short sales

Smart Real Estate News & Commentary by Chris McLaughlin July 1, 2011

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Average home price in Manhattan $1.4 million

 

According to market data compiled by the Corcoran Group the average sale price of a Manhattan apartment rose to $1.39 million during the second quarter, up 5% from $1.32 million in 2010.  Separate reports by real estate brokers showed the average sale price of a Manhattan apartment had risen to $1.43 million during the period.  The Manhattan market was largely boosted by increased demand for high-end apartments, which comprised a larger share of the market in the latest quarter.  More international buyers also entered the scene boosting demand for second homes in the $6 million to $12 million range.  The median price, which measures the middle of the market and is less impacted by the high end, rose 4% to $830,000 in the second quarter, up from $800,000 in the previous period, Corcoran said.

According to the other reports, the median price slipped 1% over the past year to $835,000.  Still, the Manhattan housing market is considerably off its peak. Back in late 2008, buyers paid an average of about $1,400 a square-foot for a condo or co-op. The average price this year is a little more than $1,000 a square-foot.  In addition, the Halstead report noted that buyers paid 96% of the asking price. Although inventory was low, Manhattan apartments spent 130 days on the market during the second quarter compared to 112 days a year ago.

Minnesota shutdown

 

Minnesota’s state government began a broad shutdown today going into the July 4th holiday, after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal.  Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year.  The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed, and state parks and campgrounds will be closed ahead of what is usually their busiest stretch of the year for the Independence Day holiday.  All but the most critical state functions will be suspended while the spending impasse continues into the new fiscal two-year period that starts on Friday, which would make the 2011 shutdown much broader in scope than one in 2005.

Dayton and Democratic legislative leaders Senator Tom Bakk and Representative Paul Thissen met for more than a week with Republican leaders, including House Speaker Kurt Zellers and Senate Majority Leader Amy Koch. The leaders met several times on Thursday in the governor’s office.  Neither Dayton nor the Republican leaders gave any indication when they would meet next to discuss the budget.  “I deeply regret that the last week of intense negotiations between the Republican legislative leaders and Senator Bakk, Representative Thissen and myself have failed to bridge the divide between us,” Dayton said in a speech.  He said his last proposed two-year general fund budget was $35.7 billion, but the differences between his approach and the Republican leaders had not changed since January. The gap between the two sides stood at $1.4 billion, he said.

Olick – excluding distressed sales, are home prices ok?

“Home prices in May were down 7.4% year-over-year, according to a new report from CoreLogic. This is the first of the May numbers, as S&P Case Shiller, which was released earlier this week, looks back two months.  CoreLogic’s report is unique, though, in that it gives the big bad number (which was a bigger dip than the 6.7-percent annual drop in April) and then it strips out the distressed sales and comes up with a new number. Distressed sales include foreclosed properties (bank-owned/REO) and short sales, where the home is sold for less than the value of the mortgage to avoid foreclosure.

Without the distressed sales, home prices fell just 0.4% in May, essentially flat. Overall, according to the report, ‘including distressed transactions, the peak-to-current change in the national HPI (Home Price Index, from April 2006 to May 2011) was -32.7%. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -21.2%.’  So should we consider that home prices are really just fine? After all, they might not be moving up, but they’re not falling, and they’re down far less than the headlines scream.  You would have to ignore an awful lot of factors to believe that—number one being that distressed sales make up more than one-third of the current real estate market, and far higher percentages in some of the busiest, albeit most distressed, sales markets.

Secondly, distressed sales might become an even larger share of the market during the next year, as banks are now ramping up the foreclosure process, taking big losses, making deals and cleaning up potential legal obstacles. That in the face of the fact that the pipeline of foreclosures is huge. Read this from Lender Processing Services on Wednesday. Read it a few times, so it really sinks in:  ‘With foreclosure sales at 78,676 at month end, the volume of serious delinquencies and foreclosures over-shadowed the number of foreclosure sales by 50:1. In fact, there are still significantly fewer foreclosure sales than there were before foreclosure moratoria were put into place, and foreclosure sales are declining.’ 

Now tell me if it makes any sense whatsoever to strip the distress out of the numbers and come to the conclusion that home prices are done falling. CoreLogic doesn’t do that, but I’m guessing some folks reading its report might.  Home prices are stabilizing in some markets, like here in Washington, D.C., but they are still under pressure in most major and not-so-major markets, not just due to distressed comparables, but because of a tight and expensive mortgage market. And one more thing: Would everyone please stop ignoring the fact that the recent monthly increases in home prices are largely seasonal!”

