CoreLogic today released its National Foreclosure Report for March, which provides monthly data on completed foreclosures, foreclosure inventory and 90+ day delinquency rates. There were 69,000 completed foreclosures in March 2012 compared to 85,000 in March 2011 and 66,000* in February 2012. Through the first quarter of 2012, there were 198,000 completed foreclosures compared to 232,000 through the first quarter of 2011. Since the start of the financial crisis in September 2008, there have been approximately 3.5 million completed foreclosures.   Approximately 1.4 million homes, or 3.4% of all homes with a mortgage, were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5%, in March 2011 and 1.4 million, or 3.4%, in February 2012. The number of loans in the foreclosure inventory decreased by nearly 100,000, or 6.0%, in March 2012 compared to March 2011.   

The share of borrowers nationally that were more than 90 days late on their mortgage payment, including homes in foreclosure and real estate owned (REO) assets, fell to 7.0% in March 2012 from 7.5% in March 2011, and remained unchanged from 7.0% in February 2012.  Also in March, the inventory of REO assets held by servicers nationwide grew more slowly than the pace of REO sales, as measured by the distressed clearing ratio.  The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures. The higher the distressed clearing ratio, the faster the pace of REO sales relative to the pace of completed foreclosures.  The distressed clearing ratio for March 2012 was 0.81, up from 0.76 in February 2012.

 Highlights as of March 2012

-  The five states with the largest number of completed foreclosures for the 12 months ending in March 2012 were:  California (150,000), Florida (92,000), Michigan (62,000), Arizona (58,000) and Texas (57,000). These five states account for 49.1% of all completed foreclosures nationally.

-  The% of homeowners nationally who were more than 90 days late on their mortgage payments, including homes in foreclosure and REO, was 7.0% for March 2012 compared to 7.5% for March 2011, and 7.0% in February 2012.   

-  The five states with the highest foreclosure rates were:  Florida (12.1%), New Jersey (6.6%), Illinois (5.4%), Nevada (4.9%) and New York (4.9%).

-  The five states with the lowest foreclosure rates were:  Wyoming (0.7%), Alaska (0.8%), North Dakota (0.8%), Nebraska (1.1%) and South Dakota (1.4%).

-  Of the top 100 markets, measured by Core Based Statistical Areas (CBSAs) population, 35 are showing an increase in the year-over-year foreclosure rate in March 2012, two more than in February 2012 when 33 of the top CBSAs were showing an increase in the year-over-year foreclosure rate.   

*February data was revised.  Revisions are standard, and to ensure accuracy CoreLogic incorporates newly released data to provide updated results.

BOA to cut 400 jobs

Bank of America (BOA) is planning to cut up to 400 jobs in its investment banking, corporate banking, and sales and trading units, The Wall Street Journal reported, citing people familiar with the situation.  An expected sale of the bank’s non-US wealth-management operations in Asia, Latin America, and Europe would eliminate up to 2,000 jobs, the Journal reported.  Reuters reported on April 17 that Bank of America was looking to sell its wealth-management units outside the US for as much as $3 billion.  BOA declined to comment on the Journal report.  Last spring, the bank announced a cost-cutting program called Project New BAC that aims to eliminate 30,000 consumer banking and technology jobs over the next few years.  The bank has said it expects to wrap up plans for the second phase of the program, which focuses on investment banking, commercial banking, and related support jobs in May. The second phase is expected to cut fewer jobs than the first because it covers a smaller, more efficient part of the bank.  At the end of March, Bank of America had about 278,700 employees worldwide.

Olick – renter nation

“More Americans are renting homes, and fewer are owning them; it’s not as if this is news to anyone who follows the US housing market, but a new report from the Census Bureau today really put an historical exclamation point on the trend.  The share of US household renting reached a fifteen year high, and home ownership reached a 15-year low. Funny how those numbers travel together.  34.6% of households were renters in the first quarter of this year, and that number is climbing, as lack of credit or sufficient down payment keeps Americans young and old from becoming home owners. Rental vacancies are therefore falling, the lowest rate out West, where foreclosures have run the highest during this housing crash. That is also where investors are rushing in to buy foreclosed properties and put them up for rent. Single family homes for rent, in fact, surpassed multi-family units, taking 52% of the $3 trillion rental market, according to CoreLogic.

Both rental and homeowner vacancies are down, which is a general positive for the housing market, because empty houses are a blight on communities. ‘The vacancy rates will only decline if household formation is increasing or units are being destroyed,’ notes ISI Group’s Stephen East.  While banks have bulldozed some foreclosed properties here and there, the practice is by no means popular or widespread. That should mean that household formation is increasing, which is generally a product of an improving jobs picture. Younger Americans who have been living together or with their parents may finally be getting into their own homes, more likely into rentals, but at least they’re forming their own households. That is thanks to a small drop in the unemployment rate among 25-34 year olds to its lowest rate in three years. The home ownership rate now stands at 65.4%, down a full percentage point from a year ago, and down from just over 69% at the peak in 2004.  Since the recession began, growth in overall new households has been about 50% short of trend lines, according to analysts at Goldman Sachs. While household formation is rebounding for single or un-related Americans, formation among families is still waning; that may be due to the types of homes they need, i.e. larger, single-family homes. It thus stands to reason that pent-up demand will show itself first in single family rentals in the future and less in multi-family. No wonder investors are flooding the foreclosure market.”

No more easing?

Two top Federal Reserve officials — one with a dovish, employment-focused bent, and the other a self-avowed inflation hawk — yesterday both said they see no need for the US central bank to ease monetary policy any further.  But the comments, from San Francisco Fed President John Williams and Dallas Fed President Richard Fisher, do not mean they believe the central bank should quickly move to raise rates, which it has kept near zero for more than three years.  The economy grew at a 2.2% pace last quarter, down from its 3% growth rate in the final three months of the year. Recent economic data, including a gauge of business activity in the US Midwest, signal growth may slow further this quarter.  “I don’t think we are ready to exit yet,” Fisher, an inflation hawk, told Reuters at the Milken Institute Global Conference in Los Angeles.  Fisher said he would oppose the extension of Operation Twist, the Fed bond-buying program that is set to end in June, but stopped short of calling for outright monetary tightening.  “We’ll have to see how the year works out,” he said.

US home ownership sets new record – down

The US homeownership rate fell to the lowest level in 15 years in the first quarter as borrowers lost homes to foreclosure and tighter inventory and credit kept buyers off the market.  The rate dropped to 65.4% from 66% in the fourth quarter and fell a full percentage point from a year earlier, the Census Bureau said in a report today. That is the lowest level since the first quarter of 1997, and down from a record 69.2% in June 2004.  Mounting foreclosures are displacing borrowers, while a lack of inventory has kept home sales from accelerating amid record affordability, the National Association of Realtors reported April 19. Stricter mortgage standards are also limiting purchases as rental demand surges, said Paul Diggle, property economist with Capital Economics Ltd. in London.  “Although house prices and mortgage rates have fallen to a level that makes buying preferable to renting, ongoing problems accessing mortgage credit are preventing many households from taking advantage,” he wrote in a note today.  The US apartment vacancy rate fell to 4.9% in the first quarter, an 11-year low, according to New York-based Reis Inc. (REIS).  The vacancy rate for rental homes was 8.8% in the first quarter, compared with 9.7% a year earlier, the Census Bureau said in today’s report.

Of the estimated 132.6 million US homes, 18.5 million, or 13.9%, were vacant in the first quarter. A year earlier, about 19 million homes were vacant, according to the report. That includes homes for sale or rent or held off the market, and vacation properties used seasonally.  The ownership rate may drop below 64% by the end of 2015 and stay there for years, Scott Simon, the mortgage bond head of Pacific Investment Management Co. in Newport Beach, California, said in an e-mail today.  “It will be lower by 2017,” he said. “It will be lower in 2020.”  About 6 million borrowers will lose their properties in the next five years because of inability to pay, creating 4 million new rental households, Simon said in an April 24 interview on Bloomberg Television.  The homeownership rate fell 3 percentage points from a year earlier to 61.4% in the first quarter for people aged 35 to 44, the biggest drop of any age group. The Northeast had the biggest regional decline, with the ownership rate falling 1.4 percentage points to 62.5%. The West had the lowest ownership rate at 59.9%, down 1 percentage point from a year earlier. 

The US homeownership rate rose to a record in 2004 when President George W. Bush, running for re-election, called for expanding home-loan availability to create an “ownership society.” The current rate of 65.4% matches the average since 1965, when the Census Bureau began reporting the figures, according to data compiled by Bloomberg.  Home prices fell 3.5% in February from a year earlier and are 35% below their July 2006 peak, according to the S&P/Case-Shiller index of 20 US cities. The average rate for a 30-year fixed loan was 3.88% last week and reached 3.87% in February, the lowest level in at least four decades, according to Freddie Mac.  About 2.37 million homes were listed for sale in March, a and 6.3 month supply and down 22% from a year earlier, the Realtors association said on April 19. A six-month supply is considered a healthy market, according to the group.

