailout aid.  The first wave of banks to repay TARP came in the summer of 2009, and included Goldman Sachs Group Inc and JPMorgan Chase & Co.

 CNBC’s Olick – negative equity

 ”Just because you owe more on your mortgage than your home is worth doesn’t necessarily mean that you are no longer able to afford your mortgage. For many Americans who bought their homes during the housing boom, little has changed for them financially other than what the appraiser has determined on paper.  What has changed are attitudes, and attitudes can be dangerous.  22.5 percent of U.S. borrowers were in a negative equity position on their homes at the end of Q3, according to a new report from CoreLogic.  The authors of the study warn that deteriorating home prices now will likely push the percentage back up in Q4.  The definition of home ownership, at least according to the Census, includes homeowners in a negative equity position. ‘However, homeowners in negative equity are not likely to behave similarly to homeowners with equity, because their financial interest (the equity) has disappeared and has only a small prospect of returning soon, given price trends,’ note CoreLogic authors.

 Underwater borrowers are more likely to behave like renters, which means they’re not going to invest much in home improvement. They are also more likely to walk away from their commitment, although not in the waves some had predicted.  The Obama Administration has been pushing lenders, Fannie Mae and Freddie Mac to write down principal on underwater mortgages in order to put borrowers back into a positive equity position.” Interestingly, the latest push is for borrowers who are current on their mortgages. They lenders argue, why should they give money voluntarily if the loans are still performing? They don’t even do that very often when the loans are in trouble!  The answer is: attitudes.  The Administration is clearly concerned that more borrowers will either walk away from their commitments or stop spending money on their homes, which are usually their single largest investment.  But is the Administration’s answer—to give borrowers back a few percentage points of equity on paper—really going to fix that and change owner attitudes? No, especially since so many Americans got used to taking money OUT of their homes to pay for all those lovely upgrades.  The change has to come in real home price appreciation.  That is the only thing that is going to give homeowners that much-needed faith in the market, that confidence to stay where they are and spend, not some measly equity handout that won’t amount to much and may just prompt the borrowers to put their house on the already glutted market. 

 And how do you get home price appreciation?  Get rid of that glut of inventory—especially the foreclosures. I’m back on my investor high horse again. Stop offering handouts to underwater borrowers who don’t need them to pay their mortgages and start focusing that same money on eating up empty houses and restoring real home price appreciation through a competitive marketplace. If you help well-vetted, responsible investors buy up the properties and rent them to all the families that lost their homes, you will do a lot more good.

 Now for our real estate education section…

 Blind-Sided by Insufficient Short Sales Advertising?

Have you been blindsided by insufficient short sales marketing strategies? According to several different research studies the answer is probably in the affirmative. Take for instance a new survey conducted by Adweek Media in conjunction with the Harris poll; despite substantial increases in innovation and creativity among internet advertisers, consumers are still “blind” to many advertisements. In another recent study, researchers found that consumers are increasingly blind to advertisements that are too familiar….and (much to their shock) advertisements that represent too much “change”.

Confused yet? No need. Here at the Short Sales blog we take pride in providing clear cut solutions to all your short sales needs including effective marketing strategies. There are three main points that should form the basis of all marketing strategies for the short sale investor and real estate professional:

1. Learn what to do – and what not to do – to attract attention online. Innovation and creativity is important but be sure to spend wisely. For example, banner ads – once considered the mainstream of internet advertising – are woefully out of date…in fact, they ranked near the bottom in terms of impact upon consumers/viewers. On the other hand, social media marketing was found to be highly effective despite relatively mundane formats.