China owns more US Treasuries than it’s supposed to

 

When the U.S. Treasury Department revamped its rules for participating in government bond auctions two years ago, officials said they were simply modernizing outdated procedures.  The real reason for the change, a Reuters investigation has found, was more serious: The Treasury had concluded that China was buying much more in U.S. government debt than was being disclosed, potentially in violation of auction rules, and it wanted to bring those purchases into the open – all without ruffling feathers in Beijing.   Treasury officials then worked to keep the reason for the auction-rule change quiet, with the acting assistant Treasury secretary for financial markets instructing subordinates to not mention any specific creditor’s role in the matter, according to an email seen by Reuters. Inquiries made at the time by the main trade organization for Treasury dealers elicited the explanation that the change was a “technical modernization,” according to a document seen by Reuters. There was no mention of China. 

The incident calls into question just how clear a handle the Treasury has had on who is buying U.S. debt. Chinese entities hold at least $1.115 trillion in U.S. government debt, and are thought to account for roughly 26 percent of the paper issued by Washington, according to U.S. government data released on June 15.  China’s vast Treasury holdings are both a lifeline and a vulnerability for Washington – if the Chinese sold their Treasuries all at once, it could undermine U.S. markets and the economy by driving interest rates higher very quickly. Scenarios of this sort have been discussed in Washington defense-policy circles for at least a year now. Not knowing the full extent of these holdings would make it even more difficult to assess China’s political leverage over U.S. finances.  The Treasury has long said that it has a diversified base of investors and isn’t overly reliant on any single buyer to digest new U.S. Treasury issuance. Evidence that China was actually buying more than disclosed would cast doubt on those assurances.

WSJ – mortgage rates mixed

 

Mortgage rates in the U.S. were mixed over the past week amid conflicted readings on the strength of the U.S. economy, according to Freddie Mac’s weekly survey of mortgage rates.  The 30-year fixed-rate mortgage was basically flat at 4.51% for the week ended Thursday, compared with 4.50% the previous week and last year’s rate of 4.58%. Rates on 15-year fixed-rate mortgages held at 3.69%, the same as last week, yet were down from 4.04% a year ago.  Freddie Mac Chief Economist Frank Nothaft noted that interest rates on 30-year fixed mortgages have hovered around 4.5% for four straight weeks, despite sluggish consumer spending. Mr. Nothaft pointed to some signs of improvement in the U.S. housing market, including a May rebound in pending home sales.  Five-year Treasury-indexed hybrid adjustable-rate mortgages hit a new record low at 3.22%, down from 3.25% last week and 3.79% a year ago. One-year Treasury-indexed ARM rates ticked down to 2.97%, from 2.99% in the prior week and 3.80% in the prior year.  To obtain the rates, fixed-rate mortgages required an average payment of 0.7 point, while adjustable rate mortgages required an average 0.6 point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

Greenspan – stimulus didn’t work

 

The Federal Reserve’s massive stimulus program had little impact on the U.S. economy besides weakening the dollar and helping U.S. exports, Federal Reserve Governor Alan Greenspan said today.  In a blunt critique of his successor, Fed Chairman Ben Bernanke, Greenspan said the $2 trillion in quantitative easing over the past two years had done little to loosen credit and boost the economy.  “There is no evidence that huge inflow of money into the system basically worked,” Greenspan said in a live interview.  “It obviously had some effect on the exchange rate and the exchange rate was a critical issue in export expansion,” he said. “Aside from that, I am ill-aware of anything that really worked. Not only QE2 but QE1.”  Greenspan’s comments came as the Fed ended the second installment of its bond-buying program, known as QE2, after spending $600 billion. There were no hints of any more monetary easing—or QE3—to come.  Greenspan said he “would be surprised if there was a QE3″ because it would “continue erosion of the dollar.”

Don’t be fooled by May home sales

 

Pending home sales may have grown 8.2% between April and May, but a housing recovery remains a ways off, real estate analytics firm Radar Logic said this week.  Radar Logic picked apart the latest pending home sales report, saying 8.2% month-over-month sales growth does not equate to a recovery when sales are down 20.4% from last year when consumers rushed to buy to take advantage of federal tax credits. Instead, Radar Logic concluded that May’s pending home sales remain “essentially flat.”  Furthermore, an influx of distressed properties, including many that are still waiting to come online, remain a constant threat to market confidence and home prices, according to the report.  “Regardless of what may happen to sales contract activity in any given month, the fact remains that the inventory of homes for sale and in the foreclosure pipeline far outstrips current demand,” Radar Logic said. “Potential buyers are cognizant of this fact and the negative impact it will have on future home price appreciation, and are therefore choosing to stay out of the market. As long as the supply overhang persists it will weigh on housing demand.”