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Fannie and Freddie CFOs make more than CEOs

The Federal Housing Finance Agency’s (FHFA) announcement of salary cuts for Fannie Mae and Freddie Mac executives doesn’t go as far as some would like.  The FHFA detailed a $500,000 cap on salaries Friday, in particular for the incoming CEOs of the government-sponsored enterprises. That remains above the federal pay scale and falls short of compensation caps in standing legislation, and includes deferred payments that boost potential pay to $30.73 million for the top 10 executives.  Fannie and Freddie’s chief financial officers are exempt from the base salary cap, meaning they’d make more than the new chief executives. CFOs Ross Kari and Susan McFarland will make $675,000 and $600,000, respectively, in 2012.  Patrick Lawler, FHFA chief economist, said candidates the agency contacted for CEO positions requested subordinates make a competitive salary.  “We’re going to try and fill these two positions at a very low wage rate, but we just don’t think there’s any chance on the others,” Lawler said.

Three Freddie executives are also set to receive a raise, albeit at or below the $500,000 barrier.  These levels do represent a sharp reduction since the government took Fannie and Freddie into conservatorship. Compensation for the top 15 executives at each GSE is down 63%, according to the FHFA.  Members of Congress, however, weren’t keen on the changes.  “That may (be) an appropriate level for the private sector, but as long as the GSEs live off the taxpayers, these companies are owned by taxpayers and their staff should be paid accordingly,” Rep. Spencer Bachus, R-Ala., said in a statement Friday.  A House bill sponsored by Bachus would limit GSE executive pay at $218,978 for 2011. It passed the committee level in November.  Jeff Emerson, a spokesman for Bachus, said that bill could come up before a full House vote soon. Bachus called the FHFA’s change “long overdue,” but said it doesn’t go far enough.

Another measure, attached to a House and Senate-approved congressional insider trading bill, would put Fannie and Freddie employees on a federal pay scale with a maximum $275,000 salary and no bonuses.  Both chambers approved separate versions, each with the GSE provision, in February, but have yet to reconcile the two measures.  Sen. Jay Rockefeller, D-W.Va., cosponsored the GSE amendment in the Senate and called the FHFA’s move a “good first step.”  “Even a $500,000 salary is too much,” Rockefeller said in a statement. “Excessive executive pay at taxpayer-funded entities has already been going on for too long and must end — period.”  The FHFA said any further salary reduction from its $500,000 benchmark or uncertainty around it would “heighten safety and soundness concerns.”  “A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances,” FHFA acting director Ed DeMarco said in a release. “A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely.”

Legislators in Washington railed against executive pay at Fannie and Freddie during committee hearings in the fall, including before the House Oversight Committee. That committee, chaired by Rep. Darrell Issa, R-Calif., issued a critical report on GSE pay, calling executives “government-sponsored moguls.”  “I’m encouraged to see that (the) FHFA took the Oversight Committee’s recommendation to reevaluate the bonus structure for these executives,” Issa said Friday in a release.  The $500,000 salary cap, however, only refers to bimonthly or weekly payments, according to FHFA documents. The pay structure includes “deferred payments,” which the FHFA does not consider bonuses, delayed by a year for each quarter.  The top 10 executives can still earn that $30.73 million with deferred payments included, a 13% reduction from roughly $35.3 million in 2011. Executives ultimately brought in $30.1 million last year with these payments.

Deferred payments are subject to reductions based on conservatorship and personal performance, as well as continued employment up to Jan. 31 2014. Early-exit provisions make up 70% of deferred salary.  The FHFA included that provision to encourage executives to stay, Lawler said.  “This is an unusual pay structure that’s designed for a very unusual situation,” Lawler said. “It doesn’t look 100% like the private sector, but it certainly isn’t the government either.”  Charles “Ed” Haldeman and Michael Williams, Freddie and Fannie’s outgoing CEOs, could earn up to $5.4 million in 2012, including $900,000 in base salary. Haldeman, however, recently asked not to receive $2 million in incentives tied to 2009 and 2010, according to a regulatory filing and first reported by The Wall Street Journal.  But both have said they’d leave before year-end, with $2.88 million in deferred salary tied to retention reductions.

Stress tests expected to show progress

The Federal Reserve will release the results of its latest stress tests this week, and they are expected to show broadly improved balance sheets at most institutions.  While unpleasant surprises are possible, analysts are counting on the Fed to find banks largely healthy. That would stand in marked contrast with the holes, in the tens of billions of dollars, found on balance sheets in the first round of stress tests in 2009.  The examination is not merely an intellectual exercise. If institutions fall short, they could be required to raise billions in new capital, depressing their shares. If they pass, dividend increases and stock buybacks by the strongest institutions will follow as they did after the second round of tests a year ago, pleasing investors whose banks’ stocks still trade at levels far below where they where before the collapse of Lehman Brothers in September 2008.

Under the tests, Federal Reserve specialists are trying to predict how capital levels at the 19 largest banks would withstand an economic downturn even more severe than the one that followed the Lehman collapse.  In addition to a 50% stock market decline and an 8% contraction in real gross domestic product, the tests envision an unemployment rate of 13%, well above the 10.2% peak recorded in October 2009. A surge in unemployment would increase losses for banks on mortgage and credit card debt.  If all that were not enough, the Federal Reserve is considering what would happen to bank assets if a market shock hit Europe and reverberated in the United States, gauging the extent of losses that have not loomed large for American institutions, despite the continuing problems in Greece and weaker European borrowers.

Regulators are walking a fine line: if they permit the banks to return too much capital now, that might leave the industry vulnerable in the event of a downturn and lead others to think the industry was returning to its risky ways. On the other hand, a raft of negative results would alarm investors just as calm seems to be returning to the markets.  For banks to pass the tests, they must show that their Tier 1 capital ratio – the strictest measure of a bank’s ability to absorb financial blows – will be at 5% or better, even in the Fed’s nightmare case. To raise dividends or buy back stock, the ratio would have to remain above 5%, after capital was returned to shareholders.  Tier 1 capital ratios for the 19 largest banks have improved since the depths of the financial crisis, rising to 10.1% in the third quarter of 2011 from 5.4% in the first quarter of 2009. Actual capital in dollar terms has jumped to $741 billion from $420 billion.

Olick – homebuilding stocks too hot?

“Improvement in the jobs market, improvement in potential buyer traffic, improvement in existing home sales, no change in record low mortgage rates…no surprise the analysts are starting to upgrade the nation’s public home builders. Not to mention that we’re getting an unusually warm start to the spring market.  ‘We are raising our targets for the builders, and are upgrading DHI, LEN, and TOL to Outperform (from Neutral), and also upgrading MTH and RYL to Neutral (from Underperform),’ wrote Credit Suisse’s Dan Oppenheim in a note this morning, that then sent the stocks of all the builders on a tear.  Not that they haven’t been on a tear since last fall, with the S&P home builder’s index nearly doubling. If that happened even before all this new spring energy in the market, then the obvious question is, how much farther do these stocks have to go?

That will depend entirely on the spring results, which we won’t get until summer. We want to focus on new orders and new home sales, but we also need to pay close attention to the distress in the market, since many foreclosed homes are relatively new construction, left over from the building boom barely six years ago.  ‘There will likely be added supply/competition as more foreclosures come to market following the robo-signing agreement, and a significant backlog of 6.6 million delinquent loans/foreclosures still needs to be worked off (though foreclosure pricing seems to have bottomed and there are plenty of investor buyers of foreclosures),’ writes Oppenheim.

He also cites increases in FHA mortgage insurance premiums. FHA is a favorite loan product for first time home buyers, and first time buyers are major clients of the new home builders. And while bargain-basement foreclosures may be hurting the home builders in the short term, the rental boom due to all these foreclosures may actually provide builders with another opportunity.  ‘Bowing to the realities of today’s for-sale housing market, a growing cadre of market-rate builders are warming to the concept of houses as an alternative rental product,’ writes Lew Sichelman in National Mortgage News.  That’s right, building houses to rent, not sell. Not so crazy, given rising rents and rising demand. If the multi-family developers can do it, why can’t single family builders?  As for the stocks of the big guys, are they too hot? Most builders are pricing in order increases of 20% at least, according to CNBC’s Bob Pisani.  ‘That seems to be happening, which would leave little room for price run-ups, but remember, this market is very under-owned by a lot of investors, so these stocks could go beyond reasonable valuations very easily,’ says Pisani.”

Obama defends energy policy

President Obama is stepping up defense of his record amid concern higher oil prices may lift gasoline to $5 a gallon in some parts of the country this summer, posing a potential threat to the president’s bid for reelection on November 6.  Republicans point out that Obama policies have hobbled the energy industry with red tape and point to the administration’s blockage of TransCanada Corp’s Keystone XL oil pipeline project to back their charge that he is hostage to environmentalists in his political base.  Obama visited election battleground states North Carolina and Virginia last week to promote his message and will speak at the White House on Monday with local television stations serving key swing states, including Colorado, Nevada and Pennsylvania.