2. Don’t go with the status quo. There are certain times and situations when prospective clients actually desire the status quo; for example, when selecting a reputable baby-sitter or perhaps searching for a funeral director….but most of the time the status quo simply comes across as boring. For real estate, it could be considered one of the deadly sins. Lack of ingenuity, innovation and ambition are NOT going to impress prospective clients. Not sure where you stand? Ask a few friends to take a quick look at your business cards, website, blog, Facebook page and other marketing materials then check back 24-48 hours later to see what they remember most. If they can’t recall anything, you are in dire need of an update. If they can recall 3-5 items then you are probably running with the majority of the pack but certainly not in a leadership position. If they recall more than a half dozen items give yourself a big pat on the back…at the very least you are memorable.

3. Don’t go overboard. After reading item number two above it might seem like a good idea to do anything to get noticed…and depending on where you landed in the dull category, even negative publicity might be an improvement. However, it’s never a good idea to make a habit out of negative publicity. Research indicates that people or concepts too far outside of someone’s norm also tend to be overlooked by clients. By definition, real estate is considered a complex transaction by the majority of people: It routinely involves legal concepts, financial constructs, psychology and much more. On one hand, you want to provide valuable information but in a user-friendly and engaging way. If you work with first-time homebuyers be sure to cover the basics while simultaneously meeting the advanced information needs of investors or others. At the same time, it is important to become memorable without making people uncomfortable. Finding the right balance isn’t simple but sooner or later, those that manage to carve out a niche will have a better chance of retaining clients in the long run. A great logo, appealing incentive program, slightly off-beat appearance or nearly any form of recognition is good…just keep it within a comfort zone that is accessible to the majority of people.

4. Add interaction. A final report by Unicast indicates that consumers are more likely than ever to share and respond to social marketing sites such as Facebook and Twitter. Video abandonment remains problematic but is beginning to show signs of improvement as users (and content providers) grow more technologically savvy.

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)

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About the author:

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

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

NAR seeks extension of government programs

Real Estate News & Commentary by Chris McLaughlin, July 14, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

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NAR seeks extension of government programs

Testifying in a hearing titled “Commercial Real Estate: Do Rising Defaults Pose a Systemic Threat?” sponsored by the Joint Economic Committee of the Senate and the House, Jim Helsel, treasurer of the National Association of Realtors (NAR) called for an extension of government programs such as the Term Asset-backed Lending Facility (TALF) and the Public Private Investment Program (PPIP). Commercial real estate, which accounts for 9 million jobs and contributes billions of dollars in taxes, has been badly hit by economic downturn.

In the first quarter of 2009, office investments were down 75% compared to a year ago, while industrial sales volume dropped 83%. Helsel, in his testimony, said: “Delinquencies on commercial loans 30-plus days past due almost doubled from the first quarter of 2006 to the fourth quarter of 2008.” Helsel expressed dissatisfaction on the “slow and inadequate” response of the banks to the crisis. Commending the government on initiatives such as TALF and PPIP, Helsel said it is important to extend such programs in order to ensure liquidity and facilitate lending.

Retails sales rise for the second straight month

According to data released by the Commerce Department, retail sales rose 0.6% in June, after a 0.4% gain in May. Analysts say consumer spending, which is critical to economic recovery, is showing encouraging signs. “We’re seeing more signs that consumer spending is stabilizing,” said James O’Sullivan, an economist at UBS Securities. Sales of autos and auto parts rose 2.3% in June, the best performance since January. Excluding autos, retail sales rose by 0.3% in June. Consumers seem to be focusing on necessary items and looking for bargains. “Many middle-to-upper-income consumers are coming into our stores for the first time for their household needs due to the recession,” said Eric Schiffer, Chief Executive Officer of 99 Cents, which sells groceries, electronics and health and beauty items. Economists say jobless rate has to decline for consumer spending to show signs of sustained recovery. “Ultimately, we need to see improvement in the labor market to be confident that the spending gains will be sustained,” said Sullivan.