Radar Logic said even though the S&P/Case-Shiller indices for April experienced their first gains in 8 months, that’s not enough to suggest the tide has turned when considering the presence of distressed home sales.  “As real estate owned (REO) by lenders and servicers and homes sold at foreclosure auctions sell at a significant discount (39% as of April), the decline in such sales as a percentage of total helped to buoy home price indices beyond the actual appreciation in the prices of individual homes,” Radar Logic said.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2010.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

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

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

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

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin June 30, 2011

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Fannie Mae single family delinquencies fall

 Fannie Mae’s conventional serious single-family mortgage delinquency rate fell five basis points to 4.14% in May, down from 4.19% a month earlier and from 5.15% a year ago, according to the government-sponsored enterprise’s monthly summary.  The multi-family serious mortgage delinquency rate also declined from 0.57% in April to 0.52% last month.  As public officials continue to ponder the future of Fannie Mae and Freddie Mac, Fannie’s gross mortgage portfolio declined at a compound annualized rate of 13.5% in May. Last month, the GSE’s gross mortgage portfolio balance stood at $737.8 billion, compared to $746.8 billion a year earlier.  Fannie Mae is required to reduce its size further by the end of the year.

According to MBS analysts at Deutsche Bank, the Fannie Mae maximum allowable limit stands at $729 billion by end-2011.  Of the current portfolio, $419 billion (56%) is in whole loans, $231 billion (31%) is Fannie Mae MBS, $80 billion (11%) is non-agency MBS and $16 billion (2%) is non-Fannie Mae agency MBS.  During the month of May, Fannie Mae completed 16,419 loan modifications, bringing the total number of loan mods completed by the GSE in 2011 to 84,133.  Year-to-date, Fannie Mae’s end-balance for all mortgage-backed securities in its portfolio stands at $234.674 billion, compared to $287.470 billion a year ago.  At the end of May, Fannie held more than $16 billion in non-Fannie agency mortgage-backed securities and $79.3 billion in non-agency, non-Fannie mortgage securities.  Also year-to-date, the firm’s total balance on Fannie guaranteed securities and mortgage loans is $2.7 billion, compared to $2.74 billion in May of last year.

Unemployment down slightly

The Labor Department says there were 428,000 initial jobless claims filed in the week ended June 25 — 1,000 fewer than the week before.  It marked the 12th straight week initial claims have stayed above the 400,000 mark — and was worse than the 420,000 claims economists surveyed by Briefing.com had expected.  The four-week moving average of initial claims, calculated to smooth out volatility, increased to 426,750, up 500 claims from the week before.  Continuing claims — which include people filing for the second week of benefits or more — fell to 3,702,000 in the week ended June 18 — also falling short of economists’ forecasts for 3,700,000 ongoing claims.  California, New Jersey and Florida saw claims rise the most in the week ending June 18, the most recent data available.  Meanwhile, Ohio saw the biggest drop in unemployment claims, with 2,769 fewer people filing claims in that state. Illinois and New York followed, each with drops of 2,000 or more.

Olick – Realtors slam lack of HUD funds

“[Yesterday's] bullish report on pending home sales came with a caveat from the Realtors:  ‘If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector,’ said National Association of Realtors chief economist Lawrence Yun.  That part has been their mantra for months. No surprise there. But then:  ‘In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,’ Yun added.

This was new to me, so I called over to HUD, and let’s just say they were not exactly thrilled with the Realtors’ statement.  HUD says what the Realtors are talking about only affects sales of HUD-owned foreclosures in six states in the Northeast, and dare I say the Northeast is not where the greatest volume of home sales are taking place right now anyway.  So this from HUD: ‘Closing on approved purchases of HUD-owned properties has been temporarily delayed in New England. Due to increased demands, funds for closing contracts in this region have been expended and HUD is currently negotiating new contracts. Once they are executed, closings will resume.  During this period, all contracts will be extended, when necessary, at no cost to the buyer. Purchasers will be advised as soon as funding becomes available for closings, and a closing date will be established as soon as possible thereafter.’  Apparently everything in Connecticut and Rhode Island will be back on track in two weeks, Main and Vermont will take two to four weeks, and closings in Massachusetts and New Hampshire ‘were expected to resume yesterday.’ 

