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Diana Olick – Home prices being slashed, more coming?

admin — Fri, 16 Jul 2010 16:48:42 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

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Diana Olick – Home prices being slashed, more coming?

“As of July 1st, 24 percent of sellers on the market had cut their asking prices at least once, according to Trulia.com. That’s up 9 percent from the previous month and represents about $27 billion worth of vanished national home equity (or home equity hopes). “The market is going to maintain a relatively flat trajectory, if not more like a saw tooth trajectory, for the near future, and meaningful recovery may not happen until some time in 2011, 2012,” says Trulia’s Heather Fernandez. We knew the price stabilization was largely due to increased buying activity on the low end from the home buyer tax credit. The issue now, front and center, is foreclosures. We’ve already seen a few reports, and I expect we’ll see more, that show new foreclosures “stabilizing,” while bank repossessions are increasing.

Let’s face it, banks don’t want to be homeowners, and they certainly don’t want to shell out even more of their dwindling cash on lawn services and handymen. Whatever incentives there are out there to turn these properties over to homeowners who can actually afford them are certainly welcome. The trouble is that there appears to be a dangerous disconnect in the housing market right now: Housing stats are at an all-time low and yet the home vacancy rate is rising. The only way that can happen is if the number of households is shrinking more than we know. Add bank repossessed homes to that mix, and I’m guessing home prices will dip more than some are expecting.”

Foreclosures fall as bank repossessions quicken

According to RealtyTrac, the number of foreclosure filings of all types — including notices of delinquency, auction notices and repossessions — fell during the first six months of 2010. There were 1,654,634 properties with foreclosure filings during that time, a 5% decline compared with the previous six months. That equates to 1 out of every 78 homes. However, the pace of bank repossessions quickened, creating nearly 270,000 homes lost to foreclosure during April, May and June, a 5% increase over the three winter months. James Saccacio, CEO of RealtyTrac, called the report a “tale of two trends.” He pointed out that the filings data showed improvement because fewer properties were entering the foreclosure process. Part of that is because lenders are now more committed to modifying defaulting mortgages or allowing homeowners to sell their homes for less than they owe.

However, there is still much inventory to move through the system and experts aren’t sure how big it will be. “While the foreclosure problem is being managed on the surface,” Saccacio said, “a massive number of distressed properties and underwater loans continue to sit just below the surface, threatening the fragile stability of the housing market.” One in 17 Nevada households, or 64,429, received a filing. That’s the highest rate of any state. The number of California homes with filings came to more than 340,000, the highest total of any state. Florida had more than 277,000 filings, or 1 for every 32 households; Arizona had more than 91,000, or 1 in 30 homes. Lenders repossessed 45,000 Calif. homes during the three months ended June 30, more than in any other state. Nevada, with a much smaller population, had nearly 11,000 repossessions, about twice the rate of the Golden State.

Business vs Obama

A letter posted to the US Chamber of Commerce’s site slammed President Obama’s economic policies yesterday, saying administration officials “took their eyes off the ball” and “neglected” to focus on job creation. The letter further pointed out that the administration “vilified industries while embarking on an ill-advised course of government expansion, major tax increases, massive deficits and job-destroying regulations.” The letter also included “some different approaches to unlock frozen capital and jolt our economy back to life.” The six suggestions are: create a growth and jobs tax policy; restore fiscal health; expand trade and export-driven jobs; rebuild and expand infrastructure; ease regulatory burdens; and eliminate uncertainty for business owners. In a speech at a jobs summit of 500 business leaders, Chamber president Tom Donohue focused on what he considers a glut of recent legislation, including financial reform and health reform. “We must address the cumulative job-killing impact of over-regulation,” Donohue said, stressing the uncertainty he considers rampant in U.S. businesses. Donohue also said lawmakers were “spending at astronomical levels — we’re setting ourselves up to be the next Greece.”

Lost decade coming?

Disappointing job reports, weakness in housing and consumer spending, and problems in world financial markets have raised concerns about the U.S. economy stalling out later this year. Now some economists are starting to talk about an even worse fate: a prolonged period of very weak growth, a so-called “lost decade.” “The probability of a lost decade is significantly greater than a double dip,” said Sung Won Sohn, economics professor at Cal State University Channel Islands.

“We don’t have too many engines of growth functioning right now — housing, consumer spending, exports are all sputtering. I have a hard time seeing where we can get 3% economic growth back.” A lost decade, or something like it, could feel like a never-ending recession to many Americans, as the economy does not grow fast enough to recoup lost jobs, and investments like homes and stocks continue to lose value. The most famous lost decade occurred in Japan in the 1990s. From 1992 through 1999, the Japanese economy grew by less than 1% a year. It has yet to fully recover from the economic weakness and falling prices it suffered during that period.

1 in 200 mortgages may be fraudulent?

According to projections in the July 2010 edition of the CoreLogic, one in 200 conforming loan applications could still contain misrepresentations in the file that could lead to default. Overall mortgage fraud peaked in Q306, CoreLogic said. But when subprime mortgages were removed from the equation, the peaked shifted to Q309. CoreLogic said its data shows mortgage fraud in prime lending was still on the rise through the peak in Q307, even when many of the largest subprime lenders were going out of business. Since that time, non-subprime mortgage fraud is down 25% at the end of 2009.

The timeline below tracks non-subprime mortgage fraud, along with various milestones in the industry. “Lenders’ aggressive stance against fraud is having an impact. Our 2010 Fraud Index indicates that mortgage fraud risk is on the decline. But with an estimated $14bn in fraud losses experienced in 2009 alone, fraud is still a major issue for the mortgage industry,” said Tim Grace, CoreLogic senior vice president of Fraud Analytics, said in a press statement. “While the industry has done good work there is evidence that fraud patterns are changing and becoming increasingly better hidden,” Grace added. “By sharing fraud patterns with each other through CoreLogic fraud consortium members’ meetings and by statistical pattern recognition fraud scoring, lenders can help stay on top of these new trends and keep risk down.” CoreLogic said its research finds a correlation between fraud risk and subsequent default rates. Of the 12 states with the highest instances of mortgage fraud in 2007, nine were among the top 12 states with the highest mortgage default rates in 2009. Florida, South Carolina, North Carolina, California and Georgia are the highest-ranking states for mortgage fraud, CoreLogic said.

Jobless claims and wholesale prices drop

The Labor Department said Thursday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008. But much of that was the result of seasonal factors. General Motors and other manufacturers skipped their usual summer shutdowns. It was the second straight week that initial claims dropped sharply and the third drop in the last four weeks. Claims fell by 17,000 in the previous week.

Separately, the Labor Department said that wholesale prices fell for a third consecutive month, pulled down by another drop in energy costs and the biggest plunge in food costs in eight years. But excluding those two volatile commodities, inflation was relatively flat. Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions. Another concern is that the latest drop may be the result of temporary seasonal factors. A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of year.

Now for our real estate education section…

Becoming an Angel Investor

Do you have what it takes to become an angel investor? Perhaps it’s time to take your own portfolio to the next level by multiplying the returns of both time and money while helping others realize their own dreams. Find out if you have what it takes to become an angel investor with this quick quiz:

1. I have a desire to give back to others. Research found that 15% of angel investors had a strong desire to simply give back to others; altruism is its own reward for those that have gained so much in life. The satisfaction of seeing others realize their dreams and make a difference in their lives…and the lives of their family…is integral to a significant number of angel investors.

2. I have the desire to remain involved in an industry I love…but at a different level. Retirement is a terrific way to enjoy life once you have made your mark on the world but that doesn’t mean you don’t miss the energy and vitality of wheeling and dealing. Angel investors often find the mentoring (and money) provides the perfect balance between involvement and independence.

3. I have the desire to network in a new industry. High net work individuals may benefit from becoming an angel investor by the ability to network in a new industry while still generating impressive returns for their own portfolio. Real estate is an exceptional area to try out since it appeals to such a wide spectrum of other professionals.

4. I have a desire to maximize profits while minimizing involvement. For those that are not satisfied by average returns (and who is these days?), becoming an angel investor is the perfect way to obtain the profits you seek without the excessive time and energy required to do it yourself.

5. I have the desire to make a difference in society. Many angel investors provide funding to entrepreneurs or investors that adhere to a specific societal function, outlook or other value near and dear to the heart of the angel investor. Whether it’s affordable housing for the elderly, eco-friendly sustainable living for the urbanite or something else in between, make the world a better place by supporting those on the cutting edge.

6. I am able to deal with risk and loss. Sometimes you win, sometimes you lose and sometimes you just break even…successful angel investors understand their personal level of risk and are able to emotionally and financially handle it.

7. I have a financial fitness plan in place and can stick to it. Finally, and perhaps most importantly, a successful angel investor has a personal plan in place for their own portfolio and the determination to stick with it. Don’t be swayed by every investment, instead, wait for those that meet your criteria. According to research, the most successful angel investors obtain more than just a return on their money…they enjoy and take personal satisfaction from the entire process.

See you at the top!

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

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
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Foreclosures to persist

admin — Mon, 12 Jul 2010 19:20:00 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

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Foreclosures to persist

According to authors at the Federal Reserve Bank of Cleveland, the nation’s high foreclosure rate is likely to persist. The Fed article looks at the changes in foreclosure and unemployment rates across states, noting the differences in the timing of the movements. The conjecture that the high foreclosure rate will persist is based in part on the observation that states that experienced boom-bust housing cycles in the past (Texas, Oklahoma, Massachusetts and California) had elevated foreclosure starts for years after the peak in foreclosure starts and inventory. These previous boom-bust cycles “were small in comparison to the current cycle,” the article said. While the recession has left deep scars in the housing and labor markets — with the unemployment rate doubling and the foreclosure start rate roughly tripling — the timing of the movements differs over the cycle, according to the abstract, written by Timothy Dunne, a vice president at the Federal Reserve Bank of Cleveland, and Kyle Fee, a research assistant.

Credit scores down

According to FICO Inc., 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. With scores like that it’s unlikely they’ll be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. FICO’s latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO’s 300-to-850 scale weren’t as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis.

Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com. On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9 percent, which is notably above the historical average of 13 percent, though down from 18.7 percent in April 2008 before the market meltdown. There’s also been a notable shift in the important range of people with moderate credit, those with scores between 650 and 699. The new data shows that this group comprised 11.9 percent of scores. This is down only marginally from 12 percent in 2008, but reflects a drop of roughly 5.3 million people from its historical average of 15 percent.