BOA and MBIA battle over evidence

Bank of America (BOA) is defending itself after insurer MBIA filed a letter with a court asking for sanctions against BOA over alleged delays or failure to produce records compelled in discovery.  MBIA, which is suing Countrywide over alleged misrepresentations made about the quality of Countrywide loans that MBIA insured as securities, is requesting documents that could shed light on allegations of fraud within the former subprime lending giant. BOA purchased Countrywide in 2008.  In a letter to Judge Eileen Bransten with the New York State Supreme Court, MBIA claims BOA failed to produce documents requested on fraud allegations, delayed the production of requested materials and dumped thousands of documents on MBIA at the last minute, making it difficult for the insurer to conduct an appropriate investigation before depositions in the case.

Bank of America responded with its own letter to the court. The bank said the allegations are baseless and blamed the mass release of documents on a coding error that was disclosed to MBIA.  Furthermore, in its letter, BOA claims MBIA refused to wait for the coding error situation to be remedied, which led to the production of documents on a rolling basis. The bank claims MBIA knew the process would take weeks and says BOA devoted significant resources to the document production.  MBIA views the recent discovery spat in a different light.  “Over the course of the last three weeks, Bank of America has produced nearly 170,000 pages of new, relevant, successor liability documents,” MBIA attorneys wrote. “These productions, which are continuing, have forced postponement of a number of successor liability depositions and compelled MBIA to agree to a brief extension of the successor liability discovery schedule. This is just the latest conduct by BAC to sabotage the discovery schedule and cause MBIA significant prejudices, and is part of an indefensible pattern of delay and discovery abuses by both the BAC and Countrywide defendants.”

MBIA’s request for discovery sanctions also claim Countrywide failed to produce documents related to allegations of fraud on Countrywide home loans.  “This includes withholding important categories of documents on specious grounds and then selectively producing certain of such documents that it believes are favorable on the eve of (or during) depositions,” MBIA said in its filing.  Bank of America denies the discovery process has prejudiced MBIA and says MBIA’s sanction requests are baseless in a letter to the court.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

All Rights Reserved.

http://www.shortsalesriches.com

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http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties

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

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* 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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Underwater borrowers eligible for settlement write-downs

A calculation by a Brookings Institution economist narrowed down a pool of underwater homeowners to 500,000 who could qualify for principal reduction from the $25 billion mortgage settlement.  Using the parameters of the settlement, Ted Gayer found just 5% of the nation’s 11.1 million underwater borrowers could get the principal reduced on their mortgage, first reported by The Washington Post. About $10 billion of the settlement, in the form of credits, will go toward principal write-downs made by the five banks. Only homeowners delinquent on their mortgages are eligible. Gayer eliminated others according to underlying requirements, including Fannie Mae or Freddie Mac loans and homes not owner-occupied. It’s a rough calculation, Gayer warned, and he made some assumptions in the process. He eliminated any loans not held on the banks’ balance sheets, as well as any with a second loan. Mortgage bondholders may not take kindly to principal write-downs, he said.

Greek Bond Swap Deal Rests on Knife Edge

Greece faces a decisive week in its struggle to avert a sovereign default, with a planned debt swap poised on a knife-edge amid doubts over the level of participation by private bondholders. Charles Dallara, the head of the international consortium of financial institutions that negotiated the debt restructuring, declined to predict the rate but acknowledged that the complexity of the deal had required some investors to spend time understanding it. Many investors need to decide by Tuesday because of the complications of the deal. Because of the size of their holdings, a large number of bondholders will have to consult their boards, especially as the loss is about 75 percent in net present value terms. Private holders of 206 billion euros in Greek bonds have until Thursday evening to decide whether to take part in a swap where they would trade bonds for a package of bonds and cash that would knock about 100 billion euros off Athens’ debts. Private holders of 206 billion euros in Greek bonds have until Thursday evening to decide whether to take part in a swap where they would trade bonds for a package of bonds and cash that would knock about 100 billion euros off Athens’ debts.

New Jersey witnesses lending resurgence

The volume of loans written by New Jersey-based banks rose 16.5% in 2009-2011, while lending fell 5.6% nationwide over that span, according to The Star-Ledger in Newark. Most of the gains in the Garden State were attributable to MetLife expanding into mortgage lending, which the insurance giant has since abandoned. But smaller lenders stepped into the void left by the exit of some of the larger banks, as well. HousingWire explored how community banks are boosting market share as big banks write fewer home loans in our latest HW Focus on Lending, a supplement to the March issue. “We made a conscious effort to take advantage of other banks stepping back,” Kevin Cummings, president and CEO of Investors Bank of Short Hills told the Star-Ledger. Cummings’ firm increased its commercial balance sheet to $3.6 billion from $380 million at the end of 2007.

US stock futures fall on global economy worries

US stock index futures fell on Monday after data showed Europe’s private sector activity declined last month and China cut its growth target, reigniting concerns about the strength of the global economy. European stocks dropped, with shares in euro zone peripheral countries such as Italy and Spain among the worst hit, after data showed the region was likely to slide back into recession. Chinese Premier Wen Jiabao cut his nation’s 2012 growth target to an 8-year low of 7.5 percent and put a priority on boosting consumer demand in hopes of weaning the economy off a reliance on external demand and foreign capital. European markets were also pressured ahead of a March 8 deadline for Greece and private bondholders to complete a debt swap. Failure to reach agreement would put the country back on the brink of a messy default. Economists look for a drop of 1.5 percent after a 1.1 percent rise in the previous month. American International Group Inc is selling part of its stake in AIA Group Ltd to raise about $6 billion to help repay a huge federal government bailout.

DSnews.com: Treasury Reinstates HAMP Incentives

The Treasury Department says servicers participating in the Home Affordable Modification Program (HAMP) are getting better at evaluating homeowners for the program, including noticeable improvement in assessing borrower income to determine program eligibility and calculate the amount of their modified payments. HAMP performance reviews evaluate servicers based on three categories: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management, and governance. Treasury said it agreed to release withheld incentives for past deficiencies as part of the $25 billion federal-state mortgage servicing settlement announced last month, but officials stress that they retain the right to withhold incentives in the future should the results of HAMP compliance reviews warrant such remedial action. As of the end of January, participating servicers had granted 951,319 permanent HAMP modifications to distressed borrowers. There are an additional 76,343 HAMP trials currently in active status.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-

foreclosure expert, he oversees more than

100 short sale & REO closings each month

* Long-time authority on real estate investing

and rapid reselling of distressed homes.  Owns

portfolio of nearly 150 high-value, high-profit

properties

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

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

* In 2011, Chris’ 4 Central Florida real estate offices

closed 3,336 sides for a closed sales volume of

$430,902,643!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!
Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Foreclosure abuse rampant

A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country. The audit of almost 400 foreclosures in San Francisco found that 84% of them appeared to be illegal, according to the study released by the California city on Wednesday. “The audit in San Francisco is the most detailed and comprehensive that has been done – but it’s likely those numbers are comparable nationally,” Diane Thompson, an attorney at the National Consumer Law Center, told Reuters. Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork. Of those documents, created between January 2008 and December 2010, 4,500 showed signature irregularities, a telltale sign of the illegal practice of “robosigning” documents.

One of the major problems that has emerged in the foreclosure crisis is that it is far from clear that many lenders foreclosing on properties actually own the loans and have the right to take action against them. In many cases during the housing bubble that burst in 2008, original mortgages were repackaged and sold to so many investors that it is now unclear who actually holds the loans. In the San Francisco study, which studied properties subject to foreclosure sales between January 2009 to November 2011, 45 per cent were sold to entities improperly claiming to be the owner of the loan. “It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans,” the report stated.

One factor that probably caused the particularly high 84 per cent rate of illegal foreclosures in San Francisco is that California is a “non-judicial” foreclosure state. In other words, the foreclosure process does not need to be overseen by a judge. That left the conduct of lenders in California – one of the hardest-hit states in terms of foreclosures – largely unscrutinized until the robosigning scandal gained prominence in late 2010. In judicial foreclosure states such as New York, some judges have been taking banks to task for submitting faulty foreclosure paperwork. But Ray Brescia, a visiting professor at Yale Law School and an expert in housing law, said foreclosure fraud had been as rampant in judicial states as non-judicial ones. “This number around 80% is not a number we have not seen before,” Brescia said, referring to both the issuing of faulty loans during the housing bubble and the foreclosure crisis that followed. “There have been a very high level of irregularities across the country.”