So that makes the Realtors’ complaint sound at best a bit petty and at worst inaccurate. This, as they are releasing some really positive numbers that went beyond the street’s expectations.  I’m wondering if they had the excuses lined up because they knew folks like me were going to poke holes in their 8.2% monthly jump in contracts signed for existing home purchases.  Let’s start with the fact that this big monthly jump comes after a larger drop in April, so the index is still at its second lowest level since last November. Okay, but the index was up over 13 from May 2010. Right, and last April 30th marked the expiration for signing contracts to get the home buyer tax credit, so you had a big May drop-off, and therefore you have nowhere to go from that but up.  I might also add that the biggest jump in the index was out West—nearly 13%—and that’s the region dealing with the biggest volume of distressed properties.  One analyst immediately cautioned me that many of these contracts are on short sales (when the bank agrees to let the home be sold for less than the value of the mortgage because the seller is either underwater and/or behind on payments), ‘And short sales generally always go pending even though they may not result in sales…much of this is due to fraud.’

I don’t mean to knock a bright spot in housing. Anything to the positive is better than the alternative. I just think we need to keep all these big numbers in perspective, especially since the volumes are so historically low right now, that any move in any of these ‘indices’ may result in bigger percentage numbers than usual.”

Dollar headed higher?

Having shed more than 10% of its value against a basket of currencies in the past year, the fortunes of the US dollar may start turning around soon, according to one analyst.  “I have a very strong belief that by the end of this year, the dollar will be much stronger than it is right now,” Kathy Lien, Director of Currency Research at Global Forex Trading said today.  “I don’t think come July 1st, we are going to see a vertical move higher immediately for the US dollar,” she said, referring to the Federal Reserve’s second round of quantitative easing, which ends on Thursday.  Lien expects the dollar index to rise gradually between 7 and 10% by the end of the year, bolstered primarily by two factors.

Firstly, she believes the US debt ceiling will be raised by August 2, a development that would be dollar positive. The Obama administration and US lawmakers have been under pressure to raise the limit, currently capped at $14.3 billion, or risk the nation going into default.  Secondly, Lien expects the US economy to continue strengthening for the rest of the year, which would prompt the Fed to begin a tightening cycle, further boosting the greenback.  “The Federal Reserve will start talking about raising interest rates, a further exit strategy…. all those should open the door for dollar recovery,” she said, and adds that the central bank could start hiking rates as soon as the first quarter next year, starting with 25 basis points.

Rental prices rise

Prices on rental properties grew 6.7% in June as more Americans chose low-risk rentals over homeownership, a new report from housing search engine HotPads.com said Thursday.  The agency, which compared June prices to last year, attributes the rental-price surge to pent-up demand among first-time renters and larger families who can no longer afford homeownership or who lack faith in the stability of home prices.  San Francisco-based HotPads.com reached this conclusion by studying the median listing price of 500,000 rentals located in major metropolitan areas.  Price hikes in the studio and five-bedroom rental segment grew the most, rising 14.3% and 12.1%, respectively. HotPads’ study is in line with analyst projections that show pent-up demand for rental housing in the wake of the credit crunch.  Americans who rented out properties gained $3.3 billion in total income from that endeavor during the month of May, up from $2.9 billion in April, according to the US Bureau of Economic Analysis.  After surveying more than 1,100 property managers in June, credit reporting agency TransUnion concluded that apartment demand is up, especially among Americans who lost homes to foreclosure.

See you at the top!
Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2010.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

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

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

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

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

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

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

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

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

Smart Real Estate News & Commentary by Chris McLaughlin June 9, 2011

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:

http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

*** Follow Chris on Twitter–>

http://www.twitter.com/mclaughlinchris

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

Lenders make short sales even more attractive

CitiMortgage, the mortgage servicing arm of Citigroup is paying borrowers an average $12,000 after completing a short sale this year.  Justin Rand, the senior vice president of loss mitigation at the bank, said servicers are putting more of an emphasis on streamlining the process and pursuing a short sale ahead of foreclosure. The short sale process in 2009 took an average 120 days from listing to close. But by reaching out to borrowers instead of waiting for them to ask the bank, short sales now take an average 83 days to complete, Rand said at a panel for the REO Expo Conference in Fort Worth, Texas, earlier this week.  “For Citi-held portfolio loans today, we have a little over 16% of delinquent loans in a short sale program,” Rand said, adding that increased from roughly 4% two years ago.

Not only are the timelines shrinking to complete these deals, but the incentives paid to qualifying borrowers – again only on loans owned by Citi – increased in recent years as well.  In early 2009, Citi offered an average $1,500 to qualifying borrowers. That went up to between $3,000 and $5,000 in 2010 and finally up to an average $12,000 so far in 2011, Rand said.  “Incentives will be offered to customers experiencing financial hardship who need funds to proceed with the short sale,” a Citi spokesman said. “The amount, which is agreed upon up front, varies according to the borrower’s individual circumstances and loan characteristics. It is disbursed to the homeowner when the sale is completed.”