Olick – NYT caught with its pants down

The other way we posted an article claiming the rich were the worst defaulters. Diana Olick says it ain’t so: “The data show that while one in 12 mortgages under a million dollars are delinquent, “more than one in seven homeowners with loans in excess of a million dollars are seriously delinquent.” Shall I wax on about how the rich care less about their credit ratings than the not-so-rich, or how many of these luxury homes are second homes that the owners don’t really need, or how rich folks don’t give a hoot about their communities and see these homes purely for their investment value?

Nah, I’d rather do a little math. Here’s my problem with the thesis of this article: A little less than 14 percent of the loans outstanding in the U.S. are “jumbo,” meaning over $417,000, according to government statistics (FHFA). The number of loans that are over $1m are even less than that. So when we’re talking about rates of default, you have to factor in the share of the market that you’re looking at and the bottom line numbers. Yes, the rate is higher, but it’s a far smaller share of borrowers, and that makes the numbers far more volatile. Just 1.7 percent of all home sales in May were of homes over one million dollars. That just gives you an idea of how small that marketplace is. Yes, we can always find the odd celebrity that squandered away all their millions and defaulted on the loan, but I would take a big step back before I come to the conclusion that the ‘rich: are more likely to default on a loan than the “unrich.’”

CMBS Delinquency Rate Exceeds 8%

The US commercial mortgage-backed security (CMBS) delinquency rate ticked up 17 basis points to 8.14% in June, according to Fitch Ratings. It marked the smallest increase in 11 months, and the fifth straight month of loan resolutions in excess of $1bn. Fitch noted $1.5bn of loans leaving the index helped to offset the $2bn of new delinquencies, bringing the total net increase in delinquencies to $512m of loans. Newly delinquent loans in June bore smaller average balances of $10.1m than the index’s overall $13.1m average. No loans with a balance in excess of $100m became newly delinquent in June. “While delinquencies slowed for the month, this trend is not expected to continue,” said Managing Director Mary MacNeill. “The number of distressed properties continues to grow, and if borrowers are unable to access capital for leasing costs or are unable to restructure their loans to a leverage level commensurate with sustainable property values, they may stop subsidizing debt service payments.” Loans continue to transfer to special servicing at an elevated rate, with a net increase of $4.2bn in performing specially serviced loans in June. In total, $23bn of loans in special servicing remain less than 60 days delinquent but face an increased risk of default. The multifamily delinquency rate rose to 13.82%, from 13.65% in May, while the office delinquency rate grew to 4.84% from 4.59%. The retail delinquency rate grew 16 basis points to 6.19% from 6.03% in May, while the industrial delinquency rate grew 41 basis points to 5.48%, from 5.07% in May. The rate of delinquency in hotel loans grew a single basis point to 18.62%.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Are you putting the power of social media marketing to work for your real estate business? If not now-when? If you have been sitting on the sidelines waiting for the perfect time to take the plunge, here are a few stats and facts that should provide all the inspiration required:

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.

The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.

Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.

Over half of YouTube users are under 20 years of age.

Take Away’s…

1. Make mobile a priority when using social media websites. Mobile users on both Facebook and Twitter are more active, linked to more people and increasingly interact exclusively via applications outside of the web interface.

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

5. Put an “I” in social media marketing. Effective marketing is an extension of your professional “voice” but that doesn’t meant it must take a lot of time and effort. Learn how to put the power of social media marketing to work for your real estate endeavors by joining one of our webinars or other informational sessions.

See you at the top!

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

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.

Home delinquency rate increases

admin — Wed, 07 Jul 2010 14:29:08 +0000

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

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IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

* Best part — with this new strategy, it’s like it’s 2008 all over again… where you can generate an autopilot, dependable, predictable, and steadily soaring income that’ll create enough wealth to retire for good!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect you to obtain the free DVD and tune in to the encore Wednesday at 8:30 PM ET, 5:30 PM PST:

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Home delinquency rate increases

According to a report by Lender Processing Services, Inc. (LPS), there’s a 2.3% month-over-month increase in the nation’s home loan delinquency rate to 9.2% in May 2010, and early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010. According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO. The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in “shadow” foreclosure inventory.

After a two-month decline, deterioration ratios increased, with 2.5 loans rolling to a “worse” status for every one that has improved. The number of delinquent loans that “cured” to a current status declined for every stage of delinquency, except in the “greater than six months delinquent” category. This improvement was likely the result of trial modifications made through the Home Affordable Modification Program (HAMP) that transitioned into permanent status. LPS manages the nation’s leading repository of loan-level residential mortgage data and performance information from nearly 40 million loans across the spectrum of credit products. Diana Olick says, “Oh good, so the HAMP program is helping “cure” those 6 month+ delinquencies. No, they’re just delaying them yet again, since we know that the re-default rate on HAMP is only rising. Forget cure and think remission.”

MBA – Refinances increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 2, 2010 increased 6.7% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6.5% compared with the previous week. The Refinance Index increased 9.2% from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0% from one week earlier. The Purchase Index has decreased eight of the last nine weeks. The unadjusted Purchase Index decreased 2.3% compared with the previous week and was 34.7% lower than the same week one year ago. “Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated. As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

“For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30% compared to April, the last month in which buyers were eligible for the tax credit.” The four week moving average for the seasonally adjusted Market Index is up 6.4%. The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 8.3% for the Refinance Index. The refinance share of mortgage activity increased to 78.7% of total applications from 76.8% the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4% from 4.7% of total applications from the previous week.

Credit card delinquencies down

The American Bankers Association (ABA) says the number of consumers behind on their credit card payments fell to an eight-year low in the first quarter of 2010, and delinquencies across a wide-range of consumer debt categories have also fallen. High unemployment and plummeting home values during the financial meltdown appear to have spurred consumers to shore up their finances and banks to limit their lending, resulting in fewer Americans being late with payments, the industry group said.

About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year — the first time since 2002 that the rate has fallen below 4%, the ABA said Wednesday. And ABA’s composite ratio, which tracks delinquencies across eight key categories, fell to 2.98% from 3.19% the previous quarter — a sign of modest improvement in the U.S. economy, the group said. “Consumers are doing a much better job managing their finances, building their savings and spending and borrowing less,” ABA Chief Economist James Chessen said. The Commerce Department’s most recent reports on personal spending and income also showed that consumers stashed a higher portion of their earnings into savings in May than they did a month earlier.

Shopping center vacancies rise

According to research firm Reis Inc, the vacancy rate in U.S. strip centers during the second quarter rose 0.10 percentage point from the first quarter to 10.9%, slightly below the 11% in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday. Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space. That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis.

Asking rents fell 0.3% from the first quarter to $19.07 per square foot, the lowest since the end of 2006. Factoring in months of free rent and other perks landlords offered to attract and retain tenants, effective rent fell 0.5% to $16.58 per square foot, the lowest in nearly five years. Reis said that roughly half of its clients plan to take advantage of the cheap rents in their expansion plans. At large U.S. malls, the vacancy rate rose 0.10 percentage point from the first quarter to 9%, the highest since the first quarter 2000, when Reis began tracking regional malls. Asking rent fell 0.2% to $38.72 per square foot, marking the seventh straight quarter of decline. Asking rent was the lowest in more than four years.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Inclusive…

77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.
The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.
Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

Over 60% of Twitter users are outside of the USA.
Over half of YouTube users are under 20 years of age.

Take Away’s…

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

See you at the top!

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

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.

Smart Real Estate News & Commentary by Chris McLaughlin July 2, 2010

admin — Fri, 02 Jul 2010 13:59:12 +0000

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

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

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

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

IT’s BACK: NO FLIP RICHES REOPENS THIS SATURDAY!

When you know how to defeat the top 9 issues that are stopping profitable short sale investing today, you’ll rapidly rise to the top of the real estate elite! (Imagine — you the guru!)

Here’s what we’ll reveal in this free online DVD and one-hour class:

*Details on each of these 9 threats – even if you don’t have a clue now How to get around them, and get up and running in less than a day

*How to target markets with NONE of these problems, with eager sellers and starving buyers eager to hand you cash… you’ll be a hero just for giving them what they need.

*When and how to fill your short sale funnel with high-margin deals… and rake in HUGE profits regularly

*Create multiple income opportunities — because after your first flip, done this new way, you simply wash, rinse, and repeat your way to a fortune!

It’s time to get excited…

Make sure you wait for the gotowebinar page to redirect

you to obtain the free DVD and tune in to the encore

Saturday at 3:00 PM ET, NOON PST:

https://www2.gotomeeting.com/register/159690035

**********************************************************
Pending home sales ‘fell off a cliff’

It was expected, but not this bad. Experts did suggest that home sales would drop once the homebuyer tax credit lapsed at the end of April, but no one expected it to be close to a shocking decrease. According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It’s even off 15.9% from a year ago when the nation was barely emerging from the recession. “The pending home sales report is a disaster,” said Mike Larson, a real estate analyst for Weiss Research. “Sales fell off a cliff after the tax credit expired. It’s the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001.”

Lawrence Yun, NAR’s chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up. Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when — or if — the job market will ever bounce back. “We’re not creating jobs,” said Larson. “The housing problems now are being driven by broad economic problems.

US employment figures continue to threaten

Agreed, getting the economy back on track does mean a lot more than stimulus packages. Is the President listening? The patchy US economic recovery faces a crucial litmus test Friday when fresh unemployment figures are released. Most analysts say the ranks of jobless Americans are likely to have swollen to more than 15 million, pushing the unemployment rate from 9.7 percent to 9.8 percent. With the Congressional elections due in November, that does not sound good for the President. Unemployment is a crucial issue with voters and for the markets, as well. With fears of a double dip recession in recent weeks looming, the Dow Jones Industrial Average lost more than ten percent of its value, over fears about the fate of the US economy.

Goldman predicts that payrolls shrunk by 100,000 last month, the first negative figure this year. Faced with an uncertain outlook and poor access to credit, US firms have been reluctant to rehire workers, as the private sector created just 41,000 jobs in May. Congress is currently locked in a bitter debate over extending unemployment insurance for over one million workers and is likely to balk at a wider spending package. Heidi Shierholz of the Economic Policy Institute, a Washington-based think tank, said “The private sector is not yet poised to takeover and sustain a robust recovery.” Last week, the Labor Department reported that new jobless claims rose to 472,000, an increase of 13,000 from the week before. But Washington is now more focused on elections in which the national debt is also likely to feature prominently, and that may mean that some 1.7 million unemployed and their troubles will have to be ignored.