Businesses brace for new “fair” tax plan

The Treasury Department will roll out a corporate tax reform plan today from President Barack Obama, administration officials said yesterday, with expectations low for any major tax code overhaul in an election year. The Obama plan will follow such principles as “fairness” that the president laid out in his State of the Union address to Congress last month, the officials said. A cut in the corporate tax rate, which presently tops out at 35%, may be included, as well as a proposal for a minimum tax on overseas profits, analysts said. After the presidential and congressional contests are decided in November, however, a number of major tax and budget issues will converge on Washington and new momentum for comprehensive tax reform may follow. Potomac Research analyst Greg Valliere said: “Even if Geithner floats something and members of both parties say they’re interested, I simply cannot see a reform bill passing before the election, close to a zero% chance.” He added: “I suppose anything would be possible in a lame-duck session in December, but something this huge and complex will require a thorough vetting, and that could take a year – or much longer.” The last major rewrite of the tax code came in 1986 under Republican President Ronald Reagan.

Republican Representative Dave Camp, chairman of the US House of Representatives tax-law writing Ways and Means Committee, wants to slash the top corporate rate to 25%. Obama last week unveiled a $3.8 billion budget-and-tax proposal that called for aggressive government spending to boost the economy and for higher taxes on the rich. On Friday, Congress approved extending a payroll tax cut through the end of 2012. Its expiration will coincide with several other fiscal earthquakes: the expirations of individual tax cuts enacted under President George W. Bush, and $1.2 trillion in automatic budget cuts across all government programs imposed as part of last year’s deal to raise the debt ceiling. After these events and others, analysts said, thorough tax reform may be a realistic prospect. For now, they said, tax proposals will largely amount to political messaging. Republican presidential candidate Mitt Romney on Tuesday called for a flatter, fairer and simpler tax code. He is scheduled to make a major economic speech on Friday in Detroit. Details of his tax plan may emerge before then.

Mortgage applications down

The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.5% in the week ended Feb 17. The MBA’s seasonally adjusted index of refinancing applications gave up 4.8%, while the gauge of loan requests for home purchases slipped 2.9%. The refinance share of total mortgage activity dipped to 80.1% of applications from 81.1%. Fixed 30-year mortgage rates averaged 4.09%, up 1 basis point from 4.08% the week before. The survey covers over 75% of US retail residential mortgage applications, according to MBA.

Eurozone at the brink of recession

The euro zone economy is in danger of tipping into recession, with the services sector shrinking this month along with manufacturing, tempering a wave of optimism after a new bailout deal for Greece struck this week. Surveys of purchasing managers published on Wednesday showed unexpectedly weak activity in the region’s most powerful economy, Germany, and in France. This is as well as in the bloc’s floundering debtor states, such as Spain, where unemployment is running at 23%, and Greece where the euro debt crisis began more than two years ago and continuous cuts have provoked riots. The Markit Eurozone Composite Flash PMI, a good leading indicator of overall economic growth, fell to 49.7 in February from 50.4 last month, below expectations for a rise to 50.6 and under the 50 line that divides growth from contraction. That weakness was echoed in China, whose PMI showed export orders falling in their worst performance in eight months. Europe is China’s biggest export market. Older data published on Wednesday, official figures on euro zone industrial orders for December, showed there had been some stabilization at low levels. Manufacturing orders in the 17 countries that share the euro rose 1.9% on the month, beating the 0.7% predicted in a Reuters poll and reversing a 1.1% fall in November. But with euro crisis curtailing on British business with the bloc, two Bank of England policymakers voted earlier this month for an even bigger stimulus to the economy in February than the extra 50 billion pounds ($79 billion)that their colleagues agreed to pump into the economy, minutes to the BoE’s February 8-9 meeting showed.

Olick – will gas prices be the spoiler?

“I spent Sunday afternoon at a Toll Brothers neighborhood in Northern Virginia called ‘Dominion Valley.’ It’s a planned community about 45 miles from the heart of DC that sprung up in 2000 and has sold 2500 homes, with another 1,000 still planned. My mission was to get a sense of buyer traffic as the President’s Day weekend unofficially kicks off the spring home selling season. As I was driving back toward DC, I noticed the price of gas (for the cheap stuff) was $3.75 a gallon. Ouch. (They’re higher in other parts of the country). That can’t be good for sales. Some of the potential buyers I spoke with worried about the drive time, but hadn’t seemed to give gas prices as much thought. Many people who live in Dominion Valley commute into the city, or just outside to the Pentagon and surrounding contractor base in Crystal City. Commutes in this area are often long, but when gas prices spike they become more costly, too.

The sales center and model homes bustling with potential buyers. With a weather forecast for snow and the ‘National Sales Event’ advertised by Toll Brothers was mostly discounts on upgrades, I was surprised to see a steady crowd. John Elcano, Toll’s VP for Virginia Sales, told me they’ve raised prices four times since October. Several of the potential and actual buyers I spoke with were eager to move, one from a condo in the same community, another a first time home buyer, and another who was downsizing from a bigger house with a bigger yard. Scott Genburg and his wife, who live near Dominion Valley, already sold their existing house, without even putting it on the market. A realtor canvassed their neighborhood and they accepted the offer. So they ended up needing to buy something fast and bought a new home. But none of the folks I spoke with were looking for a bigger house with a longer commute, a stable of the boom times. With the federal government a steady source of jobs, the Washington, DC, and Northern Virginia markets have shown resilience in the face of the great recession. Builders seem to be responding. Metrostudy reports that finished, vacant housing inventory rose more sharply than any other market it studies in the last quarter, up 17.7%. At the same time, the inventory of existing homes for sale is low. Ken Croisetiere, who just got married, expressed frustration with the house hunting process ‘it feels like a great time to buy, but what we’re finding out is that the houses that appeal to us are not as abundant as we would like to find. Toll’s Elcano says, ‘people are relocating to the area, they can’t find a resale to move into so they‘re moving more toward the new construction.’ But will people still move to new construction in the suburbs if it cost $100 to keep the tank full on a weekly basis? ISI home building analyst Steve East says higher gas prices will impact builders, with a ‘modest effect’ on the entry level market.”

Oil hits $106

Oil prices hovered above $106 a barrel Wednesday in Asia amid concern that conflict over Iran’s nuclear program could lead to global crude supply disruptions. Benchmark crude for April delivery was up 11 cents to $106.36 per barrel late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.65 to settle at $106.25, the highest since May, in New York on Tuesday. Brent crude was down 16 cents at $121.50 per barrel in London. Oil has jumped from $96 earlier this month amid escalating tension between Western powers and Iran. On Tuesday, Iran Gen. Mohammed Hejazi warned his country is prepared to carry out a pre-emptive strike against any nation that threatens Iran. His comments followed Iran’s announcement of war games to practice protecting nuclear and other sensitive sites — viewed as a message to the US and Israel that the Islamic Republic is ready both to defend itself and to retaliate against an armed strike. Iran said over the weekend that it will stop selling oil to Britain and France in retaliation for a planned European oil embargo this summer. The move was mainly symbolic — Britain and France import almost no oil from Iran — but it raised concerns that Iran, which produces almost 4 million barrel a day of crude, could take the same hard line with other European nations that use more Iranian crude. “A real stoppage of 4 million barrels a day will send crude markets to at least $130,” Carl Larry of Oil Outlooks and Opinions said in a report. “A stoppage longer than a month will push that number to $150. Damage to oil fields or transport areas will add even more premium that will not go away for years.”

WSJ- should mortgage rates be even lower?

Mortgage rates are the lowest on record. But by a key historical measure, they should be even lower. Over the past year, a wide gap ripped open between the mortgage rates house hunters see and a benchmark interest rate investors demand to buy bonds backed by home loans. In normal times, this obscure metric would only be of interest to bankers, brokers and traders of mortgage-backed securities. But with housing still dragging on the economy, the spread is potentially slowing the recovery—and important to everyone from top Washington policy makers to strapped homeowners who could use a few extra dollars each month.

For months, a key interest rate on mortgage-backed securities—known as the current coupon yield—has tumbled faster than average US 30-year mortgage rates. In recent weeks, the difference between the two has flirted with levels seen in the aftermath of the financial crisis. Some say the wide spread shows the large banks that dominate the mortgage market are flexing their muscle by keeping prices relatively high. Others argue the gap reflects increased regulatory costs, risks and new realities of mortgage making. Either way, the spread is wide. Tuesday afternoon, it was 0.96 percentage points—almost double its average over almost 30 years. It has been as high as 1.20 percentage points this year.

If history is any guide, it should be a lot lower. With yields on mortgage-backed securities at these levels, the 30-year fixed rate mortgages would be roughly 3.40% if the spread was around its historical average of 0.50 percentage points. That rate would save a US homeowner with the average outstanding loan balance of $155,000 about $41 in mortgage payments each month, versus the current rate. Over the seven-year period someone usually holds a 30-year mortgage, that translates into a roughly $3,446 difference, according to numbers provided by trade publication Inside Mortgage Finance. Wider spreads generally translate into better margins for banks and brokers. And some lenders have seen profitability on mortgage origination improve as the spread has widened. Some mortgage-finance observers suggest that increased concentration among the large banks that dominate the mortgage market better helps explain the wide spreads. They argue that because there are fewer banks doing the bulk of the mortgage lending than in years past, it is easier for them to capture market share without offering rock-bottom prices. “It’s a lack of competition. We really haven’t seen a competitive marketplace since 2008,” said Guy Cecala, publisher of Inside Mortgage Finance.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 150 high-value, high-profit
properties

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

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

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Foreclosures down in Colorado

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

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

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

Mr. Geithner goes to Germany

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

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

Olick – why are cancellations even higher?