The key to a successful short sale, just like modifications, is the timely collection of financial documents. Regulators helped move the process along with guideline changes to programs like the Home Affordable Foreclosure Alternatives initiative, which lessened the amount of documents required.  “It took us about 30 days to collect documentation in 2009 to now less than 10 days,” Rand said. “A lot of the time, for seriously delinquent loans, all we need is just a letter of authorization from the homeowner.”  David Sunlin, the operations executive for short sales at Bank of America (BOA) was on the same panel as Rand. He said the entire industry is becoming more proactive. BOA completed more short sales than REO every month for the last year and a half. The short sale department at BOA grew from 150 people to now over 3,000. Each employee handles roughly 75 cases.  “We’re past the point where we’re bumbling around losing files,” Sunlin said.

Rand said the big shift began in 2009 as the Treasury Department was putting together plans for the HAFA, which would launch in April 2010.  “In 2009, we started a proactive approach, reaching through MLS services and reaching out to real estate agents and customers with underwater mortgages, distressed loans,” Rand said. “We’re not going to turn anybody away if the short sale meets the net requirement we’re looking for.”

IMF lowers outlook for US

In the latest update to its World Economic Outlook, the IMF said it expects the US economy to expand at an annual rate of 2.5% this year and 2.7% in 2012. That’s down from projected growth rates in April of 2.8% and 2.9%.  The US government said last month that the economy grew at an annual rate of 1.8% in the first quarter of 2011, down sharply from 3.1% in the final three months of 2010.  The slowdown in the first quarter was due partly to “transitory factors,” the IMF said, including higher commodity prices, bad weather and supply chain disruptions due to the March earthquake and tsunami in Japan.  The report said “heightened potential for spillovers” from the fiscal challenges facing indebted nations on the periphery of Europe have grown since April. In addition, the IMF pointed to concerns in the financial markets about the slowing US economy.  “If these risks materialize, they will reverberate across the rest of the world — possibly seriously impairing funding conditions for banks and corporations in advanced economies and undercutting capital flows to emerging economies,” the report reads.  The IMF also called on policymakers in advanced economies to come up with “credible and well-paced” plans to bring down long-term deficits.  In the United States, the IMF said it is “critical” to immediately address the debt ceiling, which was exceeded earlier this year and has yet to be raised by Congress.

Olick – foreclosures down, but far from out

“Delays in foreclosure proceedings and a new push by big banks and servicers to find foreclosure alternatives are drawing a new, albeit still troubling picture of the nation’s real estate market.  New notices of default, the first step toward foreclosure, fell to a level in May not seen since the end of 2006, according to a new report by online foreclosure site RealtyTrac. Bank repossessions, or REO, the final stage of foreclosure, also fell on a monthly basis for the second straight month. That pushed total foreclosure activity down 33% from a year ago.  ‘I really wish I could say that looking at a 42-month low in foreclosures action means that the housing market is recovering, and the foreclosure problems are all going away and we should all go about our business and be happy,’ says RealtyTrac’s Rick Sharga. ‘Unfortunately, those would all be lies.’

The numbers have been on a roller coaster since the so-called ‘robo-signing’ foreclosure paperwork scandal that unfolded last Fall.  Now there are big discrepancies in the numbers state to state, depending on which states practice judicial foreclosures and which don’t.  The foreclosure timeline is also increasing as more banks and loan servicers focus on short selling distressed properties, which is when the sale price is less than the value of the mortgage.  REO activity was down 6% overall in non-judicial foreclosure states month-to-month, but some non-judicial foreclosure states posted substantial month-over-month increases.  Bank repossessions jumped 79% in Georgia, 36% in Virginia, and 19% in Michigan.  In judicial states, bank repossessions actually rose 1% month to month, as courts finally begin to get new paperwork and work through lawsuits.  In New York, REO activity jumped a whopping 97% and 21% in New Jersey.

While the usual suspects, California, Arizona and Nevada still lead the nation in foreclosure activity, the pain is still spreading nationwide.  The sheer volume and share of distressed properties in the current market continues to push home prices to new lows since the worst of the housing crash.  Some states may see higher numbers, but the effect is the same.  ‘It’s a little bit like saying that aside from that one unfortunate incident with the iceberg, the Titanic had a really wonderful cruise,’ describes Sharga.  ‘What we’re talking about are really markets that drive a lot of the real estate market, a lot of the economy. And these are states that have had really severe foreclosures. But beyond that, 72% of the top 200 markets saw an increase in year over year foreclosures activity in the last year.’”