Home Buyers Get Tax Credit Closing and Flood Insurance Extensions

The National Association of Realtors® worked closely with congressional leaders on both sides of the aisle toward the timely passage of two bills to extend the home buyer tax credit closing deadline and reauthorize the National Flood Insurance Program. Both bills had cleared the House earlier and were passed by the Senate last night, heading for the President’s signature. The tax credit closing deadline and the NFIP reauthorization were extended to September 30. Extending the tax credit closing and flood insurance deadlines will help provide additional stability to real estate markets across the nation, NAR said. The passage of H.R. 5623, the Homebuyer Assistance and Improvement Act, applies the homebuyer tax credit closing deadline extension only to homebuyers who have ratified contracts in place as of April 30, 2010, but could not close before June 30. There will be no gap between June 30 and the date the president signs the bill into law. Senate passage of the National Flood Insurance Program Extension Act of 2010 (H.R. 5569), reauthorizes extension the NFIP until September 30, allowing currently stalled transactions to move forward. The bill is retroactive and covers the lapsed period from June 1, 2010, to the date of enactment of the extension. Any new policy applications or renewals that were signed and submitted during the lapsed period will be effective from the date of application. In the case of waiting periods, the waiting period will start from the date of application.

Diana Olick – Housing’s Powerful Lobby Surges Ahead

“Last week, at the monthly lockup for the existing home sales report, the Realtors’ chief economist, Lawrence Yun, told reporters that if the closing date wasn’t extended, 180,000 home buyers who signed contracts by April 30th, would lose the tax credit due to delays in closing. He blamed these delays on the tough mortgage market, new appraisal rules and the still-complicated short sale process (when a home is sold for less than the value of the loan). So Congress tried to attach a three month extension on the closing date to other legislation last week, but those bills never passed. But the powerful troika of Realtors, builders and mortgage bankers pushed full speed ahead, rallying the troops. So, lo and behold, before midnight last night, a stand-alone measure made its way through the Senate, as the House had passed it the day before.

The Realtors alone are one of the most powerful lobbying forces in Washington, number one in spending in the real estate industry and 13th out of all industry lobbyists. Add the National Association of Home Builders and the Mortgage Bankers Association, and you get a force that spent $5 million in just the first quarter of this year and is on pace to break last years $27 million tab. Many Realtors also moonlight as state legislators, city council members, mayors and school board presidents; if you think members of Congress don’t understand that, think again. Housing represents a lot of jobs, plain and simple, and now is a critical time for the industry. The home buyer tax credit and its extension and its closing extension were all the result of this powerful lobby. Now, as Congress looks forward to tackling mortgage behemoths Fannie Mae and Freddie Mac, you can bet these three associations will be buying their lobbyists new shoes for walking the hill. Government may be trying to extricate itself from the business of housing subsidies, but the industry has no such plan. Get ready for a surge in K Street spending, as housing builds itself back from the ground up.”

Swinging Short Sale Discounts

Short sale discounts from regular retail home prices are varying widely from market to market in the US, according to RealtyTrac, an online foreclosure marketplace. This week, RealtyTrac released a report that foreclosure sales took up 31% of all home sales in the US through Q110. According to the report, there were 88,000 pre-foreclosure sales, often short sales, in Q110, for an average discount from retail home prices of 14.7%. By comparison, REO discounts in the US averaged 34%. But while some are seeing large short sale deals above the 14.7%, others are not. Bill Gassett, a broker with RE/MAX Executive Realty in Hopkinton, Mass., said he’s seeing slightly different numbers, suggesting that short sale discounts vary differently even within states. “There are amazing discounts right now for buyers in the Bluffton/Hilton Head Island market if they are willing to pursue a short sale,” said Tisha Chafer, a real estate agent with Century 21 Southern Lifestyle Properties in Bluffton, S.C. Bluffton is on the very southern-most tip of South Carolina. “If you are patient and can handle dealing with the time it takes for the bank to process the file then you will be rewarded at the end with a property that you were able to purchase at a great price,” she added.

Walter Mueller, a broker at Exit Realty Charleston Group said the listing price is set differently depending on which lender a broker is working for. Some want the listing price set at market value. Others want it listed at the amount of the mortgage balance, while others still have no preference. But Mueller said buyers are becoming more aware of the opportunities short sales and REO provide.

Fannie’s Appraisal Policies Updated

Fannie Mae updated its selling guide to provide additional appraisal-related guidance. The new policy addresses issues identified with appraisals after reviewing many mortgage loan files. Fannie will now require interior photographs of specific rooms and areas of the house in the appraisal report. The GSE provided guidance on when an appraisal is considered deficient and when a lender can make changes to the opinion of market value based on underwriter judgment, automated valuation models or other methodology. The policy changes take effect for all mortgage loan applications dated on or after Sept. 1, 2010. Additionally, the GSE provided guidance on appraisers’ use of foreclosures, short sales and builder sales as comparable. Fannie clarified that appraisers must be selected based on knowledge of specific geographical markets, access to appropriate data and sufficient experience. Specifically, Fannie said, a qualified employee of the lender may contact the appraiser to provide additional information or explanation about the basis for a valuation.

Now for our real estate education section…

Friday File – 15 Minute Resolution

Are you making the best use of available technology for your commercial real estate endeavors? For this week’s 15 minute resolution, several tools of the trade will be presented including a few novel ways to make the most of each. Pick your favorites and take 15 minutes to sign-up…in no time at all you can be reaping the rewards of your extra effort.

CoStar: Although a subscription is required, this is considered one of the most largest independent commercial real estate sites available. A “must have” for those seeking to break into the retail, office, manufacturing or other commercial real estate venture.

www.costar.com

LoopNet: An easy to use site dedicated to commercial properties, LoopNet has recently upgraded many of their tools including robust property research records, making it a strong competitor to CoStar.

www.loopnet.com

Also check out the LoopNet Commercial Real Estate Search iTunes application; it’s simple to use and allows you to do it all from the convenience of your phone.

http://itunes.apple.com/us/app/loopnet-commercial-real-estate/id349561448?mt=8

Finally, check out the CRE Online list of real estate investment clubs in your area. Not only is it a great way to network and learn from others but it’s also potentially profitable should you qualify to join.

http://www.creonline.com/clubs.htm

See you at the top!

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

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

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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
–

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

admin — Mon, 14 Jun 2010 22:29:15 +0000

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SATURDAY ENCORE: NO FLIP RICHES UNVEILING AND FR*EE ONLINE DVD

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Diana Olick – Big Banks Move to Short Sales, but Will It Help Housing

“Earlier this week a top executive at Bank of America told an REO conference in Dallas that the lender would be focusing more on short sales than ever before. At first hearing this, I assumed it was because of the government’s Home Affordable Foreclosure Alternative Program, which provides cash incentives to servicers and borrowers for short sales and also streamlines the process, but of course there’s way more to it than that. Said Bank of America exec, Matt Vernon, whose official title is National REO, Short Sale and Deed in Lieu Executive (his childhood dream title I’m sure), granted me an interview this morning, and was pretty clear as to why B of A is pushing these alternatives. The big difference, he says, is that BofA, as well as some other big banks, are changing the model from reactive to proactive. In other words, instead of waiting for a borrower or real estate agent to approach the bank with an offer for a short sale, they are using a “cooperative approach, with homeowner, Realtor and servicer on behalf of investor, working to move that property through the process. All three of the interested parties holding everything together,” Vernon explains. ”

Olick continues: “So the servicer sets a minimum value for a short sale and then the borrower and Realtor go out and find a buyer. When they do, the process then moves far more quickly because it’s already approved. Of course there’s always the financial incentive as well. With so many borrowers either falling out of or not qualifying for the modifications, a huge flood of properties are moving to REO (bank owned). A report from Clayton Holdings finds short sales cut risk severity by 13 percent more than REO sales. And in some states where the foreclosure process is more lengthy, short sale loss severities can be as much as 26 percent lower than REO loss severities. “I would say that’s generally accurate in what we see,” agrees Vernon. “It really comes down to time. The quicker you can facilitate the property moving.” The good news is, that will cut down on foreclosures. The bad news is that short sales, like it or not, are comps. They sell for less, and consequently bring down the values of properties around them.”

More commercial mortgage backed securities sold

On the heels of Friday’s news that JPMorgan sold $716.3m of commercial mortgage-backed securities (CMBS) bonds this week — the second such deal of 2010 — comes more optimism regarding appraisal subordinate entitlement reduction, or ASER, reimbursements. According to analysts at Barclays Capital (BarCap), an emerging trend is growing and a sizable increase in ASER reimbursements are coming to the bottom tranches of CMBS, the result of increasing liquidation volumes. During the past three months, investors in the bottom tranches of CMBS deals were reimbursed an average of $10.5m of interest that was accrued but not paid to them in the prior remittance periods, BarCap said, including reimbursements of $11.2m in May, $12.6m in April and $7.8m in March. The Mortgage Insurance Companies of America spent more than $1m lobbying the federal government on its role in housing finance during Q110. That’s up nearly 400% from Q109, when the group spent $215,000 on its efforts, as well as above its Q409 reported expenses of $850,000, according to a disclosure with the House of Representatives clerk’s office.

Retail sales drop in 8 months

Retail sales fell for the first time in eight months in May, the government said Friday, widely missing analyst expectations. Total retail sales fell 1.2% to $362.5 billion last month, compared with April’s upwardly revised 0.6% increase, the Commerce Department said. It was first decline since last September, when retail sales fell 2.3%. Economists surveyed by Briefing.com expected sales would increase by 0.2% in May. “The trend as of late has been modest growth, and around the trend of modest growth, you’re going to get some ups and downs,” said Scott Hoyt, a retail economist with Moody’s Economy.com. “That’s clearly what we’re seeing here.” Sales declines were led by a 9.3% drop in building material and supplies. Consumer spending accounts for two-thirds of U.S. economic activity, so related reports such as retail sales are closely watched to gauge whether a recovery is underway. “The pace of consumer spending growth we saw in the first quarter was too fast and couldn’t be sustained,” Hoyt said. “But if you put this [report] in the context of the last few months, where growth was quite strong, and smooth it all out a bit, we are still consistent with the story of modest spending growth, and this is where we should be.”