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

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

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

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

Euro down against dollar

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

Toll Brothers Q4 profits down 70%

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

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

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

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

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

New Jersey foreclosures wait for deliberations

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

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

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

LPS – house price declines across the board

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

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

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

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-

foreclosure expert, he oversees more than

100 short sale & REO closings each month

* Long-time authority on real estate investing

and rapid reselling of distressed homes.  Owns

portfolio of nearly 150 high-value, high-profit

properties

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

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

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

closed 2,786 sides for a closed sales volume of

$392,912,927!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!
Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

New foreclosure plan

Big investors are showing interest in an evolving Obama administration plan to sell off foreclosed homes, although the government will have to make the offer sweet enough to coax private funds. The White House is assessing how best to encourage private companies and investors to snap up foreclosed properties held by the government and convert them into rentals. Officials want private partners to take over as much as $30 billion in single-family properties that are currently on the books of government-run Fannie Mae, Freddie Mac and the Federal Housing Administration. Several money managers with large fixed income funds are interested, according to sources, and a request for ideas on how to construct a program received nearly 4,000 responses. The foreclosure conversion program would come as the next step to complement other government supports for housing, including an expanded refinance program announced on Monday.

The main question for prospective investors, which include broker-dealers and firms already overseeing similar rental programs, is the type of financing the government will make available—an issue officials are still struggling with. “In order to get a better bid, there has to be some incentive involved to get qualified investors involved,” said Ron D’Vari, co-founder and chief executive of NewOak Capital. “The reality is not a lack of interest, but so far it looks like a lack of financing.” Incentives could include low interest rates, tax benefits or some type of rental assistance, said D’Vari, a portfolio adviser who has been involved in mini-bulk auctions of real estate-owned properties, or REOs, in California. REO properties are those acquired by a lender, whether a bank or the government, after an unsuccessful auction attempt. Fannie Mae, Freddie Mac and the FHA own about 250,000 properties, close to a third of the country’s REO pool.

One key challenge would be finding big enough blocks of properties in specific geographic areas that could be sold at one time. Analysts say this is what it would take to make the program attractive to large institutional investors. The transaction and liability costs property managers will face as they try to bring deserted units back up to code also pose a hurdle. The government also needs to determine how it will protect taxpayers, and it might explore ways to pair up with investors and allow Fannie Mae, Freddie Mac and FHA to keep some type of an ownership stake in the rental properties. A public-private partnership, somewhat along the lines of a program the Treasury tried to use to soak up toxic bank assets during the financial crisis, would allow the government to gain from the sales. Fannie Mae, Freddie Mac and the FHA have already undertaken some small efforts to reduce the backlog of foreclosed homes. They have donated a few vacant properties for demolition and have held some small auctions. Having already received $141 billion in taxpayer support since being seized by the government in 2008, Fannie Mae and Freddie are under enormous pressure to make sure they maximize the returns from the properties they hold. “This has got to be thought out. Fannie and Freddie would need to assess if they are getting the return they need from a rental,” said Ken H. Johnson, a real estate professor at Florida International University. Johnson said one way to get over the hurdle would be for the two agencies to be given an explicit mission of market stabilization.

2.5% growth, jobless claims hold steady

US economic growth increased at its fastest in a year in the third quarter as consumers and businesses set aside fears about the recovery and stepped up spending, creating momentum that could carry into the final three months of the year. At the same time, slightly fewer people sought unemployment benefits last week, though level remains elevated above 400,000. Though part of the increase came from the reversal of temporary factors that had restrained growth, the expansion was a welcome relief for an economy that looked on the brink of recession just weeks ago. U.S. gross domestic product expanded at a 2.5% annual rate in the third quarter, the Commerce Department said in its first estimate on Thursday. That was a big acceleration from the 1.3% pace in the April-June quarter and matched economists’ expectations. Consumer spending in the last quarter was the strongest since the fourth quarter of 2010, while business investment spending was the fastest in more than a year. Even though consumer spending was stronger, businesses were slow in stocking up their warehouses. The peppier spending and a slower pace of inventory accumulation by businesses will lay a base for a solid fourth quarter, but a slowdown in Europe and the exhaustion of pent-up U.S. demand could leave a weak spot early in 2012. And the recovery’s pace is still too weak to lower a jobless rate that has been stuck above 9% for five straight months.

Olick – new sales increase, prices tank

“Sales of newly built homes in September came in well over expectations, and stocks of the big builders took a little tick up on the news. They then dropped off pretty precipitously, as analysts weighed in on what is behind that nice headline number. First of all, these particular monthly numbers are based on signed contracts to buy a home, not closings, which provide the numbers for existing home sales. This data set is extremely volatile due to how small the survey pool is. And then of course you have these huge seasonal adjustments, which are important given housing’s distinct seasonality, but they can really skew the reality. So, the headline number is that sales (signed contracts) rose 5.7% from a seasonally adjusted annualized rate of 296,000 in August to 313,000 in September. Take out the seasonal adjustment, and don’t annualize (the expectation of how many homes will sell this year based on the monthly rate) and according to the report, builders sold 25,000 homes in August and 25,000 homes in September. No change. The good news is that builders usually sell fewer homes in September than August, and they sold the same, hence the seasonal bump up, the bad news is that 25,000 is a pitifully low number of sales, actually tying a record low.

We can haggle over sales numbers ’til the cows come home (if their home isn’t in foreclosure), but we really need to focus on the pricing numbers. The price of a newly built home fell 10.4% in September year over year to $204,400.00, which is about $200 higher than the low of 2003. Builders are being forced to compete with existing home sale prices, one third of which are distressed properties (foreclosures and short sales). The median existing home sale price in September was $165,400, so that’s still a pretty big premium. Unfortunately, given the high cost of materials these days and difficulty in obtaining construction loans, builders take every dollar drop pretty hard. ‘The pricing issue would generally hit everyone and would result in lower margins (and some additional impairments),’ notes Dan Oppenheim at Credit Suisse. Of course the pricing numbers also have noise in them. ‘Those particular price figures are not adjusted for the mix of new homes being built, so the rate of decline probably also reflects the switch to building smaller homes rather than the so-called ‘McMansions’ that were popular during the boom years,’ writes Paul Ashworth at Capital Economics, who says a turnaround in the new home market may still be a couple of years away.”

Will the super-committee slow spending this Christmas?
The Super Committee has been negotiating behind closed doors since September, and they have until Nov. 23 — that’s the day before Thanksgiving — to reach an agreement on at least $1.2 trillion in deficit reduction measures. Some retail experts fear that further political gridlock in Washington will make American consumers even more hesitant to spend during the busiest shopping period of the year. When the Super Committee was forged out of the debate on whether to raise the debt ceiling, consumers reigned in spending. One of the problems plaguing retailers is a lack of exciting new products to inspire consumers to shop, says Marshal Cohen, chief industry analyst at NPD Group. “There is almost nothing new…to get the consumer excited beyond just the traditional holiday categories,” Cohen says. Against this backdrop, the political discussions could create a big distraction for consumers. And that’s something retailers don’t want when most analysts, including Cohen, expect marginal growth at best this holiday season. It also may be yet another reason for consumers to be downbeat. Numerous consumer surveys have shown that consumers are worried about the economy and about their rising household expenses. One of the latest, a survey conducted by Deloitte, showed that two-thirds of consumers expect the economy to stay the same or weaken next year. As a result many consumers reported that they would be trimming their gift list and 42% said they planned to spend less this year.

Underwater mortgages in Las Vegas fall further

The September median home price in Las Vegas fell 11.5% from one year ago and remains 63% below the peak, according to analytics firm DataQuick. A home that sold for $312,000 during the peak of the housing bubble in November 2006 is now worth $115,000. September was the 12th straight month the median home price fell from the year before. The decline has fallen to levels not seen since the mid-1990s, DataQuick said. “This can be attributed to several factors: home price depreciation; robust sales of low-cost foreclosures; robust sales to investors, who mainly target low-cost properties; extraordinarily low new-home sales (new homes tend to sell for more than resale homes); and higher-than-usual condo resales (condos tend to be the least expensive homes),” DataQuick said.

President Obama gave a speech Monday in Vegas, promoting changes to help more underwater borrowers refinance announced the same day. The Federal Housing Finance Agency will waive some representation and warranty risk, appraisal requirements, and negative equity caps for the Home Affordable Refinance Program. How effective the program is remains in question for the nearly 4 million Fannie Mae and Freddie Mac borrowers underwater. In Vegas, 80% of the local homeowners owe more on their mortgage than the home is worth, according to RealtyTrac. Principal reduction remains the largest tool yet to be taken up by the largest banks or by any government agency on a large scale to combat the negative equity problem in the U.S.