ING sells US unit to Capital One

Capital One Financial Corp plans to buy ING Groep NV’s US online bank for $9 billion in cash and stock, freeing the Dutch bank to repay bailout funds and sever its state ties.  ING is in the throes of a wrenching restructuring, forced on it as a condition of a 10-billion-euro state bailout during the 2008 financial crisis.  The European Commission and ING agreed on a restructuring plan in late 2009, the most surprising part of which was a mandate that ING sell its US online banking operations.  But ING has made clear it wants to be freed of its state shackles, as that would lift restrictions on making acquisitions and give it more flexibility on pricing and allow it to compete more easily.  The Capital One deal caps a long list of divestments by the Dutch banc assurer.  It has raised at least 5.4 billion euros from the sale of assets including its Asian private banking assets and insurance operations in Canada, Taiwan, Australia and Chile, and agreed to sell most of its real estate investment management operations to CB Richard Ellis and other parties in a deal worth $1.1 billion.  But it still must complete the sale of ING Direct USA, and spin off its US European and Asian insurance operations in two separate IPOs next year. It also plans to divest its Latin American insurance business in the next few months.  Last month, ING paid 3 billion euros to the Dutch state, which included a 50 percent premium, and said at the time that it would repay the remaining 3 billion euros by May 2012.  With the proceeds from selling its US unit to Capital One, ING could repay the remainder sooner, but Chief Executive Jan Hommen said any decision on early repayment could be dictated by the outcome of a European court case, with a hearing set for next month.

NAR – home prices drop

According to the National Association of Realtors (NAR), the median home sale price in May dipped 1.6% compared to April, down to $188,900, according to one real estate listing website.  , May’s median price was about 2.1% below a year earlier when government tax incentives were still driving consumer demand. The drop in price could be attributable to seller uncertainty of a double-dip in home prices.  “The modest pull-back that occurred in May 2011 could signal seller concerns over widespread reports of a ‘double-dip’ in the housing market based on sales results for the first quarter of 2011,” according to the website Realtor.com. “However, unless there is further retrenchment, the results for the past three months could be viewed as a positive indicator of future home pricing trends.”

Median prices fell in 126 out of 146 markets covered by Realtor.com. Twenty-three markets experienced a more than 5% decline in home price, 14 of which were in Florida. Chattanooga, Tenn. witnessed the largest price drop, down 17.8% between April and May to a median $145,000. That price is down 16.9% compared to May 2010.  As prices fell, sale inventory grew. Realtor.com reported a 3.5% growth in inventory to a total 2.3 million listed properties in May. That figure is down 14.3% compared to one year earlier, however.  The average number of days a home spent on the market decreased to 92 days in May from April. The age of market inventory has been gradually decreasing since the beginning of 2011 and is now roughly equal to the age seen last summer.

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-

      foreclosure expert, he oversees more than

      100 short sale & REO closings each month

   * Long-time authority on real estate investing

      and rapid reselling of distressed homes.  Owns

      portfolio of nearly 150 high-value, high-profit

      properties

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

     running 4 different offices, supporting over

     420 agents, uniquely positioning him to help

     thousands of investors make money in the

     biggest market opportunity ever!

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

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * Highly sought-after speaker, consultant, and

      seminar leader for current trends and hot topics

      in Real Estate Investing, Entrepreneurship, and

      Wealth Building

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

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

Smart Real Estate News & Commentary by Chris McLaughlin June 9, 2011

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Foreclosures fall

According to RealtyTrac, the online marketplace of foreclosed properties, foreclosure filings fell 33% In May from a year earlier and 2% month-over-month. The number of homes repossessed (referred to as REOs or real estate-owned properties) in May also declined to 66,879, down 3.8% from April and 29% year-over-year.  The huge year-over-year drop in foreclosures doesn’t necessarily mean the housing market is staging a recovery, however.

James Saccacio, the CEO of RealtyTrac, says the declines are likely due to lingering effects of the “robo-signing” scandal, which broke last September, when it was discovered that banks were playing fast and loose with foreclosure documents.  There’s another factor at play, as well. The banks can’t sell the homes they’ve already seized so they aren’t as incentivized to repossess more homes.  “There’s weak demand from buyers, making it tough for lenders to unload their REO inventory,” said Saccacio. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”  The banks don’t want to take on the expense of maintaining the homes — property taxes, heating costs, repairs and insurance — if they can’t sell them quickly.  Selling off the inventory of repossessed homes is crucial to the housing market.