DSNews.com – Shadow Inventory Variants Could Trigger Regional Price Declines: Report

Regional variations in the shadow inventories of distressed U.S. mortgages could be an indicator of the direction home prices will take, according to a new report published by Standard & Poor’s Ratings Services. The company’s analysts say differences in the backlog of distressed properties point to which markets will see home prices stabilize or even increase, and where additional declines may still be in store. The volume of troubled residential properties has been growing in nearly every U.S. state since 2005, S&P said, and borrowers nationwide are now defaulting on their mortgages faster than existing defaults are being resolved through liquidation. These trends have given rise to a large “shadow inventory” of distressed properties. S&P estimates that the shadow inventory backing just private-label residential mortgage-backed securities (RMBS) will take nearly three years to clear at the current resolution rate. The ratings agency defines shadow inventory as properties that are 90 or more days delinquent, in foreclosure, or REO, but that haven’t yet hit the market. S&P concludes that the original principal balance of this inventory overhang amounts to roughly $480 billion, or 30 percent of the entire private-label, non-GSE market. Standard & Poor’s review of the 20 major metropolitan statistical areas (MSAs) included in the S&P/Case-Shiller Home Price Indices revealed that inventories appear to be falling from recent peaks in some areas while plateauing at historical highs or continuing to rise in others.

Now on to our real estate education section…

Financial Guru’s Warn – Prepare for Financial Collapse

Savvy real estate investors know better than to listen to the major media outlets; after all, they have been proclaiming the economy is in the midst of a recovery…of course, they are also the same people that couldn’t see this coming in advance. However, even the most cynical investor may have reason to reflect upon the words of some of the leading economists and investors around the world. For those that aren’t quite sure what to believe…or where to invest your hard earned dollars…here is a quick overview of where the best and brightest minds stand. In a nutshell, the news isn’t good.

Soros – Billionaire investor George Soros didn’t hold back during last week’s Vienna conference. Not only does Soros believe the crisis is “far from over” but he went on to explain that “we have just entered Act II of the drama” and cautions that sovereign debt is likely to be the next crisis with nations far larger than Greece at risk for major collapse.

Faber – Marc Faber of the “Doom, Gloom & Boom” report has been a vocal critic of domestic policy for quite some time but recently the tone has switched from mere gloom to outright doom as Faber predicts a complete fiscal collapse and hyperinflation in the future for America.

Rogers – Jim Rogers, long recognized as a no-nonsense investor turned biker has all but given up on the current market makers – switching to commodities, precious metals and other hard assets to ride out the storm.

Roubini – Nouriel Roubini, one of the most respected academic economists of the era, is predicting a long and painful decline (at best) with the possibility of a major economic collapse at worst.

Celente – Gerald Celente, known for his trend reporting, predicts social unrest combined with rising crime rates and deteriorating inner cities due to a hyperinflationary economy combined with lack of services and deteriorating infrastructure.

So, wondering what the average person can do to prepare? As it turns out, quite a bit. Consider this little tidbit, there is currently $45,000 of actual money available to each person in the United States…however, $180,000 of debt per person. Obviously, even if the government was able to tap into every available dollar currently in existence, it wouldn’t come near to paying the amount owed…and this doesn’t account for the wide variations in income, savings and other assets. One thing each of the above guru’s agree upon is the eventual advent of inflation…hyperinflation to be exact. Once that happens hard assets are the only things that hold their value – fiat currency is quickly used to pay back debt with worthless dollars.

Those that hold “reserve notes” will be wiped out. Those that hold hard assets won’t. It’s a simple lesson learned from every major economic collapse in history. The guru’s agree, hard assets like real estate, precious metals and other investments retain their value or even increase in price while fiat currency collapses. Turn into one of our webinars to learn how short sale real estate can enhance your financial survival while others strive to barely survive, and make sure you are joining us in Los Angeles in July for the Make It Happen Now Foreclosure Investing Summit: http://www.LAInvestorEvent.com.

See you at the top!

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

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

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About the author:

Chris McLaughlin is widely known as America’s top
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Smart Real Estate News & Commentary by Chris McLaughlin June 8, 2010

admin — Thu, 10 Jun 2010 15:10:35 +0000

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DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide

Borrowers Representing one of the largest judgments imposed in a Federal Trade Commission (FTC) case, two Countrywide mortgage servicing companies, now part of Bank of America Home Loans, have been ordered to pay $108 million to settle charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. In a statement released Monday, the FTC said the $108 million settlement will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by North Carolina-based Bank of America in July 2008. Bank of America said it agreed to the settlement “to avoid the expense and distraction associated with litigating the case.” According to the FTC, Countrywide used unlawful practices in servicing homeowners’ mortgages. The company allegedly charged excessive fees for default-related services, made claims about amounts owed by homeowners in bankruptcy that were false or couldn’t be backed up, and didn’t tell people going through bankruptcy when new fees or charges were being added to their loans. Going forward, borrowers in Chapter 13 bankruptcy must be sent a monthly notice with information about what amounts are owed – including any fees assessed during the prior month. Additionally, the defendants must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy.

Economic Recovery Losing Shape?

The latest jobs report spooked investors Friday because it showed that the labor market isn’t bouncing back as rapidly as it was predicted. Some say the dollar’s strength is the reason for the sharp drop in oil and copper prices. But others worry it’s a sign of weak global demand. It looks like the V-shaped recovery is just a mythical beast. Some economists worry that this could be a double-dip recession, and it could take longer to recover. The job growth outside of federal government was anemic though there are reports of positive signs in the job market. Bill Cheney, chief economist with John Hancock Financial Services in Boston, said that the market may have been making too much over one monthly report and ignoring the general trend.

This was the fifth month of job growth after all and it may make sense for companies to slow down the pace of new hires in light of the recent market volatility and concerns about Europe. There are plenty of signs that the U.S. economy, and the global economy for that matter, are still in precarious shape, as the prices of oil, copper and commodities prices continue to fall as the dollar gains ground against the euro, kicking off a worrisome trend. Michael Pento, senior market strategist with Delta Global Advisors in Huntington Beach, Calif said, “If there was truly a lasting global recovery, these commodities would be rising. The only logical conclusion is that we are having a global slowdown, and we are all interconnected.”

Bernanke: Recovery ‘won’t feel terrific’

Federal Reserve Chairman Ben Bernanke says the recovery, “won’t feel terrific because it’s not going to be fast enough to put back 8 million people who lost their jobs within a few years. It’s going to take a while.” In an interview with veteran TV journalist Sam Donaldson, in Washington, Bernanke dodged a question about whether he fears a double-dip recession, saying “nobody knows with any certainty.” He warned the unemployment rate will remain high “for a while,” explaining, “that means that a lot of people are going to be under financial stress.” The Fed chairman said he couldn’t predict when the Fed would raise interest rates next and that it depends on the state of the economy, unemployment rates and inflation trends.

Bernanke talked about the need for U.S. leaders to take control of the nation’s deficits over the medium term, some three to six years from now, in a way “that will allow us to bring our fiscal house in order over a long period of time.” But when asked if the nation has such a plan, or if he’s seen one, Bernanke said: “No. Not yet. I don’t.” While sharing his views, he said that he wouldn’t give recommendations as to whether Congress should raise taxes to cut deficits and he didn’t want a blanket ban that would prohibit banks from being able to legitimately hedge risk in some cases, a comment on the “Volcker Plan.” He said he favors the Senate version which gives regulators, including himself, the power to figure out when a bank is shedding risk as a “legitimate customer service” and when is it “gambling with the banks’ capital — ultimately with taxpayers as a backstop,” and that it can be made to work.

What commercial real estate crash?

Investors have now spent years dodging disaster in one area of the markets, only to find their investments coming to a bad end elsewhere. Oddly, commercial real estate(CRE) has survived since 2007. For much of 2008 and 2009 CRE was awash in red ink, and yet it hangs on. Richard LeFrak, chairman of the LeFrak Organization, said at the Milken Institute Global Conference in April, “The failure that we were all anticipating in the commercial real estate market, it kind of didn’t happen. We blinked, it went away.” The only question now is how long it can keep up the sprint, while the sector is haunted by $1.4 trillion in loan maturities looming large, three years over the horizon. Some experts predict foreclosures, loan defaults and a national crisis of disastrous proportions.

A few other investors in commercial properties and buyers of commercial mortgage-backed securities believe that the commercial real estate market will continue to suffer until it hits a bottom, but it will never crash in the way that the residential market collapsed. But the bigger danger to the capital markets — and to banks — are speculative commercial loans, like those in construction and land loans. Those aren’t backed by firm assets and are a key part of the reason that many smaller banks have failed in recent years. It is these loans that could yet bring a reckoning to CRE. If the CRE can escape the same kind of crash that took down residential real estate, then we have a case study in how investors and government can prevent a crash before it happens. If it doesn’t work, however, the economy could be hit again at a moment when it is least able to bear the punch.

Many March, April Pending Home Sales May Never Close: Economist

The jump in pending home sales seen in April and even March — ahead of the first-time homebuyer tax credit expiration on April 30 — may not necessarily translate into sales, according to outlook and commentary services firm Econoday. By extension, the firm said, the “unexpected strength” in pending sales during recent months may not take as many homes off the market as initially suggested, shared Econoday senior economist Mark Rogers in recent commentary.

The possibility that many pending sales never become final, taken alongside recent plummets in purchase mortgage applications measured by the Mortgage Bankers Association, indicates home sales are “almost certain to slump in May,” Rogers added. Pending sales grew 6% in April, following a 7.1% spike in March, according to the National Association of Realtors. Year-on-year, pending home sales are up 22.4% from April 2009.

DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide Borrowers

Representing one of the largest judgments imposed in a Federal Trade Commission (FTC) case, two Countrywide mortgage servicing companies, now part of Bank of America Home Loans, have been ordered to pay $108 million to settle charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. In a statement released Monday, the FTC said the $108 million settlement will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by North Carolina-based Bank of America in July 2008. Bank of America said it agreed to the settlement “to avoid the expense and distraction associated with litigating the case.” According to the FTC, Countrywide used unlawful practices in servicing homeowners’ mortgages. The company allegedly charged excessive fees for default-related services, made claims about amounts owed by homeowners in bankruptcy that were false or couldn’t be backed up, and didn’t tell people going through bankruptcy when new fees or charges were being added to their loans.

Going forward, borrowers in Chapter 13 bankruptcy must be sent a monthly notice with information about what amounts are owed – including any fees assessed during the prior month. Additionally, the defendants must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy.

Now on to our real estate education section…

Lessons Learned from Greece 2010

The recent melt-down in Greece may serve as a strong warning for the UK and the USA according to experts like Marc Faber and legendary investor Jim Rogers. For those that are unfamiliar with Greece, it is a small island nation that represents less than 10 percent of the EU economy (roughly 6 percent in fact).

How does a relatively insignificant economy suddenly strike fear in the hearts of nations throughout the world? Simple; Greece has been acting like a major investment for larger nations and essentially funding their own infrastructure based upon the exchange of funding rather than growth or taxation (sound familiar?).