Goldman Sachs reports blockbuster quarterly results

Goldman Sachs has reported a net income of $3.44 billion or $4.93 per share for the second quarter of 2009; surpassing the $3.65 per-share average estimate of 22 analysts surveyed by Bloomberg. Goldman’s performance was bolstered by strong trading and stock underwriting performance. This is the highest ever quarterly net income reported by Goldman so far. The profit was impacted by a one-time $426 million charge due to repayment of $10 billion in loans from the Troubled Asset Relief Program. “Goldman’s got a sweet spot in here, they were the go-to players,” said Peter Sorrentino, a portfolio manager at Huntington Asset Advisors. “For the time being, they’ve got kind of an open playing field all to themselves.” Goldman’s results have tremendous significance given the bank’s status as the fifth largest bank by assets, and the largest surviving investment bank. The share price of Goldman Sachs has risen 77% since the beginning of this year and has almost tripled from a low of $52 last November.

Downgrades on the rise

According to Standard & Poor’s (S&P), ratings on 15 companies were downgraded to “junk” in June. This is the third highest total since 1987. Ratings of 60 issuers pertaining to debt worth $209 billion have been changed to junk so far in 2009. About 75 issuers with a debt of $255 billion are close to becoming junk. S&P has downgraded 19 banks and financial institutions to junk this year. The financial sector holds the dubious distinction of witnessing the most number of downgrades to junk status this year. S&P says some 17 financial institutions are close to becoming junk. Nouriel Roubini, an economist known for dire predictions, believes that default on corporate bonds will increase significantly. “Once a severe recession is underway a massive wave of corporate defaults will take place,” says Roubini. “In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%.”

Proposal to introduce surtax on wealthy to fund healthcare

Analysts say the House Ways and Means Committee is likely to propose a surtax on incomes exceeding $250,000 as a source of funding healthcare costs. The surtax may not find favor with Republicans. “The surtax is obviously more attractive to Democrats in the House because it’s more progressive, which they find attractive in and of itself,” said Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a research group. Matthew Beck, a spokesman for the Ways and Means Committee, without commenting on the surtax option, said that “everything’s on the table.”

Analysts say there are 4.3 million U.S. households filing tax returns earning more than $200,000. The surtax is likely to be levied on income, before deductions such as mortgage interest and charitable gifts. Some are worried about the impact of surtax on small business owners whose business incomes get taxed on their individual returns. “With unemployment nearing double digits, we need to help small businesses grow and create jobs, not squeeze the life out of them with even higher taxes,” said Michael Steel, a spokesman for House Minority Leader John Boehner.

Now on to our real estate investor education section…

Information Seminar – Short Sales Marketing Made Easy

Every successful short sale entrepreneur will tell you the secret to their success is less about some extraordinary marketing ability but rather their ability to identify good prospects. One of the best ways to do this is to employ multi-stage marketing in the form of a seminar.

1. Creating a short sales information seminar or class allows you to identify high potential prospects as well as expand your center of influence in the local community. Rather than purchasing out of date lists or running blind ads, having the direct and undivided attention of those seeking to sell puts you face to face with motivated clients. At a minimum, be prepared to cover the following topics:

• How to sell your home fast even in a down market.
• Traditional sales – MLS, fees, repairs, time and other considerations.
• Options when you owe more than your home is worth.
• What happens when you can’t refinance – other alternatives.
• Short sales versus bankruptcy, foreclosure and just “walking away” including the pros and cons of each decision from a personal, tax and practical stand-point.
• Who benefits from short sales.
• Why banks and lenders like short sales.
• How to determine if a short sale is the right opportunity.
• How to find a short sale investor.
• What to expect and when.
• How to spot frauds from the “real deal”.
• Resources & References
• How to get a free evaluation of your property.

1. Sort. Based upon your criteria, eliminate prospects that do not meet your criteria while encouraging those that do to meet individually with you or your representative for a follow-up visit to discuss their specific situation.
2. Meet & Debrief.  At this point you should be in a position to begin bargaining in earnest should the opportunity meet your expectations. Find out what needs and objections are to be dealt with and be prepared to act swiftly.