The steepest drops in filings have come from judicial states, ones in which the courts are involved in repossessions. In these states, where foreclosure proceedings are subject to the scrutiny of the courts, it appears banks are taking special care to make sure they’ve stamped out the last vestiges of the robo-signing issues.  Nevada, where most cases are handled outside of court, continued to be foreclosure central. One of every 103 households received a notice of some kind in May. However, that was an improvement of 23% compared with May 2010. Arizona, with one filing for every 210 households, and California, one for every 259, were second and third.  The judicial state of Florida, where the housing market is no better, has seen a much greater drop-off in filings over the past year, down 62%. It now has the eighth highest foreclosure rate, of one filing for every 461 households. A year ago, it was in the top four, along with the other “Sand States.”

Nearly 50% of Americans see another recession coming

According to a new NBC News/Wall Street Journal poll, nearly half of all Americans, and two-thirds of Republicans, believe the country is headed back into recession. A 54% majority disapproves of Obama’s handling of the economy.  “The public is incredibly pessimistic about the future,” said Peter Hart, the Democratic pollster who conducts the NBC/WSJ poll with his Republican counterpart Bill McInturff.  President Obama’s overall job approval dipped back to 49% from 52% in May. That signals that the popularity boost he received after the special forces raid that killed Osama bin Laden has faded.  the challenge facing the president was evident when voters are asked whether they intend to support him or the Republican candidate in 2012. Obama led by a narrow 45 to 40 margin, down from 49% to 30% in May.  The survey showed continued deep concern about government spending; some 63% said Washington should focus more on reducing the deficit even if it slows economic recovery, and a 45% plurality of Americans believe the 2009 economic stimulus didn’t help the economy.  On raising the federal debt ceiling, Americans are split. A 39% plurality said it should not be raised, while 28% said it should be and 31% said they didn’t know enough.

Housing starts up

The number of permits for future housing construction jumped to a seasonally adjusted annual rate of 612,000 last month, up 8.7% from the revised rate of 563,000 in April, the Commerce Department said.  It was the highest monthly rate since December and was much higher than expected, with economists surveyed by Briefing.com looking for a 548,000 permit rate.  Permits for single-family homes, viewed as a more stable indicator of new homebuilding activity than permits for multi-family home construction, ticked up 2.5% from April to a rate of 405,000.  Housing starts, the number of new homes being built, rose 3.5% in May to an annual rate of 560,000 units from a revised 541,000 in April, the Commerce Department said.  Economists had expected an annual rate of 540,000 units, according to consensus estimates from Briefing.com.  Construction of single-family homes rose 3.7% to a rate of 419,000.

While permits are typically viewed as an indication of builders’ confidence in the housing market, the big jump in permits could have had a lot to do with seasonality, even allowing for the government’s adjustment, said Doug Roberts, chief investment strategist for Channel Capital Research.  Roberts said that this is the prime time of year to begin construction, given the better weather. And given the flooding and bad weather in April, many builders may have gotten off to a late start — leading to a jump in permits and housing starts last month.  “These are the months where the most construction occurs, so this increase could be more of a seasonal blip,” he said.

Financial regulators face limits

Under a bill released Wednesday by the House Appropriations Committee, the U.S. Securities and Exchange Commission would be denied a dramatic funding increase for the 2012 fiscal year.  The Republican-led committee’s bill would also strip the newly created consumer financial watchdog of its independent funding, subjecting it to the politically charged budget process starting in 2013.  “This new agency created by the Dodd-Frank legislation has not yet been fully constituted and many questions remain as to its authority and mission,” the committee said in a statement.  The funding for the SEC would be kept steady at $1.2 billion for the fiscal year that starts Oct. 1, according to the bill. The Obama administration had asked for a $222 million bump in funding for the agency that was given more responsibility to police markets in last year’s Dodd-Frank financial reform law.  Republicans are trying to attack the overhaul of financial regulations by denying funding to agencies responsible for overseeing the reforms.

Olick – foreigners jump into real estate market

“Falling home prices may be plaguing the US economy, but they are candy to foreign investors, who already have a weak dollar on their side.  Buyers from overseas spent roughly $41 billion on US residential real estate last year, a bump up from the previous year. US real estate agents report a surge this Spring especially, as foreign buyers see continued pressure on home prices and ample bargains.  ‘I don’t think they’re so concerned about the prices dropping as they are about getting value for their money,’ says Rick Ambrose, a Coldwell Banker agent in Lake Mohawk, NJ.  Ambrose and his colleague Mary Pat Spekhardt recently hosted two groups of Japanese investors searching for homes on the scenic lake just about an hour outside of New York City.  ‘They can work here, be close to the city, be close to their corporations and still feel like they’re on vacation. I think that’s really what grabbed everybody. That’s what got them,’ says Spekhardt.  The group of about 35 from Japan also toured properties in Las Vegas and Los Angeles, which are more popular choices among foreign investors.

A new survey by Trulia.com that tracks searches from potential foreign buyers found LA ranked number one in potential interest traffic, trailed by New York City, Cape Coral, Fl, Fort Lauderdale, FL and Las Vegas.  The greatest interest is from buyers in the UK, Canada and Australia.  ‘Prices now in the US are generally 30-40% off from the peak.  In addition, the weakness of the dollar gives the Japanese an advantage, as it does the Europeans, of another 20-25% off, so they’re seeing real bargains and opportunities,’ notes Ambrose.  The interest is pretty widespread, with Brazilians trolling Miami and Russians and Chinese hunting in Chicago, according to Trulia’s survey.  What’s so interesting to me, though, is that foreigners are so much more ready to jump into the market now than US investors. Granted, they have, as noted, the weak dollar on their side, but they also seem to have a longer term view. US buyers are so afraid to lose a little in the short term on paper, they don’t realize they could gain a lot in the long term. Of course foreign buyers are largely using cash, which many US buyers are lacking. Credit, or lack thereof, is playing against the US investor.  Prices in Miami are actually beginning to recover, especially in the condo market, thanks to foreign buyers, so much so that the foreigners are beating out the Americans.

I remember all the rage a long time ago when the Japanese were buying up commercial real estate in New York City.  Everyone was so appalled. Not so much now, even up in Lake Mohawk, NJ…’It isn’t popular. It is unforeseen territory, and it’s unique. I think it’s a very smart choice. It’s not where everyone is looking,’ says Spekhardt.”

Data hopeful for the economy?

Initial claims for state unemployment insurance slipped 16,000 to 414,000, the Labor Department said on Thursday, suggesting the jobs market was regaining some momentum after stumbling badly in May.  Initial jobless claims remained above the 400,000 level for a tenth straight week. Economists say claims would need to drop below that level to offer a clear sign of an improving labor market.  U.S. financial markets, however, were little moved by the data, which was eclipsed by concerns Greece could default on its debt.  “The broader theme we have to look at is that the pace of job destruction is slowing but the pace of job creation is also a bit tepid,” said Ian Pollick an economic strategist at TD Securities in Toronto. A report earlier this month showed U.S. employers added a scant 54,000 workers to their payrolls in May, with the jobless rate rising to 9.1%.  The report on jobless claims showed the number of Americans who continued to receive benefits under regular state programs after an initial week of aid eased to 3.68 million from 3.70 million in the week to June 4, the latest week for which data is available.  Under all benefit programs, including emergency benefits extended by Congress, 7.4 million were on the rolls in the week ended May 28, down about 200,000 from a week earlier.  The data suggested the long-term unemployed were finding it somewhat easier to find jobs, although if May’s dismal pace of job creation continues their hopes could be dashed anew.

Home builders confidence low

The National Association of Home Builder’s sentiment survey fell three points in June to 13, as builders face not only competition from distressed properties, but rising costs of materials. Fifty is the line between positive and negative sentiment on the survey.  “Roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.  Builders reported weaker confidence in current sales and buyer traffic, which in turn pushed them to revise their sales outlook over the next six months.  The “expectations” component of the survey dropped four points to tie a record low set back in February of 2009.

As the big banks, Fannie Mae and Freddie Mac ramp up short sales and foreclosures and funnel ever more distressed properties onto an already overflowing market, pressure on home prices continues unabated.  Prices nationally fell 5.1% in the first quarter of this year compared to one year ago, according to the S&P/Case Shiller Home Price Index. Researchers there declared the “double-dip” in prices for the first time since home prices began recovering with the help of the home buyer tax credit in 2009.  “Potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy,” notes the NAHB’s chief economist David Crowe. “Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”

See you at the top!

Chris McLaughlin

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

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

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

About the author:

Chris McLaughlin is widely known as America’s top

Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-

      foreclosure expert, he oversees more than

      100 short sale & REO closings each month

   * Long-time authority on real estate investing

      and rapid reselling of distressed homes.  Owns

      portfolio of nearly 150 high-value, high-profit

      properties

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

     running 4 different offices, supporting over

     420 agents, uniquely positioning him to help

     thousands of investors make money in the

     biggest market opportunity ever!

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

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * Highly sought-after speaker, consultant, and

      seminar leader for current trends and hot topics

      in Real Estate Investing, Entrepreneurship, and

      Wealth Building

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

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