The situation in Greece mirrors the situation taking place within the financial sectors of the United States; as one investment is marked down, related parties are forced to reassign new (lower) values to their own assets resulting in a domino effect throughout the banking industry. What began in the business sector has now reached national levels as nations which invested in Greece are now forced to reexamine their own holdings.

Wondering how this relates to real estate? Greece has many valuable lessons for average Americans specifically due to their reduced work force, aging demographics and high cost of social programs. Fewer workers, a declining manufacturing industry and over-reliance upon outside investments by other nations worked great…while it lasted. As we have seen in the media, once the money ran out, Greece has been forced to take drastic measures such as reducing benefits and increasing taxation. Citizen took to the streets in protest but the grim reality is the money must come from somewhere.

The situation in Greece is especially noteworthy due to the impact upon seniors and others in an aging population. Much like the United States, Greece has a growing population of retirees and elderly citizens. Not only do they use a disproportionate amount of medical care but retirement funding and other benefits have come to be expected as a primary source of security in old age. Unfortunately, much of that has now come to an end as foreign investments dried up and the nation of Greece is unable to afford the care and benefits previously enjoyed by the elderly.

Can the same thing happen in the United States? Many people think so.

Historically retirement earnings have been especially sensitive to disruption during times of economic and social unrest. For example, Argentina “wiped out” the private retirement funds for most of their citizens leaving those that had relied upon private pensions with little recourse. Those in Greece are facing a similar situation during a period of time when they can least afford it.

Short sale investors and others interested in real estate should recognize the opportunity to purchase income generating real estate in order to create their own ’safety net” later in life. Although the majority of people don’t expect government sponsored Social Security benefits to be there by the time they retire…what about 401k, IRA’s or other private pension plans?

What would happen if the United States decided to adopt the strategy of Argentina either by privatizing or taxing away the income? Perhaps the situation in Greece is repeated years later. Whatever the outcome, one thing is certain…to date, the only safe and reliable method to guarantee a lifelong income in old age has been real estate.

See you at the top!

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

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.

Smart Real Estate News & Commentary by Chris McLaughlin June 3, 2010

admin — Thu, 03 Jun 2010 14:15:59 +0000

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Pending Home Sales Surge Continuing

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the National Association of Realtors®. The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February. The data reflects contracts and not closings, which usually occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs. A big concern surfacing recently is insufficient time to close the deal at the settlement table. However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues.”

According to him, homebuyers who responded to tax credits may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.

Retailers Post Another Month of Disappointing Sales

Analysts have failed in estimating inadequate consumer spend and the impact it will have, on the economy. After a disappointing April, the results from retailers in May underscores how fragile the economy recovery is at this stage. Analysts on average are expecting same-store sales to rise 2.6 percent in May from the prior year, according to Thomson Reuters. That compares with a decline of 4.8 percent in May 2009. Among the department stores, Nordstrom is expected to report the strongest year-over-year same-store sales growth, with sales expected to be up 4.8 percent, while Costco Wholesale was expected to report the strongest monthly increase among the discount chains, with sales expected to rise 7.3 percent, excluding gas sales, according to a Thomson Reuters survey.

However, the warehouse club store reported sales rose only 5 percent, excluding gas sales. Hot Topic was expected to post the biggest decline in same-store sales with an 8.3 percent drop, but its actual performance proved even worse. Same-store sales fell 9.0 percent. Although the monthly sales reports will be closely watched for their insights into consumer spending, the reports aren’t the gauge they used to be as many retailers, including Wal-Mart Stores, the world’s largest retailer no longer report monthly sales results.

Diana Olick – BofA: Mortgage Walkaways Have Huge Incentive

“Bank of America rolled out their new “Principal Reduction Enhancement” program, which is an earned principal forgiveness plan for borrowers behind on their mortgages and whose loans are at least 20 percent underwater in value. The plan is in conjunction with the government’s Home Affordable Modification Program, but the government’s principal reduction plan isn’t in place yet. What makes BofA’s plan so proactive is that it employs, “a principal reduction as the first step toward reaching HAMP’s affordable payment target of 31 percent of household income when modifying certain NHRP-eligible mortgages — ahead of lowering the interest rate and extending the term.” Why are they getting more aggressive on modifications? Because more borrowers are walking away. BofA’s credit loss mitigation executive, Jack Schakett, said the amount of strategic defaulters (those who can pay their loans but opt not to) are “more than we have ever experienced before.” He went on to say, “there is a huge incentive for customers to walk away because getting free rent and waiting out foreclosure can be very appealing to customers.”

Schakett says the foreclosure process is still taking 13 to 14 months (and by my estimates that’s an optimistic assessment), and so there’s over a year of free rent. While the banks are trying to improve the time, they’re just not there yet. 31 percent of foreclosures in March were deemed to be “strategic default” by researchers at University of Chicago and Northwestern University. We also learn from those same researchers that the likelihood of walking away increases by 23 percent when homeowners learn that a neighbor got some principal forgiveness. I’ll let you all argue that one.”

Fed’s Lockhart Says Rates May Rise With Unemployment Still High

Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank, to counter inflation, may eventually need to raise its target interest rate from near zero even with U.S. unemployment still high. “The policy rate may have to begin to rise even while unemployment is considerably higher than before the recession,” Lockhart said today in a speech in Atlanta. According to a Bloomberg News survey of economists, the U.S. economy strengthened in May amid the worsening in Europe’s debt crisis, as employment likely climbed during the month by more than 500,000 workers. The unemployment rate likely dropped to 9.8 percent from 9.9 percent, the survey found ahead of tomorrow’s government report. “The time is approaching when it will be appropriate to consider recalibrating interest rate policy,” he said in remarks prepared for the Atlanta Technical College. “I do not believe that time has yet arrived.” “However, extraordinarily low policy rates will become inconsistent with maintaining price stability,” he said.

Policy makers are debating when to begin withdrawing record liquidity from the financial system as the economy emerges from the worst recession since the Great Depression. The Fed’s preferred inflation gauge — the core personal- consumption expenditures price index, which strips out food and energy — rose at an annual rate of 0.6 percent in the first quarter, the slowest pace since records began in 1959.

DSNews.com – Commercial Defaults Hit Record for Both Investors and Banks

Pressures continue to drive up commercial mortgage defaults. The economic downturn has choked off demand for retail and office space, with vacancy rates rising and prospects of new occupants limited by the duress of today’s job market. At the same time, commercial real estate (CRE) values have dropped more than 40 percent in some markets, pushing a growing number of property owners severely underwater. According to new data from Real Capital Analytics, the default rate for commercial real estate loans owned by the nation’s FDIC-insured banks increased from 3.83 percent in the fourth quarter of 2009 to 4.17 percent in the first quarter of 2010. Real Capital says this is the highest default rate reported since 1992, the first year for which data is available, when it was 4.55 percent.

Year-over-year, the default rate is up by 192 basis points. By contrast, at its cyclical low in the first half of 2006, the commercial mortgage default rate was 0.58 percent. As of the first quarter of this year, $45.5 billion of bank-held commercial mortgages were in default, according to Real Capital’s tally. A separate study released this week by Trepp LLC shows that the share of past due loans held by investors in commercial mortgage-backed securities (CMBS), including those already in foreclosure and REO, jumped 40 basis points in May to 8.42 percent – the highest in the history of the CMBS industry. To put the delinquent CMBS universe into perspective, Trepp says that just six months ago, the delinquency rate was 5.65 percent. One year ago, it was 2.77 percent.

Now on to our real estate education section…

All About Commercial Risk

Commercial real estate has been making headlines as the next step for short sale investors but as many novice commercial investors are learning, there are substantial differences required to close the deal. First and foremost is the question of finance. Typically, commercial real estate has more stringent requirements and/or often requires substantially larger sums of money however, the basic process is still the same. The lender wants to reduce risk and remove a non-performing asset from their books.

Demonstrate the ability to pay the loan and you are halfway toward becoming a commercial investor. Critical is an understanding of the major risks associated with commercial loans from the lenders perspective. Use this as a quick checklist when putting together an offer or evaluating your own potential.

1. Credit Risk. Perhaps the most common type of risk, this simply indicates the ability of the borrower to meet the contractual obligations as outlined in the loan documents…aka, the ability to pay. However, because you are dealing with commercial loans, the credit risk can be impacted by several items including competitive market factors (ie, the inability of the property to lease as expected, increased or decreased demand etc), interest rate sensitivity, rollover of leases (long term leases may be stable but are also more prone to declining values), changes in regulatory environment including zoning and tax laws.

2. Interest Rate Risk. The majority of commercial real estate is financed on a floating rate basis so interest rate risk is a very real threat depending upon the timing of cash flows, yield curves and other economic conditions that may adversely impact the economic climate.

3. Liquidity Risk. Banks must meet obligations the same way that private individuals are required to do so; loss of liquidity means the bank is unable to extend credit or must call loans in order to raise capital. For an investor, liquidity risk is typically isolated to the ability of the bank to loan money in the future should you require it in order to roll-over or refinance a loan.

4. Compliance Risk. Once the domain of elusive economic theory, compliance risk has risen to disproportionate levels thanks in large part to the current crisis as well as outside influences. Examples are broad but range from potential liability of bad debts during the mortgage boom to the current oil spill at BP; a bank may be held responsible for assets held as collateral. High risk assets will be assessed a premium.

Short sale investors seeking entry into the exciting world of commercial real estate should review each property from the perspective of the lender; examine risk levels and potential threats through the eyes of the bank in order to maximize your prospect for success.

See you at the top!

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

http://www.shortsalesriches.com
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About the author:

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

admin — Mon, 24 May 2010 18:50:29 +0000

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Diana Olick – Home Buyer Tax Credit Snafu: No USDA Loans

“The federal mortgage program from the U.S. Dept. of Agriculture for rural home buyers, guarantees low and even no down payment, low interest loans to rural buyers, but the lines between rural and urban were getting a bit vague. The tight mortgage lending conditions today have pushed thousands more buyers into the program. In 2006, the USDA program backed about 31,000 loans or $3 billion worth. In 2009, that had grown to 133,000 loans worth $16.2 billion. The good news is the standards are tight and the default rates far better than the FHA. The bad news is the program wasn’t meant to handle that many loans, and it ran out of money. Congress is in the process of appropriating more money for the program. The House passed a bill sponsored by Congressman Paul Kanjorski (PA).