Department of Housing and Urban Development Secretary Shaun Donovan said principal reduction will be a major function of the still pending attorneys general settlement with the largest mortgage servicers. Many Republican AGs and lawmakers say such lengths would only promote strategic default, not entice more people to stay current on their mortgage. Meanwhile, the number of default notices in Vegas increased 190% from July to August, according to DataQuick. More than 4,700 default notices were filed, led by Bank of America, the same findings states along the West Coast found. “It is unclear whether the higher levels of NODs seen in August and September are the beginning of a longer-term upward trend in default filings, which could mean far more distressed properties on the market and more downward pressure on home prices,” DataQuick said.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 150 high-value, high-profit
properties

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

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

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Short sales gaining popularity

US home prices may get a boost from an unlikely source: a pickup in sales of properties in default before they reach the stage where they are repossessed by the bank and sold.  There has been a “dramatic shift” in banks’ willingness to sell a property for less than the mortgage balance to avoid foreclosing, said Ron Peltier, chairman and chief executive officer of HomeServices of America Inc.  The short sales typically change hands at a discount of about 20% to homes not in financial distress, compared with a 40% price cut for bank-owned homes, according to RealtyTrac Inc. Short sales jumped 19% in the second quarter from the prior three months while foreclosure sales were flat, the data seller said.  “Banks have become much more supportive of short sales,” said Peltier, whose Minneapolis-based company is a unit of Warren Buffett’s Berkshire Hathaway Inc. “That’s better for the lenders, who have smaller losses on a short sale, and it’s going to be better for homeowners, who won’t have as much psychological distress as a foreclosure.”

Distressed sales brokered by HomeServices used to be 60% foreclosures and 40% short sales, Peltier said in an interview. Now, that ratio has flipped, according to the CEO.  “There’s a huge backlog of homes in default that the banks want to get rid of,” said Thomas Popik, research director for Campbell Surveys in Washington. “They don’t want to be homeowners.”  Banks are being more agreeable to short sales as foreclosures slow following a yearlong probe of so-called robo- signing, or pushing through unverified default documents. Foreclosure filings have fallen for 12 straight months through September as banks work through a backlog of paperwork, according to RealtyTrac.  Almost a third of all home transactions in August were foreclosures or short sales, according to the National Association of Realtors.

Goldman Sachs posts loss

Goldman Sachs posted a loss that was even worse than expected of 84 cents a share on a 33% drop in investment banking revenue from a year ago.  Wall Street had expected the company to post only the second quarterly loss since Goldman went public in 1999, but estimates were for just 16 cents a share in the red.  Shares, though, rebounded from earlier losses after company officials insisted the firm was well-positioned after the economy recovers and financial markets stabilized. Goldman stock rose 1% in premarket trading.  Goldman posted $3.59 billion in revenue, a decrease from $8.90 billion a year ago when it posted a profit of $2.98 a share.  Analysts had expected revenue of $4.29 billion.  Investment banking revenues came in at $781 billion, a one-third fall from the third quarter in 2010 and a 46% drop from the previous quarter. Financial advisory revenues were $523 million, up a bit from the same quarter last year.  Goldman’s loss-driver was its Investing & Lending division, which holds stocks, bonds, loans and private equity assets as long-term investments.  The division reported negative revenue of $2.48 billion as the value of those assets dropped sharply. Goldman’s stock investment in Industrial and Commercial Bank of China alone generated more than $1 billion of paper losses.  Goldman was also hurt by big declines in bond trading and investment banking revenue.  Its fixed income, currency and commodities client trading business reported $1.73 billion in revenue, a 36% decline from a year earlier.

Federal officials and banks try to hammer out a mortgage deal

Officials and big banks are working on a plan that would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, the Wall Street Journal reported.  Such borrowers typically are not able to refinance because they lack equity in their homes. The plan would apply only to mortgages owned by the banks, the Journal said, citing people familiar with the matter.  Federal officials have been trying to broker a settlement with the five largest mortgage servicers — Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo — the Journal said.  It is not clear how many borrowers would qualify for help, the paper added.  Officials are pushing for a plan in a bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market, the paper said.  Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week.

Oil down

Oil fell for a second day in New York after China said its economy grew at the slowest pace in two years and US crude stockpiles were forecast to increase.  Futures dropped as much as 0.5%, extending yesterday’s 0.5% decline, after China’s statistics bureau said the economy grew at 9.1% in the third quarter, less than predicted. An Energy Department report tomorrow may show US crude inventories climbed for a second week, according to a Bloomberg News survey. Technical indicators indicate prices may have advanced too fast to be sustainable.  “The number from China is getting a bit worse than before,” said Ken Hasegawa, an energy trading manager at broker Newedge Group in Tokyo, who forecasts prices will decline $5 a barrel. “If the recovery of the economies in Europe and the US is getting worse, then the economies of China and Asia will show some damage.”  Crude for November delivery fell as much as 40 cents to $85.98 a barrel in electronic trading on the New York Mercantile Exchange. It was at $86.10 at 2:45 p.m. Singapore time. Yesterday, the contract lost 42 cents to $86.38, the lowest settlement since Oct. 13. Prices are down 5.8% this year.  Brent oil for December settlement on the London-based ICE Futures Europe exchange dropped as much as 45 cents, or 0.4%, to $109.71 a barrel. The European benchmark contract was at a premium of $24 to US futures. The difference narrowed 16% yesterday, the most since June 16.

Rentals surge

Despite the most affordable buying market in decades, households across the country are slowly choosing rentals versus homeownership, signaling a positive economic trajectory for the multifamily sector, according to Freddie Mac’s October 2011 economic outlook report released Monday.  In the year ending June 2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing, a 4% rise in the number of tenant households.  The US homeownership rate fell about 1.5% over the past year, according to Freddie Mac’s report.  Hessam Nadij, managing director of research and advisory services for Marcus & Millichap, said in the August issue of HousingWire magazine that “apartments, which are considered part of the commercial real estate sector, are well ahead of retail, office properties and industrial properties in the recovery because of the release of pent up demand.”  Much of the rental demand is from household heads under 30 years old who have decided to postpone homeownership in favor of renting during uncertain economic times, according to the report. Owner rates for those under 25 years old fell 4.4% to 21.9% while rates for those 25 to 29 years old fell 7% to 34.7%.

Bank of America Merrill Lynch estimated a net decline of 1.2 million homeowners since 2007, alongside a net increase of 3.4 million renters. Americans expect home prices to continue to fall, according to a recent Fannie Mae National Housing Survey. Another Fannie survey released in August also predicted a rise in renters.  Financing for rental housing is becoming more readily available. Frank E. Nothaft, Freddie Mac vice president and chief economist, attributed the rise in lending to low mortgage rates, improving apartment-sector economics and the return of traditional lenders that had curtailed activity during the recession. Nothaft said this year’s multifamily loan origination volume is “stronger” than last year’s.  Texas is the hottest market for apartments this year. A majority of the growth is coming from the Dallas-Fort Worth metro area, according to, a unit of RealPage, Inc. The North Texas region started more than 7,300 new units, according to the firm’s mid-year data.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-

foreclosure expert, he oversees more than

100 short sale & REO closings each month

* Long-time authority on real estate investing

and rapid reselling of distressed homes.  Owns

portfolio of nearly 150 high-value, high-profit

properties

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

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

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

closed 2,786 sides for a closed sales volume of

$392,912,927!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Banks stand to lose billions

The nation’s big banks could see billions in increased costs if the Federal Housing Administration (FHA) refuses insurance claims on soured mortgages, FBR Capital Markets said this week.  Analysts at the investment management unit of FBR Inc. said the federal agency could deny claims from lenders due to issues with the underwriting or securitization process of the loans.  In a note to clients, Paul Miller of FBR Capital said refusals on claims could lead to $13.5 billion in losses if servicer claims are denied and $11.5 billion if lenders’ claims are not accepted. Such a move would impact all of the largest banks, including Wells Fargo, Bank of America, and JPMorgan Chase, FBR Capital said.  FHA functions as a type of insurance provider for certain mortgages. When a home goes into foreclosure, a lender submits a claim to get reimbursement for the value of the loan.  “In the past, claim denials were unusual and policies were paid out almost automatically,” Miller said. “Today, due to the state of the FHA’s financial position and the possibility of further home price declines, the agency is motivated to take a closer look at the life of a loan before paying out claims to conserve cash.”

FBR Capital said such a scenario would be the equivalent of another shoe dropping on the housing economy, but for now it’s a headline risk as opposed to an immediate capital concern. And Miller said several questions remain about whether the FHA will cover claims in its financial state.  FBR said the risk lies with the servicers, and if the FHA is looking to refuse a claim, “the servicing process is an easy target.”  “Given the spike in FHA loans and market participants in recent years, we believe that, should the agency want to deny claims over procedural issues, it has ample opportunity,” Miller said.  “The servicing of FHA loans comes with highly technical regulatory mandated procedures, which include offering loan modifications and contacting the borrower within 45 days of delinquency. As a result, the agency’s narrowly proscribed requirements make it more likely for the servicers, not the originators, to be tripped up,” according to Miller.

