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ronald reagan

FBI Says Mortgage Fraud Up 400%

by Chris McLaughlin on April 7, 2009

Real Estate News & Commentary by Chris McLaughlin, April 7, 2009
http://www.shortsalesriches.com/welcome.html

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Markets down

Aluminum giant Alcoa will kick off the dreaded next corporate reporting period after the markets close today. Alcoa earned 44 cents per share a year ago, but it’s expected to have lost 57 cents per share this period, according to analysts surveyed by Thomson Reuters. The markets are girding their loins in anticipation or, more exactly, running away fast, if today’s opening is anything to go by. Asian stocks finished lower, and European markets were down in afternoon trading. The Dow Jones industrial average, Standard & Poor’s 500, and Nasdaq 100 all opened lower for the second day in a row. Anthony Conroy, head trader at BNY ConvergEx Group helpfully pointed out, “We must maintain some semblance of confidence in the economy. There’s this tremendous amount of nervousness, and this nervousness breeds volatility.” Really? When did that start happening?

Crackdown on scams

Hard times always brings out the scammers, and this one is no exception.

According to the Department of Housing and Urban Development (HUD), a multi-agency crackdown is set to target real estate scams and frauds, as well as bolster state and federal action and efforts to protect homeowners. An online survey by the FTC found 71 distinct companies running suspicious ads, and a Treasury committee found nearly 180,000 fraudulent mortgage reports. The FBI is currently investigating more than 2,100 mortgage fraud cases, up 400 percent from five years ago, according to ABC News. Among those involved in the effort are the U.S. Department of the Treasury, the U.S. Department of Justice (DOJ), the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois.

Uptick rule back again?

The U.S. Securities and Exchange Commission (SEC) will consider four proposals to restrict short selling – a bet that a given stock will fall. As it stands now, speculators can leap on a declining stock and drive it down further, according to many executives. At its Wednesday meeting the Securities and Exchange Commission will consider, among other ideas, the restoration of the “uptick rule,” which allowed short sales only in cases where the last price was higher than the previous price. SEC Chairwoman Mary Schapiro said at the Council of Institutional Investors conference that they’ll be looking at different proposals, including a so-called “bid test” and a “circuit breaker.” Schapiro did not provide details on how the bid test or circuit breaker could work and did not elaborate on the fourth proposal.

The Puma

Will urban streets soon be clogged with two wheeled electric automobiles that look more like partially assembled wheelchairs than cars? They will if General Motors (GM) gets its wish. GM is teaming with Segway Inc., maker of the upright, self-balancing scooters to build the PUMA, an acronym for Personal Urban Mobility and Accessibility. The machine, which GM says it aims to develop by 2012, runs on batteries, has a range of about 35 miles between charges, and uses wireless technology to avoid traffic backups and navigate cities. GM didn’t say how much the machines would cost, but research chief Larry Burns said owners would spend one-third to one-fourth of the cost of a traditional vehicle. Well, we all said we wanted change, right?

Now on to our real estate investing education section…

Shell Games in a Banana Republic – How to Surf the Tide of Short Sales

$46, 666 for every man, woman and child in the nation. That is the estimated current level of expenditures, promises and (as of yet) unfunded liabilities guaranteed by your good old Uncle Sam since January 2007….with relatives like that who need enemies? Now ask yourself – do you feel like you are getting your money’s worth? Did the government perform $46,000 of improvements to local parks, roads and public services that enhanced your life by the equivalent of thousands of dollars per month for the past 16 months? If not, where is the money going? To that great shell game in the sky of course.

The problem with shell games is the players always have the illusion of knowing the right choice – only after the choices are made does the slight of hand become apparent. The same goes for investments today. The common “buy and hold” strategy has wiped away a decade or more wealth from the pockets of most American investors while foreign bond buyers are calling en mass for the IMF (International Monetary Fund) to propose a new reserve currency for the world. Unable to pay the current debts while making good on bail-outs and future funding, the USA is resorting to the financial policies used by banana publics world-wide….just print and deal with the day of reckoning later.

So let’s see what Uncle Sam has hidden under those shells; guess right and you get to ride the largest transfer of wealth in modern history. Guess wrong and you get to spend your retirement years trading coconuts for a little spare change.

Shell #1 – Cash transfer payments. The current economic plan penalizes

those holding cash or cash equivalents by inflating away the value of their dollars. Average Americans, the Chinese and others with large cash reserves are rightfully concerned about the growing supply of “stimulus” as the government prints money out of thin air then sells it to itself. Around and around we go…where we stop nobody knows. One thing is certain, when it does stop those in cash or cash equivalents are likely to be big losers. Hard assets like real estate have always re-indexed to the inflated or new baseline. Buy now while the buying is good.

Shell #2 – “I’m from the government and I’m here to Help”…Ronald Reagan once called these the most terrifying words you might ever hear and with good reason. The US government is getting ready to “help” every person in this nation by expanding over 80 percent – in ONE Year! Yes, you heard that right. The baseline budget for the US government is set to expand by over 80 percent in one year. This will mean the federal government alone is responsible for more than 1 of every 3 dollars produced in this country…and still growing. Let’s face it – by the time you add in state and local government, roughly half of all revenue does not come from the production of goods and services but by government and government has even more plans to help you and your family. Healthcare, education and cradle to grave social services are just a few of the proposed ways Big Brother will keep an eye on you. The only problem is you must play by their rules or risk financial ruin as evidenced by the recent government intervention into the business practices of corporations that received federal assistance. Don’t believe it will apply to individuals? Just ask any welfare recipient how much “freedom” they have. Value your way of life and freedom? Better have alternative plans to finance your own lifestyle rather than rely on Uncle Sam’s shell game.

Shell #3 – Someone has to win so you might as well be one of them. Even if you aren’t a DC insider expecting to receive big bucks from the bail-out, bonus or other transfer of wealth scenario it doesn’t mean you can’t still survive or even thrive. Learn how to ride the wave of wealth as it is transferred from those in dollars to those in assets. In the future, the ability to create wealth from work will grow increasingly possible thanks to progressive income taxes that take an ever greater percentage of earned income and penalize the wealthy. Likewise, with roughly 1 of every 2 dollars generated by state, local or federal government, creating wealth from a small business is increasingly difficult since you will almost undoubtedly be forced to deal with government regulations every step of the way. Few safe-guards remain to the average American…fortunately, real estate and the land itself is one of the few options available.

So, how can you surf the tide of short sales while the rest of the nation goes bananas?

Take advantage of historic lows in hard/tangible assets before inflation rears its ugly head. By the time everyone else figures out high prices are here to stay it will be too late.

Lock-in low rates now. Banks are almost losing money on interest rates so

you can rest assured they can’t keep them low forever. Lock-in low rates while you can…it could take awhile before rates begin rising due to the current economic crisis but when they resume their upward momentum it could be the last you see of low rates during this lifetime.

Follow the lead of those few big banks and states that rejected federal funds rather than accept the draconian “strings” likely to lead to a lifetime of servitude later. Smart states, banks and soon to be individuals that value the freedom to lead as they see fit must remain solvent without reliance on government. The price to pay for financial “security” is financial freedom and opportunity in the future.

See you at the top!

Chris McLaughlin

http://www.shortsalesriches.com/welcome.html

P.S.

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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 flipping of distressed homes. Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker 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

* On twitter: http://twitter.com/mclaughlinchris
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Mortgage Rates Hit a 4 Year Low As Short Sale Investing Gets More Fun!

by Chris McLaughlin on December 12, 2008

Mid-Day Market News & Commentary by Chris McLaughlin, December 12, 2008
http://www.shortsalesriches.com/welcome.html

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The good news keeps coming for mortgage rates: they hit a 4 year low at 5.47% and then dropped further to 5.33% yesterday, with no points or origination fees. The new rates have encouraged fence sitters to jump off and begin making purchases, and loan officers have reported a bounce in mortgage applications as well.

Bank of America announced late yesterday that it would be giving pink slips to over 35,000 employees as it finalizes its merger with Merrill Lynch. The reduction will account for approximately 10% of the combined companies’ total employee base. The announcement comes on the heels of a similar one from Citigroup, which announced last month that it would eliminate 52,000 jobs, or about 15% of its total workforce.

And in a sign of the greedy times on Wall Street, get this: the former Chairman of the Nadaq Stock Market was arrested for what investigators have described as a “stunning fraud that appears to be of epic proportions.” The fraud is estimated to be a “50 billion Ponzi scheme,” where the assets that Mr. Madoff would tell his investors about actually didn’t even exist. I wonder whether Madoff will ask the Treasury for a bailout? Think about it … banks lied about the value of their mortgage bank securities and induced people into loans they weren’t suited for, so why given them money and not Madoff? Ok, I’m just kidding but you get the point!

And in the latest on the Big 3 Bailout, it appears that Congress hit a snag and can’t come to agreement … so the Bush Administration is reversing course and now suggests that the money might be able to come from the $700 billion TARP. “Under normal economic conditions we would prefer that markets determine the ultimate state of private firms,” White House press secretary Dana Perino stated. “However, given the current weakened state of the US economy, we will consider other options if necessary, including use of the TARP program to prevent a collapse of troubled auto makers.”

Now, on to our topic of the day: Recession, Depression, Inflation, Deflation…What’s it all About and How Does it Impact Real Estate?

Ronald Regan once stated “A recession is when a neighbor loses his job. A depression is when you lose yours. If we were to apply the same logic to the real estate market, then the nation has been in the midst of a recession for some time as people have been steadily losing (or walking away from) their homes. In fact, there is a great deal of recent debate on whether the nation is already in a recession and heading for a depression or whether the easy money economics of the Federal Reserve will prevent a depression at the risk of creating further inflation…or perhaps world-wide deleveraging will actually result in massive deflation instead. Let’s take a few moments to examine real estate in each of the above scenarios’…

Recession. Unlike employment figures (or stocks), real estate doesn’t act the same as jobs during a recession. When a worker loses a job the position may be completely eliminated (or the stock completely wiped out). When someone loses a house it reverts back to the prior owner, heirs, bank or local government. Short sale buyers realize the inherent value in the home or property and act like a middle man to obtain a percentage of that value for themselves in the form of resale, rentals or retained equity.

Depression. During a depression the entire economy may slow down so much that little to nothing is being produced. Job loss often runs rampant as prices drop below the cost of production. Unemployment drives labor costs down – creating a downward spiral as unemployed workers are unable to afford more than the basic necessities. Again, jobs and stocks alike may all but disappear during a depression but a house remains standing. Housing is a basic necessity and tends to take top priority even during the most critical economic crisis.

Inflation. Inflation tends to drive the price of all commodities and assets higher as the replacement cost rises; real estate is no exception. With the Federal Reserve practically printing money out of thin air, the ability to own or control physical assets with a fixed rate of interest is often the best way to preserve wealth during periods of escalating inflation. On the other hand, the increased cost of production and labor often leads to more work for less pay among employees.

Deflation. Falling assets prices and world-wide deleveraging tend to drive down the price of commodities and assets including real estate. However, short sale buyers are often purchasing property at or near the fully depreciated value. Even those who experience further price drops still have other options available to bridge the gap until the market recovers; rentals, owner financing and factoring may each help raise needed capital or reduce individual debt repayments until the property has regained full value.

What Happens to Real Estate In a Recession?

by Chris McLaughlin on October 15, 2008

Impact of a Recession on Real Estate

Mid-Day Market News & Commentary by Chris McLaughlin, October 15, 2008
http://www.shortsalesriches.com/welcome.html

The BEST fr’ee webinar that you’ll ever attend on short sales & wealth building in this market:

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RSVP early as spaces are limited!

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At midday investors continued to hold their breath, as the Dow Jones Industrial Average was down 317.24 to 8993.75. A government report released this morning showed that retail sales had dropped by 1.2 percent, which was twice as much as most analysts had been expecting. The report does not bode well for the upcoming holiday season, where many Americans are seen as tightening their belts.

JP Morgan Chase’s profit dropped 84 percent to $527 million from the $3.4 billion in the year ago third quarter. “It’s an unpleasant situation, and I don’t want to underplay it. It’s unpleasant for the country,” said CEO Jamie Dimon. “I hope that the financial crisis, with the powerful moves made by governments around the world, will start to ease.”

In other banking news, Wells Fargo fared much better than JP Morgan Chase. Its third quarter profit fell 25% to 1.64 billion from $2.17 billion in the year ago period. The company was successful in breaking up the proposed Citigroup-Wachovia merger and now Wells plans on merging with Wachovia. Citigroup has indicated that it will not stop the deal but does plan on extracting its pound of flesh in court for damages.

Now on to our real estate investing news arena…

Recession, Depression, Inflation, Deflation…What’s it all About and How Does it Impact Real Estate?

Ronald Regan once stated “A recession is when a neighbor loses his job. A depression is when you lose yours.” If we were to apply the same logic to the real estate market, then the nation has been in the midst of a recession for some time as people have been steadily losing (or walking away from) their homes. In fact, there is a great deal of recent debate on whether the nation is already in a recession and heading for a depression or whether the easy money economics of the Federal Reserve will prevent a depression at the risk of creating further inflation…or perhaps world-wide deleveraging will actually result in massive deflation instead. Let’s take a few moments to examine real estate in each of the above scenarios’…

ronald reagan

FBI Says Mortgage Fraud Up 400%

Mortgage Rates Hit a 4 Year Low As Short Sale Investing Gets More Fun!

What Happens to Real Estate In a Recession?

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