The Senate passed a bill out of the Appropriations Committee, as part of agriculture appropriations. It was sponsored by Sen. Michael Bennet (CO). But you still can’t get a loan now. There is a far smaller program for direct loans from the USDA, but it is barely a blip compared to the guarantee program. So we’re all sitting here waiting for Congress to get the program more money, and it’s all expected to pass, but that still presents a big timing problem: The home buyer tax credit. Buyers have to close by June 30th, and many of them were depending on USDA loans. They signed contracts by the end of April, and now they’re stuck. Despite the promise of the funds, big lenders are holding off until the new appropriations are a done deal. Keith Wilcox of 1st American Home Loans says by the time the Congress passes the new funding, there will be such a backlog of borrowers, they’ll never get the loans done by closing June 30th. He’s not the only mortgage broker lighting up my phone this week. So not only are these borrowers missing out on the USDA loans, they’re also missing out on the opportunity to get the tax credit and at the very least lock in today’s nearly historically low interest rates. In other words, the government is holding up its own housing stimulus.”

Countrywide Picks Up Pace Resolving Troubled Loans: Barclays

Liquidation and modification rates on Countrywide-serviced residential loans have edged higher in the past few months, with a larger percentage of mortgage restructurings encompassing principal forgiveness, according to a study just released by Barclays Capital. The research firm examined loans within residential mortgage-backed securities (RMBS) serviced by Countrywide, now Bank of America Home Loans, and found that while historically, Countrywide-serviced deals have claimed lower-than-average mod rates and long liquidation timelines, that has begun to turn around in the past few months. Barclays reports that constant default rates (CDRs) on pools of mortgages serviced by the once-subprime leader have improved, primarily due to faster roll rates, as well as rejections from Home Affordable Modification Program (HAMP) trials, which allow the loan to proceed to foreclosure.

Analysts at Barclays expect Countrywide’s liquidation rates to continue to increase as more HAMP trials are resolved in the coming months. Many of these resolutions, though, do include transitions to permanent loan restructurings. Barclays says HAMP conversions have also boosted modification rates for Countrywide, and the research firm found that debt forgiveness mods now make up 10 percent of the servicer’s modified loans, up from 0 percent in January. The research firm says it as seen “continuous improvement” in current to delinquent rolls and falling 60-plus day delinquencies. Barclays says there have been important changes in servicer behavior in the Countrywide camp. HAMP rejection rates for Countrywide loans have shot up in the past few months and now constitute 36 percent of all resolved trial mods. According to the Treasury’s latest HAMP progress report, Countrywide/Bank of America is servicing approximately 215,000 active trial mods and has finalized nearly 57,000 permanent loan restructurings.

Wall Street hopes to dodge two reform bullets

Wall Street may still escape two of the harshest elements of Washington’s reform efforts. The two measures, included in the Senate bill passed last week, take direct aim at some of the more risky — and profitable — parts of banks’ business. One proposal would require financial firms to spin off their trading desks that deal in derivatives. The other, would ban banks from wagering with the firm’s own money, what the industry calls “proprietary trading.” Firms would also be restricted from investing in or sponsoring private-equity funds or hedge funds. The restrictions, if included in the final bill, would hit bank profits.

As the bill now moves to negotiations between key leaders of both the Senate and the House, there is a growing belief that both those proposals run the risk of getting derailed. Experts believe that the amendment aimed at regulating derivatives, will be left on the cutting-room floor or watered down substantially. Both the White House, as well as most Republicans, have come out strongly against the proposal, partly out of fear of what kinds of unintended consequences the new rule could have. Lawmakers already missed an opportunity to strengthen the proposal after choosing not to vote on an amendment which would prevent banks from trading for their own benefit rather than for the sake of their customers. Experts suggest that the Senate bill does not do a good job of explicitly defining what businesses banks should, and should not be involved in, positioning the topic as a subject of intense debate among lawmakers.

Ratings Shopping’ Lives as Congress Debates a Fix

Real-estate investment firm Redwood Trust Inc. approached two credit-rating firms early this year to rate a new mortgage-bond offering. One of the firms, Standard & Poor’s, expressed reservations about parts of the deal. Redwood chose Moody’s Investors Service—and in April sold more than $200 million of bonds carrying Moody’s top rating of triple-A, without a hitch. In a commentary about the bond offering last month, S&P indicated the deal wouldn’t have met its standards for a triple-A rating. A Moody’s spokesman said the firm “conducted a thorough review of the deal,” according to criteria it strengthened since the mortgage crisis. S&P, owned by McGraw-Hill Cos., declined to comment on its discussions with Redwood.

In the wake of the financial crisis, the companies that rate bonds have been lambasted for being asleep at the switch and for assigning rosy ratings to questionable mortgage bonds in order to win business. Those ratings companies have made numerous changes, but one thing remains the same: Issuers still “ratings shop” among firms for the most favorable opinions on deals. Some in the industry say ratings shopping may even have gotten easier in the wake of the financial crisis. S&P, Moody’s and Fitch Ratings are no longer as dominant in the business of rating bonds as they were, in part because they have pulled back partially from the mortgage market. The financial-regulation overhaul bill passed by the Senate on Thursday would limit the ability of bond issuers to pick firms to rate their securities. But the House version of the bill contains no such provision, and some key lawmakers have raised concerns about the idea. It remains to be seen whether the proposal will survive as the two chambers begin efforts Monday to reconcile their differences.

Now on to our real estate investing education section …

Commercial Calamity Calming

Although the state of commercial properties continues to show serious stress, according to Fitch Ratings, the rate of default is beginning to slow despite reaching a record 7.48% delinquency rate. The report goes on to provide a break-down of delinquencies by type including:

Hotels: 18.42%

Multi-family: 13.60%

Retail: 5.83%

Industrial: 4.6%

Office: 3.87%

The Good News

In addition to slowing default rates, areas outside of the Sun Belt and Rust Belt are showing signs of stability. The rate of credit worsening is also slowing as the level of liquidity loss as well as ability of mortgage holders to pay-off or close their loans demonstrated some positive signs.

The Bad News

Although the number of defaults is beginning to slow, experts believe the situation will continue into the foreseeable future as credit and lending standards continue to tighten in the commercial arena. Unlike residential real estate which is typically financed using 15 to 30 year loans, commercial loans frequently use short durations from five to ten years making them especially prone to a lack of liquidity associated with tighter lending standards. Net lending activity is down over 7.5 percent from the peak in 2008 with commercial giants like Wells Fargo projecting continued losses to peak by the end of the 2010.

The Bottom Line

What does this mean for prospective commercial short sale investors? Plain and simple…opportunity. Commercial short sales may be just the ticket to move your portfolio from a part-time investment to full-time career or long term asset. Whether you own a business of your own or simply desire a method to maximize profits, commercial short sales provide many of the same benefits enjoyed by those that work in residential real estate concerns with meaningful returns. Tune in to one of our webinars or sing-up to receive more information about investing in commercial short sale opportunities.

See you at the top!

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

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

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

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Chris McLaughlin is widely known as America’s top
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Smart Real Estate News & Commentary by Chris McLaughlin, May 21, 2010

admin — Fri, 21 May 2010 19:02:27 +0000

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Mortgage Rates Hit New Lows in Two Weekly Surveys

Mortgage rates dropped again this week, setting new records in two weekly surveys, the result of investor flight from European investments. The Freddie Mac weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.84% with a 0.7 origination point for the week ending May 20, down from last week’s average of 4.93%. A year ago, the 30-year FRM averaged 4.82%. The 25-year-old Bankrate.com weekly survey of large banks and thrifts put the average rate for a 30-year FRM at 4.96% with a 0.5 origination point, the lowest in the history of the survey.

Despite the end of the Federal Reserve mortgage-backed securities (MBS) purchase program, mortgage rates are at their lowest point all year. As Europe responds to the Greek debt crisis, the euro is plummeting compared to the dollar. Investors are turning to American investments that, for the moment, seem safer. However, some argue that debt levels in the US are also as risky as in Europe. “People rush to us for ’safety,’ although we’re Greece — we just haven’t gotten there yet,” Anthony Sanders, distinguished professor of real estate finance at George Mason University, told Bankrate.com. Sanders added US interest rates will rise once European and Chinese economies recover. Freddie said the 15-year FRM averaged 4.24% with an average 0.7 point, down from last week’s average of 4.3% and a year ago, when the average was 4.5%. Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.91% with a 0.6 point, down from last week’s average of 3.95% and a year ago, when it averaged 4.79%. It’s the lowest average rate for the product since October 2004, when it averaged 3.96%.

Senate Passes Finance Bill

The Senate on Thursday approved the most extensive overhaul of financial-sector regulation since the 1930s, hoping to avoid a repeat of the financial crisis that hit the U.S. economy starting in 2007. The legislation passed the Senate 59 to 39 and must now be reconciled with a similar bill passed by the House of Representatives in December, before it can be sent to President Barack Obama to be signed into law. The controversial measure, supported by the Obama administration, sets up new regulatory bodies and restricts the actions of banks and other financial firms. It is designed to try to make order of the cascading regulatory chaos that ensued in 2008 when mammoth banks and some unregulated financial firms collapsed, and public funds were used to save them.

Among other things, the legislation would: a)Establish a new council of “systemic risk” regulators to monitor growing risks in the financial system, with the goal of preventing companies from becoming too big to fail. (b) Create a new consumer protection division within the Federal Reserve charged with writing and enforcing new rules that target abusive practices in businesses such as mortgage lending and credit-card issuance. (c) Empower the Federal Reserve to supervise the largest, most complex financial companies to ensure that the government understands the risks and complexities of firms that could pose a risk to the broader economy. (d) Allow the government in extreme cases to seize and liquidate a failing financial company in a way that protects taxpayers from future bailouts. (e) Give regulators new powers to oversee the giant derivatives market, increasing transparency by forcing most contracts to be traded through third-parties instead of only between banks and their customers. “It will inevitably contract credit,” said Sen. Judd Gregg (R., N.H.), who says the Senate bill “is probably undermining the system, probably making for a weaker system.”

Sen. Gregg was one of 37 Republicans to vote against the 1,500-page bill. Now Congress will need to reconcile the Senate bill with a companion House package adopted in December on a 223-202 vote, with 27 Democrats joining unanimous Republican opposition. The outlines of the two bills are largely the same. But there are more than a dozen notable differences that will need to be reconciled during negotiations that are expected to start within days. Despite the differences, the Senate passage virtually ensures that some type of financial regulatory reform will be finalized by this summer.