More easing will hurt

Two top Federal Reserve officials known for their hawkish views on inflation reiterated on Monday their opposition to further Fed monetary policy easing, saying it would do more harm than good.  But the two, Richmond Fed President Jeffrey Lacker and Dallas Fed President Fisher, sketched somewhat different reasons for their views on the eve of Fed Chairman Ben Bernanke’s appearance before Congress on Tuesday.  Lacker said he was primarily concerned with the threat of inflation; Fisher said he was mainly worried that the policy would not work as advertised.  Fisher said that US. politicians need to lay a sounder base for economic growth, or the Fed’s easy monetary policy will simply be “pushing on a string.”  Fisher told CNBC television he expected the US. economy would grow at an annual rate of under 2% over the remainder of the year, but he warned: “We could slip.”

Fisher and Lacker both said that uncertainty was restraining businesses, and that many of the economic problems were beyond the central bank’s writ.  “We have a limited amount of ammunition,” Fisher told CNBC, adding that there were plenty of studies that suggested the Fed’s “Operation Twist” would not have that great an impact spurring stronger economic growth.  “I personally did not feel that the benefits … outweighed the costs,” he said. “I think we have done enough at this juncture.”  Fisher, who has long argued that an uncertain regulatory and budget environment was damping business spirits, said he felt it would do little good to ease monetary policy because the level of interest rates was not the problem facing the economy.  Lacker concurred.  “There are impediments to growth that somewhat lower, longer-term interest rates will not be the antidote for,” he told students.

DSNews.com – foreclosures jump 20%

Data released by Lender Processing Services (LPS) yesterday shows that foreclosure starts were up in August by 19.7% when compared to the previous month.   However, LPS noted in its report that the 247,957 foreclosures initiated in August represents a 12.2% decline from a year earlier.  At the same time, of the approximately 4 million loans that are either 90 or more days delinquent or in foreclosure, the number in the 90-plus day delinquency bucket – 2,148,179 – has contracted to levels not seen since 2008, according to LPS’ study.  That’s not the only indicator of improvement LPS documented for problem loans. The company’s latest report also showed that, of loans that were current six  months prior, 1.4% had become seriously delinquent by August.  LPS says that percentage is less than half the rate seen in 2009, when the loan deterioration rate peaked at 2.9%.

At the same time, “first-time” delinquencies – new problem loans that had never been delinquent before – accounted for approximately a quarter of all new delinquencies, another sign of an improving trend for problem loans, according to LPS.  The company points out, however, that 23% of the nearly 46 million loans that were current as of the end of August were still at risk as a result of negative equity – a leading indicator of a borrower’s propensity to default.  LPS’ analysis of mortgage performance data at August month-end showed an all-time high in the number of loans shifting from foreclosure back into delinquent status, suggesting that process reviews and potential loss mitigation activity are continuing.  As a result, the company says foreclosure timelines continue to increase, with the average loan in foreclosure having been delinquent for a record 611 days.  Average delinquencies in non-judicial states continue to be about six months shorter at the time of foreclosure sale when compared to their judicial counterparts, where LPS says backlogs continue to be extremely high.

Bear market pessimism

Some of the market’s top thinkers are releasing a chorus of dour predictions that, while allowing for the chance of a mild rally as 2011 closes, otherwise believe there is little reason for hope.  Bob Janjuah, the notably bearish fixed income analyst for Nomura Securities, believes that a market low is coming in October that could be followed by a late-year rise. But 2012 holds little but a bear-market roar that could take the Standard & Poor’s 500 all the way down to the 700 range—a numbing 38% drop from current levels.  “The basic problems remain weak trend growth in the (developed market) world, which we think will continue for another three to five years, the policy errors (in our view) of the current set of policymakers, and the existing set of inadequate ‘old world’ policy institutions,” Janjuah wrote in an analysis for clients.

Those types of comments are being echoed across the financial markets spectrum but perhaps most notably in recent days by the Economic Cycle Research Institute.  The ECRI is widely considered an impartial—and highly accurate—referee when it comes to discerning trends. At a similar point last year, when many also were anticipating another recession, the ECRI rebuffed those predictions.  For the months ahead, though, the ECRI’s leading index is unwavering in its call for another recession, just two years after the last one officially ended. ECRI’s head economist, Lakshman Achuthan, detailed the reasons for the coming recession:  “It’s important to understand that the recession doesn’t mean a bad economy—we’ve had that for years now. It means an economy that keeps worsening because it’s locked into a vicious cycle,” ECRI said in research posted a few days ago. “Here’s what ECRI’s recession call really says: If you think this is a bad economy, you haven’t seen anything yet.”  Strategists such as David Rosenberg at Gluskin Sheff in Toronto have been pounding the table for months about another recession. He said Monday that only a decline in the savings rate has prevented one from happening already.  “We have to admit that we feel somewhat vindicated, having made this call nearly four months ago to howls of derision,” Rosenberg said in his daily note Monday. “What we saw then and still see now is a full-fledged deleveraging cycle that has gone global.”  For those who have intensified their negative outlooks, the conversion has much to do with a repeated inability of policymakers and politicians to come up with solutions to the European debt crisis as well as the jobs stagnation and other problems in the US.

Fannie knew about robo-signing in 2003

Mortgage giant Fannie Mae knew about allegations of improper foreclosure practices by law firms in 2003 but did not act to stop them, a government watchdog says.  Similar allegations are the subject of a probe by state attorneys general into how lenders and law firms ignored proper procedures to handle a crush of foreclosure paperwork.  An unnamed shareholder warned Fannie Mae of alleged foreclosure abuses in 2003, the inspector general for the agency that regulates Fannie says in a report being released Tuesday.  Fannie Mae responded by hiring a law firm to investigate the claims in 2005. The law firm reported in 2006 that it had found foreclosure attorneys in Florida “routinely filing false pleadings and affidavits.”  Fannie officials said they told a government official about the law firm’s findings in 2006. That unnamed official, who now works for Fannie’s regulator, the Federal Housing Finance Agency, said he couldn’t recall the conversation, the report says.

Fannie began using a network of attorneys in 1997 to help handle foreclosures, evictions and bankruptcies. In 2008, the network grew to 140 law firms. And the number of foreclosures in Fannie’s portfolio reached historic highs. Foreclosures more than doubled from 2007 to 2008. They grew 50% in 2009.  In June 2010, FHFA officials went to Florida to study the foreclosure crisis. They found that the mortgage industry was overwhelmed by foreclosures; that the average foreclosure processing time had grown from 150 days to more than 400 days; that lenders were beset by flawed documentation; and that law firms weren’t devoting enough time to cases.  The worst practices, known collectively as “robo-signing,” led some lenders to suspend foreclosures last fall. And it led to an ongoing investigation by all 50 state attorneys general.  Several states, including California, Delaware and New York, oppose a proposed settlement with the lenders. They complain that the lenders would receive unfair immunity from civil litigation under the deal.  Fannie and its sister company, Freddie Mac, own or guarantee about half of US. mortgages. That equals nearly 31 million loans worth more than $5 trillion. And they account for nearly all new mortgages.  The Bush administration seized control of the mortgage giants in September 2008, hoping to stabilize the housing industry.  The inspector general’s report says FHFA plans to change its oversight policies by the end of 2012. The report is among several government inquiries into the aftermath of the housing crisis.  A broader report into missteps by Fannie and Freddie is expected this fall.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-

foreclosure expert, he oversees more than

100 short sale & REO closings each month

* Long-time authority on real estate investing

and rapid reselling of distressed homes.  Owns

portfolio of nearly 150 high-value, high-profit

properties

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

running 4 different offices, supporting over

420 agents, uniquely positioning him to help

thousands of investors make money in the

biggest market opportunity ever!

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

closed 2,786 sides for a closed sales volume of

$392,912,927!

* Highly sought-after speaker, consultant, and

seminar leader for current trends and hot topics

in Real Estate Investing, Entrepreneurship, and

Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Forward this e-mail to your friends!
Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Olick – new wave of foreclosures coming

“Bank of America is ramping up its foreclosure processing, sending out far more notices of default to borrowers in August than in previous months, well over 200% more month-to-month. A notice of default is the first stage of the foreclosure process in non-judicial foreclosures states, that is, where foreclosures do not go before a judge. The notice of default is usually sent when a borrower is 90 days or more overdue in payments, but that timeline has been extended significantly during this housing crisis, due to the so-called ‘robo-signing’ processing scandal and the sheer volume of troubled loans.