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

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

About the author:

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris

Caution is the watchword for potential home buyers

Real Estate News & Commentary by Chris McLaughlin, July 9, 2009

http://www.shortsalesriches.com

* Follow me on Twitter: http://www.twitter.com/mclaughlinchris

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Caution is the watchword for potential home buyers

According to a survey conducted by Realtor.com, home buyers in the U.S. are hesitant to jump into the housing market, given the current economic downturn. Nearly 53% of the survey participants said they have postponed their home plan on account of their negative outlook. Uncertainty on the job front was the main factor for not buying a house for nearly a third of the survey participants. Nearly 16% said they worry about selling their current home, while 8% said they fear home prices will keep falling. Home buyers recognize that the housing market currently offers great deals; however, financial worries far outweigh attractiveness of the deals available. Nearly 20% said they were interested in foreclosed homes with an attractive price, while nearly 15% said they want to receive incentives such as the $8,000 tax credit for first-time buyers. Errol Samuelson, president of Realtor.com, said buyers feel that purchasing a foreclosed home is more “complex” than other transactions. Among the survey participants, only 28% said President Barack Obama’s plan to tackle the foreclosure crisis is working, compared with 41% who said it isn’t and 27% who didn’t know.

12 plead guilty in $100 million mortgage fraud

New York City prosecutors have charged 25 people, including lawyers, bankers, mortgage brokers and appraisers, and a mortgage company, with committing mortgage fraud. Robert Morgenthau, Manhattan District Attorney, said AFG Financial Group Inc. (AFG) and its accomplices inflated property values, created phony loan packages, forged W-2 forms, and bank documents to get loans from banks for unsuspecting buyers. Buyers did not know that the transactions were a sham. AFG, through its attorneys, would ask that the mortgage money be deposited in escrow accounts. Instead of paying the seller, AFG would take the money for itself. “These attorneys often did not meet or communicate with their so-called clients until the day of the closings … and were paid off by AFG for their efforts,” Morgenthau said. Buyers were left with bad credit while the lender foreclosed the seller’s property and took ownership. Banks which were cheated include New Century Mortgage Corp., which lost $32.2 million; Countrywide Home Loans, which lost $7.9 million; and Washington Mutual, which lost $8.6 million. “This is one of the reasons for the mortgage crisis,” said Morgenthau. Among those charged, 12 have pleaded guilty. All those convicted face up to 25 years in prison.

Analyst says AIG’s equity value could be zero

Joshua Shanker, an analyst at Citigroup, says American International Group (AIG) will have no value left after repaying bailout funds. “Our valuation includes a 70% chance that the equity at AIG is zero,” said Shanker. AIG has received over $182 billion as bailout funds from the government so far. Edward Liddy, the outgoing chief executive officer of AIG, said last month at the firm’s annual meeting that the company has an “excellent chance” of repaying the government. Liddy had earlier informed the Congress that the company can pay back bailout funds within 5 years. AIG said last week that its recent losses in derivates could have a “material adverse effect” on its results. “The company has not been forthcoming about the sequence of events that would result in a loss,” Shanker said. “Even a proportionally small loss could be significant.” The outgoing CEO has been under pressure to sell some of AIG’s assets to repay government funds. “The CEO’s motivation and ability to lead may be compromised by his preparations to transition the company’s top seat to another,” Shanker said.

Monthly retail sales data denotes weakness in consumer spending

Retailers, across segments, posted weak monthly sales in June on account of continuing unemployment and rising gasoline prices. Merchants such as Limited Brands Inc., teen merchant Wet Seal Inc. and The Children’s Place Retail Stores Inc. reported poor sales figures. Low-priced retailers too were not spared. Costco reported a sales decline of 6% compared to a year ago. “Consumers are under severe pressure on the job front, so discretionary spending is just not happening, “said Ken Perkins, president of Retail Metrics, a consultancy. “This is not setting up well for the back-to-school season.” Customers continued to trade down to essential goods. Costco said food was among the categories which exhibited strong sales. Recession has taken its toll on consumer spending. “Obviously, the consumer has been under severe pressure here throughout this recession,” said Perkins. “There just were no catalysts for consumers to spend in June.” Weather also played spoilsport. Consumers buy items such as light clothing and beachwear in June which marks the onset of summer weather. However, this year, June had a cool weather with record rainfall in cities like New York, Boston and Chicago. As a consequence, consumer interest for summertime merchandise dropped significantly.

UBS caught in diplomatic row

The U.S. government believes that the Swiss bank UBS has about $15 billion in secret accounts meant to evade taxes in the U.S. UBS says it cannot reveal the identity of its account holders on account of Swiss banking laws. Switzerland has made it clear that it would prevent UBS from revealing the identity of account holders. “Switzerland will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS,” the Swiss government said in a response to U.S. authorities. Analysts believe that this issue souring diplomatic relations between the U.S. and Switzerland. Alan Gold, a district judge in the U.S., has asked the U.S. Justice Department if the government will shut UBS in the United States if the bank does not provide information on its account holders. The Justice Department will have to be careful in answering the judge’s question. “They’re going to have to be very delicate and thoughtful in terms of how they respond to this,” said Peter Hardy, a partner at the Post & Schell, a law firm.

Now on to our real estate investor education section…

Top Reasons Short Sale Investors Get Side-Tracked

Sooner or later you are likely to encounter a potential short sale investor filled with anticipation, eager to get started and checkbook in hand…who dwindles away with little to nothing to show. Find out the top reasons short sale investors get side-tracked and what actions are required to get back into the race.

1. False Start. The excitement of doing something new overrides their discipline and true desire for success. Plain and simple, they don’t have realistic expectations or the knowledge to get the job done right. Start slow and invest in success by acquiring proper training, surrounding yourself with the right professionals and expect to confront a few bumps now and then.
2. Justification. These would be investors tend to be cautious and perform well once they convince others it is the right track. Unfortunately, it can be tough to justify your position to everyone around you. If you need to prove your position before moving forward, either take the time to crunch the numbers in more detail or do a reality check on your readiness to invest. Having someone agree with you might feel good but does little for your bank account at the end of the day. Learn how to rely upon yourself rather than the opinions of others.
3. Guilt. Paying for Past Mistakes can be a long and difficult journey especially if you are involved with someone that simply wants to “punish” you. Recognize that investment involves elements or risk and reward then move forward. Make what amends you can then walk away from the issue once and for all. Remember, investing is about the future –not the past.
4. Recruiting. Investing isn’t like joining a golf club; there are very real reasons why it can be good to go it alone. This doesn’t mean you can obtain expert advice and surround yourself with professionals – that is always a good idea – but it does mean you are able to move forward without having half your friends and associates involved. Set the pace and believe us, they will show up once the profits begin rolling in!
5. Going it Alone. Likewise, trying to do everything your self is another major reason many short sale investors get side-tracked. It’s simple too much to handle alone. In fact, even if you are able to do so for a short period of time, it’s not always the best use of time. Establish a process that makes the most of your valuable time with the greatest possible reward then hire out or subcontract the rest.
6. Avoidance. Those that attempt to avoid all risk will rarely experience anything but the most limited gain – if not actually increase their total risk. It’s one thing to inform, educate and prepare yourself but quite impossible to avoid risk altogether. The reality is this is fear of the unknown which you are weighing more heavily than fear of that which is familiar…sadly, that isn’t always the least risky. Something familiar might initially seem harmless but in reality can be deadly. The same goes for finances – inflation can erode away even the safest investment making it the most risky route by far

See you at the top!
Chris McLaughlin

http://www.shortsalesriches.com

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About the author:

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,

running 4 different offices, supporting nearly

450 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Add me on Facebook: http://www.facebook.com/mclaughlinchris