Diana Olick – US Housing Prices to Rise Slightly in 2010: Poll

“U.S. house prices will manage a small gain in 2010 after the worst crash since the Great Depression but gains in coming years are likely to come slowly, a Reuters poll found. Home sales and prices may retreat in the near-term after government tax credits to homebuyers as large as $8,000 ended on April 30, economists and property market analysts said. But that trend will be countered by historically low mortgage rates and the fact that housing affordability is now near the best it has ever been, likely putting prices back on a slow upward path.

Three-quarters of the economists polled May 14-19 said it was possible that average house prices would return to where they were in 2006 before the crash — which would require a rise of more than 40 percent — but that it would take a long time. Home prices as measured by the Standard & Poor’s/Case-Shiller 20-city index should rise 1.4 percent this year and 3 percent next year, breaking three years of sharp declines, according to the median forecast. “The recovery is likely to be longer and more arduous than many expect,” said John Silvia, economist at Wells Fargo. The homebuyer credit, which the government expanded and broadened to include repeat as well as first-time buyers, stole many future sales as buyers rushed to lock in deals before the April 30 deadline.

Buyers put away their checkbooks in the first weeks after the credits of $6,500 for repeat buyers and $8,000 for first-time purchasers expired. But there are reasons to be optimistic. Most economists say the recovery now can be sustained without government help and that home prices are fairly valued. But banks still need to put the record supply of repossessed houses on the market, which will keep prices from recovering very quickly. “A toxic combination of weak demand and high supply will generate a double-dip in prices now that the tax credit has expired,” said Paul Dales, U.S. economist at Capital Economics, who expects a 4 percent fall in prices next year.”

What’s in the Wall Street Bill

The Senate’s final version of Wall Street reform runs close to 1,600 pages. It takes a broad swipe at the rules that govern the financial sector. It aims to prevent future financial crises. It establishes a new consumer regulatory agency. It throws down new rules on complex financial products and creates a new way for the government to take over failing financial firms. The bill, which the Senate passed Thursday night, must now be reconciled with a similar measure the House approved last December. Here’s a breakdown of key measures in the Senate legislation. Among others, the bill creates a new process for unwinding big financial firms. Banks would be taxed to pay for unwinding banks after a collapse. Also, the Federal Reserve would be able to make emergency loans only to banks that are otherwise healthy and just need credit to get by. The bill gives regulators strengthened powers to break up financial companies that have grown too big and threaten to destabilize the financial system.

According to the bill, an independent Consumer Financial Protection Bureau housed inside the Federal Reserve will be established. Bank fees fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards. It attempts to control complex financial products called derivatives that many blame for bringing down American International Group and Lehman Brothers. It supposedly limits the size and scope of banks’ investment activities, barring banks from trading on their own accounts, though it gives regulators the power to modify the ban. Banks are also prevented from trading derivatives, even for their clients’ accounts. Banks would be forced to spin off their swaps desks that make these trades. Now Congress is allowed to order a one-time Government Accountability Office review of Fed activities, including loans made during the financial crisis.

With this, the President gets new powers to appoint the head of the New York Fed. Currently, banking sector leaders play a big role in choosing who runs the New York Fed. Shareholders get to have a say in curbing executive pay packages, and makes it easier for investors to have a say in choosing who is on the ballot to run for the board of a publicly-traded company. It also adds that agencies that rate securities must disclose their methodologies. The Securities and Exchange Commission would appoint a panel to figure out how to independently match ratings agencies with firms that need securities rated. Now ‘liar loans’ get banned as lenders would have to document a borrower’s income before originating a mortgage and verify a borrower’s ability to repay the loan. The bill also forces ’skin in the game,’ by forcing firms that sell mortgage-backed securities to keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk.

DSNews.com – Survey: 59% of Borrowers Would Not Walk Away if Underwater

A survey released Thursday by Trulia.com and RealtyTrac shows that only 1 percent of homeowners with a mortgage say walking away would be their first choice if they were unable to make their payments. If their mortgage were to go underwater – meaning the property value drops below the amount still owed on the loan – 41 percent would at least consider a strategic default, while 59 percent would not consider walking away no matter how much their mortgage was underwater. Pete Flint, Trulia’s co-founder and CEO, says the new survey results show that,

“While it may not make the most sense to keep paying for this undervalued asset, many homeowners, at least for now, are holding on.”

He says only 5 percent of those surveyed say they would opt for a short sale as their first choice, while 69 percent would pursue a loan modification to save their home. The study conducted by the two California-based companies also found that while the stigma around owning a foreclosure has subsided, interest in purchasing a foreclosure is significantly down compared to a year ago. Currently, 45 percent of U.S. adults age 18 and above are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to 55 percent this time last year, the survey results showed. “For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes,” said Flint. “It now seems clear that government programs will not reach the overwhelming majority of homeowners in trouble,” leading to a larger number of foreclosed homes on the market, he explained. “We anticipate that there will be an increased number of both REO purchases and short sales throughout the rest of the year as the most active buying segments – first-time homebuyers and investors – continue to look for bargains,” said said Rick Sharga, SVP for RealtyTrac.

NAR Offers Congress Ideas to Strengthen a Successful VA Home Loan Program

The National Association of Realtors® offered some suggestions to Congress today toward making a good Veterans Affairs Home Loan Guaranty Program even better. Testifying before the House Subcommittee on Economic Opportunity, NAR First Vice President Moe Veissi, broker-owner of Veissi & Associates Inc., Miami, praised the VA program that encourages private lenders to offer favorable home loan terms to qualified veterans. “The program is most effective when it provides veterans who are unable to qualify for a conventional loan with favorable loan terms,” Veissi said. “VA’s strong, yet flexible, underwriting helps veterans purchase a home of their own without depleting their savings.”

To date, VA has guaranteed almost 19 million loans to American veterans, with a total value of more than $1 trillion in guaranteed loans. Eighty percent of veterans are homeowners, which is significantly higher than the national average at 67.2 percent. More than 90 percent of VA home loan borrowers have used the zero-downpayment option, Veissi said. “And their track record is fantastic – the default rate and delinquency rate for VA loans are far better than subprime, better than FHA, and even better than prime. Despite all the talk these days of ‘skin in the game,’ this program shows that solid underwriting is the key to sustainable homeownership,” Veissi said. He also noted that the VA has never guaranteed subprime loans. As a result of the subcommittee’s work and the passage of the Veterans’ Benefits Improvement Act of 2009, veterans have been able to refinance their distressed non-VA loans into safe, affordable VA loans.

NAR believes that VA should give borrowers the flexibility to negotiate fees as a normal part of home purchase transactions. Veissi pointed out that, while NAR supports VA efforts to limit fees paid by veterans, a high percentage of sales in his home state of Florida are foreclosures or short sales. “Since there is no seller to pay the fees, veterans are completely shut out of this market, which often includes the most affordable homes,” he said. To step up its efforts to educate Realtors® about the program’s value, NAR partnered last year with the VA to produce “Unlocking the Future,” a VA toolkit for Realtors® and homeowners that is comprehensive and informational.

Now on to our real estate investing education section …

Friday File: 15 Minute Resolution…Finding Killer Kindle Apps for Real Estate Agents & Investors

According to Amazon.com, Kindle remains the most wished for item on the website since the original release. For those that have been searching for a reason to purchase a Kindle but can’t justify the purchase as a business write-off…here’s a bit of a good news. These killer Kindle applications combined with the cost effective purchase of business books and syndicated news make the newest Kindle a “must have” gadget well within your price range.

Best Business Books on Kindle

Kindle makes ordering business books simple; one quick click and the newest release is instantly ordered and loaded…usually for $9.99 or less. Older books, public domain, classics and limited-time promotions are often free making the Kindle a great way to go green and save money at the same time. Currently the top three real estate investing books on Amazon include:

Investing in Real Estate by Gary W. Eldred

Rich Dad’s Advisors-: The ABC’s of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss by Ken McElroy

The Complete Guide to Investing in Real Estate Tax Liens & Deeds: How to Earn High Rates of Return – Safely by Jamaine Burrell

Most Heavily Highlighted

Ever wonder what really makes an impact on people while they are reading? Searching for emerging trends to capture attention? Now you can find out with this great little tool. Simply click on the following link to find out what books are grabbing attention with the most highlighted passages:

http://kindle.amazon.com/popular_highlights/books

For those that are curious, this week’s most heavily highlighted books include:

Switch: How to Change Things When Change Is Hard by Chip Heath, Dan Heath

The 4-Hour Workweek, Expanded and Updated: Expanded and Updated,

With Over 100 New Pages of Cutting-Edge Content by Timothy Ferriss

Rather know the actual passages rather than the book? Visit

http://kindle.amazon.com/popular_highlights/highlights

This week’s passages include:

…the more money they made the next day on the streets. Those three things—autonomy, complexity, and a connection between effort and reward—are, most people agree, the three qualities that work has to have if it is to be satisfying. It is not how much money we make that ultimately makes us happy between nine and five. It’s whether our work fulfills us.

Outliers: The Story of Success by Malcolm Gladwell

No matter what the setting, there are five discrete stages that we go through as we deal with our work. We (1) collect things that command our attention; (2) process what they mean and what to do about them; and (3) organize the results, which we (4) review as options for what we choose to (5) do. This constitutes the management of the “horizontal” aspect of our lives—incorporating everything that has our attention at any time.

Getting Things Done by David Allen

See you at the top!

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

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

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

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

About the author:

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

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

Smart Real Estate News & Commentary by Chris McLaughlin, May 19, 2010

admin — Wed, 19 May 2010 19:09:06 +0000

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

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

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

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

FIX A FLIP OPENS AGAIN THIS THURSDAY!

We’re bringing it back! Fix-a-Flip funding will re-open

up this Thursday with even more updated fast-flipping

strategies and new partnerships with capital

providers. And we’ll be sold out again in record time.

Go here to get what you’re missing out on in a fr-ee

webinar Thursday at 3 PM ET, NOON PST:

https://www2.gotomeeting.com/register/899839235

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

Home Loan Demand Sinks to 13-Year Low

Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday. Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30. Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs. “The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season,” Michael Fratantoni, the industry group’s vice president of research and economics, said in a statement.

Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows. Average 30-year mortgage rates fell 0.13 percentage point last week to 4.83 percent, the lowest since last November, the MBA said. The record low was 4.61 percent in March 2009, based on the group’s survey, which has been conducted since 1990. Low borrowing costs and stabilizing home prices are being offset by near double-digit U.S. unemployment and a looming supply of foreclosed properties yet to hit the market. The worst of the housing crisis is over but recovery will be long and slow, most economists agree.