Mortgage and housing analyst and strategist Mark Hanson alerted me to unusually high legal default filing activity, and his research points to Bank of America as the primary driver. I contacted a Bank of America spokesman, who responded: ‘It appears the numbers you noted to me this afternoon generally track with our own numbers for key categories. It should be noted it’s driven more in key states like California and Nevada than overall, and certainly the progress we’re seeing is limited to non-judicial states. Judicial states continue to move very slowly, with key states like New Jersey only beginning to start processing foreclosures again this month.’

The foreclosure numbers are down very slightly year-over-year, but only because August 2010 was one of the highest foreclosure months on record, and of course was just before the ‘robo-signing’ scandal was uncovered. Delays in processing have artificially lowered the foreclosure numbers over the past year, so this new surge is likely addressing loans that have been long delinquent, but unaddressed. In other words, the foreclosure pipeline is filling again. RealtyTrac, a widely followed foreclosure sale and data site, is also confirming a surge in overall notices of default in its August numbers, to be released later this week. They do not cite Bank of America specifically, which bought Countrywide Financial, taking on millions of troubled loans. ‘We’ve been seeing REO [bank-owned property] sales, and processing of loans through foreclosure. This increase may simply be the lenders and servicers starting the next cycle. August traditionally is a high month for foreclosure actions, so part of the increase might be seasonal,’ says RealtyTrac’s Rick Sharga. ‘Could be any number of reasons – but with 3.5 million delinquent loans, this had to happen sooner or later.’

The question of course is, is this a one month catch-up purge or will it continue at high levels for a while? And if the latter, will other banks follow suit quickly? Because if other banks see Bank of America pushing more loans to foreclosure, which will inevitably means more properties heading out for sale, they may want to get in before that glut of properties pushes prices down even further. ‘This proves once again that ‘credit’ as measured by legal defaults and foreclosures is not necessarily about borrowers missing payments, rather about what the servicers chose to do about it,’ notes Hanson.”

CBO cuts economic outlook

The Congressional Budget Office (CBO) —the non-partisan budget and economic analyst for Congress—said economic growth would slow from previous estimates and a nagging, 9.1% jobless rate would basically remain stuck there through next year’s presidential and congressional elections. CBO Director Douglas Elmendorf said his agency now sees economic growth of around 1.5% this year and 2.5% in 2012. That’s down from CBO’s August estimate of 2.3% and 2.7%, respectively. New data since CBO pieced together its August outlook contributed to the downward estimates, Elmendorf said. The unemployment rate, now at 9.1%, will remain “close to 9% through the end of 2012,” Elmendorf said. Last month, CBO estimated joblessness at 8.9% this year, falling to 8.5% in 2012.

MBA – mortgage applications up

Mortgage applications increased 6.3% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending September 9, 2011. This week’s results include an adjustment to account for the Labor Day holiday. The Market Composite Index, a measure of mortgage loan application volume, increased 6.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 15.4% compared with the previous week. The seasonally adjusted Purchase Index increased 7.0% from one week earlier. The unadjusted Purchase Index decreased 16.2% compared with the previous week and was 7.2% lower than the same week one year ago.

The Refinance Index increased 6.0% from the previous week, stopping a run of three consecutive weekly decreases. The Refinance Index is not seasonally adjusted but is adjusted for the holiday. On an unadjusted basis, the Refinance Index decreased 15.2% and is 23.5% lower than the same week a year ago. The four week moving average for the seasonally adjusted Market Index is down 2.9%. The four week moving average is up 0.5% for the seasonally adjusted Purchase Index, while this average is down 3.9% for the Refinance Index. The refinance share of mortgage activity increased to 77.3% of total applications from 77.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.9% from 7.1% of total applications from the previous week.

Wholesale prices flat, inflation eases

Excluding the volatile food and energy categories, core wholesale prices edged up 0.1%, the smallest increase in three months. The figures indicate that inflation pressures are easing. The Producer Price Index, which measures price changes before they reach the consumer, was unchanged in August, the Labor Department said Wednesday, after a 0.2% rise in July. In the past 12 months, the index has increased 6.5%, mostly due to higher gas and food costs. That’s the smallest 12-month rise since March, though much bigger than the annual changes late last year. Core prices rose 2.5% in the past 12 months, the same pace as July.

Food prices rose 1.1% in August, the largest increase since February. Egg prices jumped nearly 11%, the most since April, while processed chicken prices increased 3.7%, the most in five years. That likely reflects the higher cost of corn and other grains that are used for animal feed. Processed fruits and vegetables rose 2%, the most since February 1990. The core index was pushed up by a jump in tire prices, which rose 1.4%, the most in four months. Wholesale gasoline prices, meanwhile, fell 1% in August, and home heating oil dropped 1.2%. Sharp increases in the prices of oil, food and other commodities pushed up most measures of inflation earlier this year. But now that many commodities are becoming less expensive, inflation pressures are fading.

What might work in Obama’s jobs plan

House Majority Leader Eric Cantor critiqued the Obama jobs plan on Tuesday, pointing out areas lawmakers can agree on as well as areas that House Republicans will oppose — including stimulus spending and tax hikes on the rich. “We need to work very hard to try to peel off things that we can actually agree on,” Cantor said at a summit hosted by the American Action Forum, a right-leaning think tank created by deficit hawk Doug Holtz-Eakin, a former Congressional Budget Office director. Cantor provided new insight on Republican reaction to the $447 billion Obama jobs package that the White House officially sent Congress on Monday. “Let’s get some wins on the board together. And then we’ll have to disagree to disagree on some of the things that will have to be decided in public debates in the next election.”

One of those areas Republicans want to leave to voters: Tax hikes for the rich. President Obama’s largest proposed pay-for — which the White House estimates would raise roughly $400 billion over 10 years — limits itemized deductions and certain other exemptions for individuals with adjusted gross incomes of $200,000 or more ($250,000 and up for married couples). Cantor said that’s not going to happen. “Republicans are not going to accept tax increases if the goal is to grow the economy,” he said. The No. 2 House Republican also elaborated a nuanced opposition to some details of the Obama jobs package that Republicans agree on in principle, like infrastructure spending.

The White House and some Republicans have talked about creating an infrastructure bank that would pair public and private dollars to finance projects that revamp roads and bridges. But Cantor blasted that proposal on Tuesday. “I, for one, think that infrastructure bank is akin to creating a Fannie and Freddie for roads and bridges,” Cantor said comparing the idea to the struggling government-owned mortgage finance companies. “It’s something we don’t need to do.” He said he’d rather see expedited permitting for such projects, which is included in the Obama package.

With 14 million workers jobless, Cantor acknowledged the enormity of the problem. But he doesn’t believe in a no-strings-attached extension of unemployment benefits. Without going into details, Cantor said he’d favor an extension only if it were tied to “job opportunities.” “Unemployment benefits should not turn into a permanent solution,” Cantor said. “We should somehow connect unemployment benefits with work or a job opportunity.”

In his Tuesday speech, Cantor also pointed out areas of bipartisan agreement, like giving more generous tax breaks to small businesses and pulling back burdensome regulations. President Obama has said he will push hard for his new jobs proposal to be passed in its entirety — not piecemeal. However, the president won’t veto pieces of the jobs package, if Congress passes them that way, a top Administration official on Tuesday.

Orlando prices jump 15%

As foreclosures and short sales made up a shrinking share of local home sales, home prices in Orlando jumped 15% in August from a year earlier. The Orlando metro area’s median price for August was $115,000, up 21.2% from January and 15.1% from August 2010, according to a report from the Orlando Regional Realtor Association. “A steady rise in the percentage of ‘normal’ sales — those that are neither bank-owned nor short sales — continues to boost the overall price,” said the report. Those “normal” transactions made up 41% of sales in August, down a percentage point from July. That was the first decline in such sales after they rose for six consecutive months.

Even with prices on the upswing, though, sellers continue to overprice their homes, the report shows. The average home sold for 95% of its listing price in August, after spending an average of 101 days on the market before coming under contract. Affordability numbers suggest the Orlando market still has a large amount of unmet demand. The area’s affordability index rose to 248 in August, showing median income earners make more than twice as much as they need to in order to qualify for a median-priced home. “Affordability conditions this year have been enormously favorable, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers and ignoring a large share of otherwise creditworthy buyers,” said association Chairman Mike McGraw of McGraw Realty Services, Inc. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that in Orlando and even on a national scale could stimulate additional economic activity and create jobs.”

The number of Orlando home sales completed in August fell 8.7% to 2,342 from a year earlier, as bank-owned sales fell 51%. Short sales and “normal” sales each rose 32%. Meanwhile, led by a decline in the number of condominiums for sale, Orlando’s for-sale housing inventory fell 39% to 10,055. That put inventory at a 4.29 month supply. Average interest rates paid by buyers fell to 4.26%, the lowest level since the realtor association began tracking it in 1995.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 150 high-value, high-profit
properties

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

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

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

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Home prices up, but…

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

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

Fed for more “easing?”

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

NAR – pending sales slip

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

Irene hits sales

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

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

Olick – a curious letter

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

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

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

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

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties

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

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

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

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

* Join my Facebook Fan Page: http://www.mclaughlinchris.com