SEC moves to expand stock circuit breakers

The Securities and Exchange Commission proposed new rules Tuesday that would pause trading in certain stocks that experience extreme swings. The move is in response to the brief but historic stock market crash of May 6, in which the Dow Jones industrial average fell nearly 1,000 points, its biggest intra-day drop on record, before the index rebounded within a matter of minutes. Under the proposed rules, trading in an individual stock would pause across all U.S. stock markets for a five-minute period in the event that the stock experiences a 10% change in price over the preceding five minutes.

The pause, also called a circuit breaker, would give the markets the opportunity to attract new trading interest, establish a reasonable market price, and resume trading of an affected stock in a fair and orderly fashion, according to the SEC. The proposal would create uniform, market-wide standards for individual securities in the S&P 500 stock index. In the current system, circuit breakers are triggered under various circumstances depending on which exchange a stock trades on. The SEC said about 30 stocks in the S&P 500 (SPX) fell at least 10% in a five-minute period in an event which has become known as the “flash crash.” The new rules reflect a “consensus” that was achieved in that meeting, the SEC said. The new rules, which are subject to Commission approval following the completion of a comment period, will be rolled out as a pilot program running through Dec. 10, 2010. The SEC did not state when the program would start.

DSNews.com – Moody’s: Distressed Sales Key to Speed of Recovery

The future of U.S. home prices is acutely tied to the speed and the manner in which distressed sales work through the system, Moody’s Economy.com stressed in a report issued this week. “We expect that house prices will continue to decline because the pipeline of distressed mortgages is substantial and because the price discounts for distress sales weaken all house prices,” the forecasting and credit risk unit of Moody’s Analytics wrote. While the overall housing market has largely bottomed, Moody’s Economy.com says home prices aren’t there just yet. The company projects home sales and new construction to rise slowly this year, but “[n]onetheless, we foresee a 5 percent additional house price decline nationally. Regions with increasing foreclosure volumes will suffer more,” Moody’s said in its report. During the course of this housing correction, home price trends have been closely tied to distressed transactions, including foreclosure sales and short sales.

The greater the number of foreclosures in a market relative to total home sales, the greater the downward pressure on prices, Moody’s says. Banks discount the price of foreclosed properties in order to dispose of them quickly, and Moody’s says the typical markdown has doubled since the beginning of the housing bust. The report noted that short sales have a more muted impact on the downward pace of home prices since the discount is far smaller than price cuts associated with a foreclosure sale. The administration’s Home Affordable Foreclosure Alternatives (HAFA) program is expected to drive up the number of short sales this year as compared to last year.

Mortgage Default Rates Lower as Consumers Choose Property Over Plastic

The monthly default rates for first and second mortgages fell in April, but climbed for bank card loans for the third consecutive month, according to the latest data from credit-rating agency Standard & Poor’s and national credit bureau Experian. Defaulting balances of bank card loans rose to 9.1% in April, from 8.9% in March and from 7.7% a year earlier, according to S&P. First and second mortgage default rates slipped to 3.7% and 2.5%, respectively down 6% and 11% from March levels. At the same time, the share of borrowers delinquent on credit cards but current on their mortgages slipped to 3.6% from 4.1%.

“Consumer defaults continue to moderate in the key big ticket items of first and second mortgages and auto loans,” said David Blitzer, managing director and chairman of the index committee at S&P Indices. “In these areas, defaults bottomed out around the same time as the stock market in the first half of 2009. Bank cards on the other hand continue to worsen and are at levels not seen in the history of these indices.” The S&P/Experian default index for first mortgages fell 6.2% from last month and 31.1% from the same time last year, while that of second mortgages posted similar declines of 11% and 45.4%. At the same time, however, the default index for credit cards grew 2.4% from last month and 19.3% from last year. According to the S&P/Experian indices, consumer credit defaults vary across major cities and regions of the US. Among the five major Metropolitan Statistical Areas (MSAs) studied for the April report, Chicago showed the smallest decrease of 5.8% in the past year. The sharpest decline was in Miami where defaults declined 40.5% in the last 12 months and 7.9% in the past month. It marks a reversal of recent trends of borrowers paying down credit cards before mortgages, as seen by national credit bureau TransUnion.

Investor confidence takes a hit

U.S. futures and European shares fell sharply early Wednesday after Germany announced restrictions that prevent traders from betting against some government debt securities and financial shares. Germany’s DAX lost 1.7%, the FTSE 100 in Britain fell 1.7% and the CAC 40 in France declined 1.9% in morning trading in Europe. In the United States, Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all lower. Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

Companies: Target reported Wednesday that net earnings for its most recent quarter were $671 million, up from $522 million in the year-ago quarter. The retailer also reported earnings per share of 90 cents, up 30% from 69 cents in the same quarter last year. This fell just short of the 91 cents EPS expected by a Thomson Financial’s analyst consensus. Dollar and commodities: The euro partly pulled out of its slump, after hitting a four-year low on Tuesday. Against the shared currency, the dollar fell 0.5%. The greenback was down 0.3% on the British pound and fell 1% versus the Japanese yen. Bonds: Treasury prices were higher early Wednesday, pushing the benchmark 10-year note’s yield down to 3.36%. Bond prices and yields move in opposite directions.

Now on to our real estate investing education section …

Commercial Real Estate Jargon Buster

Real estate can be a complex and confusing area but in our ever expanding effort to follow the KISS directive, we are proud to present a real life interpretation for modern day real estate lingo. While you may not find these definitions in sync with the latest version of Webster’s Dictionary, we think you will agree they accurately reflect the state of affairs.

PAD: A stand alone building in a prime location of a large shopping center…or, what banks are doing with bail-out funding while waiting for the next shoe to drop.

Anchored Tenants: A big brand-name national tenant…or a commercial tenant that can’t afford to relocate across the street much less across town.

Gross Lease: A lease where the tenants are supposed to pay the rent while the landlord or property owner pays the taxes, insurance and maintenance. Given the rising cost of property taxes and insurance, the standard definition will suffice.

GRM: Gross Rent Multiplier or the ratio of purchase price over annual income. In many commercial divisions that bought during the boom, the GRM can perform the rare and somewhat elusive feat of multiplying negative numbers.

LOI: Typically this stands for Letter of Intent or a non-binding offer letter use to purchase a commercial property. In today’s tough commercial market it could also stand for “Loss of Interest” as short sales continue to climb among many retail spaces.

Absorption: The amount of inventory or units of a specific commercial property type that become occupied during a specified time period…or the amount of money being soaked up by the under-performing property.

Cash Flow After Taxes/ES – The net operating income less mortgage, improvements, property taxes etc…or, a non-existent state among many retail operations bought over the past several years.

See you at the top!

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

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

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

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

About the author:

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

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

Short Sales Riches Blog » short sale

Diana Olick – Home prices being slashed, more coming?

Smart Real Estate News & Commentary by Chris McLaughlin July 15, 2010

Fix A Flip Re Opens … If you want your deals funded beyond 1 day,

Diana Olick – Home prices being slashed, more coming?

Foreclosures fall as bank repossessions quicken

Business vs Obama

Lost decade coming?

1 in 200 mortgages may be fraudulent?

Jobless claims and wholesale prices drop

Now for our real estate education section…

Becoming an Angel Investor

Foreclosures to persist

Smart Real Estate News & Commentary by Chris McLaughlin July 12, 2010

********************************************************** Foreclosures to persist

Credit scores down

Olick – NYT caught with its pants down

CMBS Delinquency Rate Exceeds 8%

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Home delinquency rate increases

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

IT’s BACK: NO FLIP RICHES REOPENS TONIGHT!

It’s time to get excited…

********************************************************** Home delinquency rate increases

MBA – Refinances increase

Credit card delinquencies down

Shopping center vacancies rise

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Inclusive…

Exclusive…

Take Away’s…

Smart Real Estate News & Commentary by Chris McLaughlin July 2, 2010

IT’s BACK: NO FLIP RICHES REOPENS THIS SATURDAY!

********************************************************** Pending home sales ‘fell off a cliff’

US employment figures continue to threaten

Home Buyers Get Tax Credit Closing and Flood Insurance Extensions

Diana Olick – Housing’s Powerful Lobby Surges Ahead

Swinging Short Sale Discounts

Fannie’s Appraisal Policies Updated

Now for our real estate education section…

Friday File – 15 Minute Resolution

www.costar.com

www.loopnet.com

http://itunes.apple.com/us/app/loopnet-commercial-real-estate/id349561448?mt=8

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

SATURDAY ENCORE: NO FLIP RICHES UNVEILING AND FR*EE ONLINE DVD

**************************************************** Diana Olick – Big Banks Move to Short Sales, but Will It Help Housing

More commercial mortgage backed securities sold

Retail sales drop in 8 months

DSNews.com – Shadow Inventory Variants Could Trigger Regional Price Declines: Report

Now on to our real estate education section…

Financial Guru’s Warn – Prepare for Financial Collapse

Smart Real Estate News & Commentary by Chris McLaughlin June 8, 2010

NO FLIP RICHES UNVEILING AND FR*EE ONLINE DVD

**************************************************** DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide

Economic Recovery Losing Shape?

Bernanke: Recovery ‘won’t feel terrific’

What commercial real estate crash?

Many March, April Pending Home Sales May Never Close: Economist

DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide Borrowers

Now on to our real estate education section…

Lessons Learned from Greece 2010

Smart Real Estate News & Commentary by Chris McLaughlin June 3, 2010

HELP US HELP YOU!

ENCORE: Find Private Lenders NOW

TONIGHT, June 3rd at 8:30 PM ET, 5:30 PM PST

Pending Home Sales Surge Continuing

Retailers Post Another Month of Disappointing Sales

Diana Olick – BofA: Mortgage Walkaways Have Huge Incentive

Fed’s Lockhart Says Rates May Rise With Unemployment Still High

DSNews.com – Commercial Defaults Hit Record for Both Investors and Banks

Now on to our real estate education section…

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

FIX A FLIP OPENS TODAY AT 3 PM ET, NOON PST!

Diana Olick – Home Buyer Tax Credit Snafu: No USDA Loans

Countrywide Picks Up Pace Resolving Troubled Loans: Barclays

Wall Street hopes to dodge two reform bullets

Top stories from HousingWire over the weekend

**********************************************************
Foreclosures to persist

**********************************************************
Home delinquency rate increases

**********************************************************
Pending home sales ‘fell off a cliff’

****************************************************
Diana Olick – Big Banks Move to Short Sales, but Will It Help Housing

****************************************************
DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide