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BOA resumes foreclosures

by admin on December 10, 2010

Smart Real Estate News & Commentary by Chris McLaughlin December 9, 2010

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BOA resumes foreclosures

 Bank of America (BOA) said today it was ending its hiatus on foreclosure sales, and promised to get its act together after a series of sloppy home seizures prompted the bank to back off and re-examine its process.  The bank said it plans to proceed with 16,000 foreclosures this month, though it will observe a “holiday suspension” of sales and evictions from Dec. 20 to Jan. 2. Freddie Mac and Fannie Mae have announced a similar holiday freeze.  The Bank of America action ends the “voluntary freeze” that the bank initiated in October, after a series of messy real estate mistakes. They included the foreclosure of a house that was owned outright by someone who had paid cash, without any mortgage at all, as reported by the Sun Sentinel of Florida. 

 In another case, the bank shut off the utilities of a Pittsburgh homeowner and seized her pet parrot, despite the fact that she was current on her payments.  The bank reiterated that “more than 86% of the bank’s home loans are current on their mortgage,” which means that less than 14% of home owners are not current.  The bank also reiterated that “at the point of foreclosure sale, one-third (of the) properties it services are vacant.”  “We have identified areas of our process that can be improved and while we make these improvements, it’s important that we move ahead with efforts to reduce the number of abandoned properties across the country,” said Barbara Desoer, president of Bank of America Home Loans, in a statement. “The properties can drag home values in neighborhoods and slow the eventual recovery of the housing market.”

Americans get richer

 Net worth for households and individuals climbed $1.2 trillion, or 2%, to $54.9 trillion in the third quarter, according to the Federal Reserve’s Flow of Funds report released yesterday.  Household wealth had tumbled in the second quarter — sliding $1.5 trillion between April and June — after having climbed for four straight quarters. But growth returned in the third quarter thanks to higher stock values, with the S&P rising 11% following a 12% slide in the second quarter.  Corporate equities jumped $939 billion and mutual fund shares gained $378 billion, eclipsing the $698 billion dip in real estate assets — the first decline in five quarters.  “Today’s report shows that households have continued to rebuild their balance sheets throughout Q3, although the boost to net worth was completely due to a strong recovery in the equities market,” Theresa Chen, an economist with Barclays Capital, said in a note to clients. “Looking forward, we expect net worth to rise further as overall economic activity increases and the employment outlook improves.”  Meanwhile, liabilities fell $7.6 billion in the third quarter, as a $64 billion drop in home mortgages was slightly offset by a $22 billion gain in consumer credit.

 Olick – government to become investor friendly?

 ”Last week I interviewed an investor who buys foreclosed properties and rents them out long-term for solid returns. He claims that’s the only way to right the housing market — get long-term investors to eat up the excess inventory. The biggest roadblock, however, is credit. Fannie Mae and Freddie Mac both limit the number of investor mortgages.  Multiple sources now tell me that the Administration, specifically over at the Department of Housing and Urban Development, is considering ways to get more investors into the housing market, possibly with the help of Fannie and Freddie. HUD would not confirm that, but Fannie Mae’s chief economist Doug Duncan said it is definitely on the table both at HUD and at Fannie.  ‘We’re certainly exploring the opportunities to expand that,’ said Duncan in an interview, cautioning, ‘the data in our own portfolio show that when you get to a certain number, like ten is the number we’ve chosen, if there’s any default issue, all the loans go bad at the same time, so at the present time we have two mandates, one is to help provide liquidity and help with funding, but the second is to protect taxpayers as well.’ 

 No question that any such program would have to require investors to have significant skin in the game, that is, large down payments on all properties, and perhaps a designated capital reserve level to protect against losses. Underwriting would have to be stringent, unlike what went on in the heyday of the housing boom.  Part of the problem is that the Administration doesn’t want to spend any more money on housing, and it is particularly politically unpalatable to offer financial assistance to investors, who are widely blamed for causing the housing crisis in the first place. But we’re talking about a different kind of investor here. There is an awful lot of hedge fund capital just sitting on the sidelines, if and only if the banks would let them on the field.  With home prices falling yet again, a collective $1.7 trillion of collective home equity lost in 2010, according to Zillow.com, and mortgage rates rising, more potential home buyers are being priced out of the housing market. 23 percent of borrowers are now underwater on their mortgages, which means they can’t sell to move up. Inventories are still far above a healthy level, and the shadow inventory of foreclosed properties will only add pressure to prices.

I’m sure the Administration is well aware of all that, which is why officials are putting ever more pressure on Fannie and Freddie to write down mortgage principal.  ‘The Administration believes strongly that the FHA short refi [which involves principal write-down] is a viable option to deal with borrowers with negative equity, and outright refusal to implement a program which could have economic value to the institutions bearing the risk, we think is shortsighted,’ FHA commissioner David Stevens told me.  Whether it’s principal write-down or investor incentives, it is becoming ever more abundantly clear that the housing market is not going to right itself on its own without considerably more pain.”

Trade deficit narrows

 The U.S. trade deficit narrowed much more than expected in October, as exports rose a robust 3.2 percent and imports declined slightly in the face of slackening demand for industrial and petroleum products, a Commerce Department report showed today.  The trade gap totaled $38.7 billion, down from a revised estimate of $44.6 billion for September.  Analysts surveyed before the report had expected the October trade deficit to narrow just slightly to about $43.60 billion.  On an annual basis, the trade deficit has widened sharply this year and could surpass $500 billion when final figures for 2010 are available. 

 Last year, in the midst of the global financial crisis which put a squeeze on world trade, the U.S. trade gap narrowed about 46 percent to $374.9 billion.  Record exports to China and Mexico in October helped push the overall export tally to $158.7 billion, the highest since August 2008.  Exports to the European Union and Japan also showed growth.  Overall U.S. imports fell 0.5 percent to $197.4 billion, led by drop in imports of industrial supplies and materials and the lowest petroleum imports since November 2009.  Despite the overall drop, imports from Mexico were the highest on record and imports from Japan and the European Union were the highest in two years.  Imports of advanced technology products also set a record.  Despite record exports to China in October, the U.S. trade deficit with that country in the first 10 months of 2010 was $226.8 billion, up 20.3 percent from the year-earlier period.

 GSE principal writedowns “symbolic”

 Mortgage-backed securities strategists at Credit Suisse say the market-wide impact of potential Fannie Mae and Freddie Mac principal writedowns on securitized mortgages would be minimal.  The Credit Suisse comments come in response to recent news reports that the Obama administration is pressuring the two government-sponsored enterprises to force principal writedowns for underwater borrowers, something they have thus far resisted.  Credit Suisse analysts said that the number of incremental mortgage borrowers is so small that the power of such a program would be limited due to the small number of people who would qualify.  The Wall Street Journal reported that the GSEs are being pressured to participate in the Federal Housing Administration’s short refinance program. Participation so far has been weak, with only 61 applications in the first three months and only three processed, according to the WSJ. 

“We believe the market impact of this program should be more symbolic and psychological than fundamental,” write analysts Mukul Chhabra, Qumber Hassan and Mahesh Swaminathan.  “We estimate that 5% to 15% out of the $224 billion outstanding balance of more than 105% LTV loans from 2005-2008 vintages might qualify,” they write in a note to clients.  Furthermore, such a program will likely need congressional approval and require the distressed borrower to be in imminent default.  “Borrowers who meet the imminent default criteria are already being offered HAMP,” the government-sponsored mortgage modification program, they write, “so there are no incremental borrowers for the new program – just a shift from HAMP to FHA short refi.”  The analyst doubt that, given the current makeup of Congress, getting a large, market changing mortgage reduction program passed into law unlikely.

Pimcoe raises growth forecast after tax compromise

 

Pacific Investment Management Co, manager of the world’s largest bond fund, raised its growth forecast for the U.S. economy to between 3 percent and 3.5 percent for 2011 from its earlier estimate of 2 percent to 2.5 percent, Chief Executive Mohamed El-Erian told CNBC late Thursday.  The more positive outlook was influenced by measures put in place to stimulate the economy such as the compromise to extend Bush-era tax cuts for another two years, but further stimulus measures would be needed to keep the growth going, El-Erian said. 

Pimco sees the economy growing 3 percent to 3.5 percent in the fourth quarter of 2011 from the same period of this year.  “We revised this week our outlook for U.S. growth in 2011 taking into account Monday’s announcement on additional fiscal stimulus measures,” El-Erian said in an interview with Reuters.  Many economists also raised their U.S. gross domestic product forecasts after the compromise tax deal made by Obama, which included a surprise reduction in payroll taxes for 2011.  El-Erian said: “Such a multiyear improvement would likely also require structural measures aimed at improving America’s global competitiveness and a credible medium-term fiscal consolidation program.”  He warned: “It’s important to ask whether the extraordinary fiscal and monetary stimulus measures, by themselves, will also have a meaningful impact on growth beyond 2011.”

Now for our real estate education section…

Gotta Get Item of the Week: Tangible Social Media Tools

First there was online MLS, then virtual tours and now social media. Sometimes the more things change the more they stay the same. Although today’s gotta get item of the week may not be a game-changer, it is an enticing, fun and even potentially profitable undertaking….tangible social media tools.

Tangible Social Media Defined

Tangible social media may not be a term you have heard before but that is only because it is so new. Basically these tools (more on that in a minute) allow consumers or social media site owners to create customized books, comics, memoirs, portrait books and other printed versions of online interactions to be used as keepsakes or future reference.

Cool Tools

The EggBook – Organized and print a physical copy of Facebook interactions. It even includes a photo mosaic of all your friend avatars and a top 20 list of best commentators. Create a Facebook page for seminars, online events or specialized information then turn it into a commodity to give away later.

Printing Facebook – This creative an unique service allows you to create posters ($20 each) filled with all your Facebook friends.

PerfectFools Facebook Book – Ever wish there was a way to preserve the great memories, interaction and even quips on your Facebook page? Well now there is thanks to the Facebook Book. Freeze your internet activity in a space and time by creating a book that compiles all the interaction, images and even status updates on your account. A great tool for information heavy users or those seeking to capitalize on an especially interesting theme.

Custom Twitter Books – This could be one of the best $20 you spend in a long time (and don’t forget those tax deductions); customized Twitter books that preserve all your best Tweets in a printed version. Include or omit tweets as desired, then put them all together to preserve those words of wisdom (or downright foolishness…your pick). As an added benefit, real estate and investment pro’s will become more aware of the value of information when including a tweet with an eye for posterity. Great give-away or gift idea as well.

FledglingWine.com – Think of this as social media on ice. In an effort to encourage literacy, a wine enthusiast has created what may be one of the most creative uses of Twitter to come about; Twitter wine. At $20 per bottle, you can customize the Twitter label in a choice of Chardonnay or Pino Noir. Right in time for the holiday celebrations, it’s a fun twist on an old tradition.

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

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Foreclosures to persist

by admin on July 12, 2010

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

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

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

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

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Foreclosures to persist

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

Credit scores down

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

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

Olick – NYT caught with its pants down

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

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

CMBS Delinquency Rate Exceeds 8%

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

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

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

Inclusive…

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

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

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

Exclusive…

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

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

Take Away’s…

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

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

3. UTube is especially geared toward a younger audience.

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

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

See you at the top!

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

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
-

{ 0 comments }

Home delinquency rate increases

by admin on July 7, 2010

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

 Forward this e-mail to your friends! 

Then they can subscribe directly at the following link: 

http://www.smartrealestatenews.com/ 

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

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

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

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Home delinquency rate increases

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

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

MBA – Refinances increase

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

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

Credit card delinquencies down

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

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

Shopping center vacancies rise

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

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

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

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

Inclusive…

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

Exclusive…

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

Take Away’s…

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

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

3. UTube is especially geared toward a younger audience.

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

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

See you at the top!

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

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 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
–

{ 0 comments }

Smart Real Estate News & Commentary by Chris McLaughlin, February 17, 2010

by admin on February 17, 2010

Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

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Delinquencies up

According to credit reporting agency TransUnion, 6.89% of mortgage payments were 60 or more days past due in Q409 – up from 4.58% in the final three months of 2008. The previous record delinquency rate was 6.25% in the third quarter of 2009.  FJ Guarrera, vice president of TransUnion’s financial services business unit, says the fourth-quarter uptick was due in part to normal seasonal spending shifts. Consumers are more likely to have trouble paying bills during the last few months of the year as they run low on cash because of holiday spending.  But he says that even accounting for normal season patterns, there is some reason to be concerned about the pace of increase moving higher. “To see continuing growth in the first quarter would certainly raise an eyebrow.” 

TransUnion tracks mortgages that are two months past due as an indicator of potential foreclosure, because of the difficulty involved in coming up with three payments to bring an account current. The agency said the delinquency rate stayed highest in Nevada, at 16.2%, and Florida, at 14.9%. Arizona and California, the other two states hit hardest by the housing crisis, were third and fourth, at 11.3% and 11% respectively.  The highest growth rates compared with the third quarter were in the District of Columbia, Louisiana and Delaware.  Guarrera noted that many homeowners still have adjustable rate mortgages written in late 2006 or early 2007 due to reset to higher rates in coming months, and that could drive foreclosures even higher, especially in areas where home prices have fallen to the point where values are lower than mortgages. “We’re not out of the woods yet,” he said.

Government jobs ballooning

Amity Shlaes at Bloomberg.com points out the growth of government.  In the 1990s, former President Bill Clinton and House Speaker Newt Gingrich managed to reduce the federal workforce to less than 2 million, excluding the postal service.  But from January 2000 to January 2010 — first under President George W. Bush after Sept. 11, then under Barack Obama — the number of non-postal employees in the federal government grew 15 percent, to 2.18 million from 1.89 million. The rise came in Homeland Security positions, Veterans Administration jobs, Justice Department posts, and so on.  This increase would mean less if the private sector had grown as well. But over the same period, private-sector employment decreased by 3 percent, to about 107 million from about 110 million. In short, the relative picture changed. 

Jobs with Uncle Sam aren’t just more numerous than they used to be. They’re better. Wages and benefits for federal civilian workers were more than double the average total compensation in the private sector: $119,982 versus $59,909. In the treacherous period between December 2007 and mid-2009, the number of federal employees earning more than $100,000 doubled, rising to 66,500 or so.  The new relative appeal of a government job sends a message that private-sector work, especially self-employment or a job at a start-up, may not be worthwhile. Recent wipeouts of big businesses and the recessionary struggles of smaller ones only reinforce that message. So do politicians’ occasional disparagement of “risk.”  Shlaes concludes:  Today, the U.S. economy has more competition than it did in the 1950s.  So the kind of policy change that would affect the jobscape, such as eliminating the capital-gains tax and simplifying the income tax, is necessary.  But you won’t hear about those radical measures in the Reid-McConnell jobs debate of February 2010. That’s a shame, because right now there are young people deciding whether they will be employers or mere employees.

DSNews.com – 33 months of coming foreclosures

The Standard & Poor’s (S&P) report we mentioned yesterday in connection with short sales also said the hidden supply of REOs and pending foreclosures will likely take 33 months – or nearly three years – to clear if liquidation rates hold steady.  Even more unsettling is that S&P called its estimate “conservative” because the company’s analysis was based on the number of properties the company believes to be lurking in the shadows right now – repossessed homes that banks have not put on the market and already delinquent mortgages that will likely turn into foreclosures. S&P’s assessment does not take into account any loans that have yet to show serious signs of distress. The ratings agency did not give a specific number of loans in its calculated shadow supply, but said the original balance of currently seriously delinquent and REO loans stands at $426.3 billion. An earlier study by Amherst Securities estimates the dark cloud to hold about 7 million loans, while First American CoreLogic puts it at 1.7 million.  Analysts at Standard & Poor’s said in the report, “It is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”

New home construction up

The Commerce Department announced today that construction of new homes climbed to an annual rate of 591,000 during the month, up 2.8% from December’s revised rate of 575,000.  Economists surveyed by Briefing.com expected January housing starts to rise to an annual rate of 580,000. The number of building permits issued during January fell 4.9% to a seasonally adjusted annual rate of 621,000. Economists had predicted building permits would fall to 620,000.  “It’s a positive surprise on all fronts and shows that overall demand has moved higher. That’s an important element to watch as we move through a cycle going from incentive-based to more organic growth,” said Craig Peckham, equity trading strategist at Jefferies & Co. in New York. 

Groundbreaking for single-family homes rose 1.5 percent last month to an annual rate of 484,000 units after declining 3 percent in December. Starts for the volatile multifamily segment increased 9.2 percent to a 107,000 unit annual pace after rising 12.6 percent in December.  New building permits, which give a sense of future home construction, fell 4.9 percent to 621,000 units last month after rising to a 14-month high of 653,000 units in December, the Commerce Department said. That’s compared to analysts’ forecasts for 620,000 units.  The inventory of total houses under construction fell 2.3 percent to a record low 503,000 units last month, while the total number of units authorized but not yet started eased 0.9 percent to 94,300 units.

MBA – loan applications down

The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 0.5 percent compared with the previous week.  The Refinance Index decreased 1.2 percent from the previous week and the seasonally adjusted Purchase Index decreased 4.0 percent from one week earlier.  The unadjusted Purchase Index increased 1.0 percent compared with the previous week and was 18.4 percent lower than the same week one year ago.  The four week moving average for the seasonally adjusted Market Index is up 1.1 percent.  The four week moving average is down 1.2 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index.  The refinance share of mortgage activity decreased to 69.3 percent of total applications from 69.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.4 percent from 4.5 percent of total applications from the previous week. The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990 = 100.

Now on to our real estate investing educational section…

Are YOU a Broker and Not Even Know It?

When it comes to taxes, the Internal Revenue Service defines a Broker differently than most state or business regulations; in fact, you do not even need a Broker’s license for the IRS to classify you as a broker for tax purposes. Take the following quick quiz to find out if you are a broker and not even know it according to the IRS:

1. Do you routinely sell, exchange, purchase, rent or lease real property?

2. Do you offer to sell, exchange, purchase, rent or lease property for others on a regular basis?

3. Do you negotiate the terms of real estate contracts for yourself or others on a regular basis?

4. Do you list real estate for sale, lease or exchange on a repeat or regular basis?

5. Do you procure prospective buyers and/or sellers on a consistent basis?

If you answered “yes” to the above questions then you might be considered a real estate broker for tax purposes. To determine if you qualify as a “real estate professional” you must satisfy three independent tests including:

1. The 51% Test. Do you spend more than half your working time each year toward your real estate business or activities?

2. 751 Hour Test. In addition to spending 51% or more of your work time in real estate related activities, do you spend at least 751 hours annually in the same pursuit?

3. Material Participation Test. Do you activity participate in the activities related to your real estate profits and losses?

If you answered “yes” to all three of the above questions, you may qualify as a real estate professional by IRS standards and are therefore eligible to take the real estate professional exemption which provides more than $25,000 offset for losses. All real estate related losses or deductions can be claimed including an offset against other earnings, exclusive of income limits, making this an extremely valuable tax strategy for high income earners.

See you at the top! 

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

Copyright Loss Mitigation Institute LLC 2009.

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)

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

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

About the author:

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

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

{ 0 comments }

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

by admin on February 12, 2010

Forward this e-mail to your friends!  Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

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

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

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

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Moody’s – Short sales will rise 50%

Federal and mortgage industry officials are increasingly looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.  Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition.  Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings. As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale. In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.  Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.

Retail sales up

The Commerce Department said total retail sales edged up 0.5% to $355.8 billion last month, compared with December’s revised decline of 0.1%. Economists surveyed by Briefing.com had anticipated that January sales would grow 0.3%. Sales excluding autos and auto parts rose 0.6% last month. A consensus of economists had projected ex-auto sales to rise 0.5% in January. The year-to-year increase was more impressive. January retail sales jumped 4.7%, compared to the same month in 2009. Sales were boosted by electronics and appliance stores, where sales rose 1.2 percent after declining 3.5 percent in December. Sporting goods, hobby and books sales rose 1 percent last month, adding to December’s 1.9 percent increase.  Sales at general merchandise stores rose 1.5 percent in January, the biggest gain since February 2009.  Core retail sales, which exclude autos, gasoline and building materials, rose 0.8 percent after falling 0.3 percent in December. The jump in sales sent the dollar higher, extending gains against the Japanese yen. Retail sales are being closely watched for signs of whether consumers are healthy enough to sustain the economy’s recovery once government stimulus and the boost from restocking by businesses wanes.

DSNews.com – Homebuilders buy troubled loan portfolio 

Lennar Corporation, one of America’s largest homebuilders, said that it has purchased two loan portfolios from the FDIC with a combined unpaid balance of $3.05 billion.  Lennar paid $243 million for the portfolios, which include 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships. But the Miami-based builder says it’s no stranger to working with troubled mortgages.  “Acquiring and working out distressed real estate loans was a large and extremely profitable part of our business during the last major real estate down cycle in the early 1990s,” said Stuart Miller, president and CEO of Lennar Corporation. “We are pleased to return to this business and honored to partner with the FDIC to manage, work through and add value to these portfolios of real estate loans.”  Miller says the company has been preparing to invest in the distressed loan space for the last two years and has been closely watching the market to identify “the opportune point of entry.”  Tulsa-based BOK Financial Corp. also bought servicing rights to a $4.1 billion portfolio of 34,400 mortgage loans made by Albuquerque-based Charter Bank.  The acquisition boosts BOK’s $7.4 billion mortgage servicing portfolio by 46%.

Investor’s Business Daily – Stimulus a failure

Early last year, President Obama’s advisers made it clear: By the end of 2010, there would be 3.5 million new jobs created if the stimulus bill then being crafted in Congress was passed. Unemployment would peak at 8%.  The reality was a tad different. No net new jobs — zero — were created. Indeed, the White House had to make up jobs “created or saved” through numbers-fudging and statistical legerdemain to show any new jobs at all.  The sad fact is, private U.S. businesses cut 4.7 million jobs — 392,000 a month — in 2009. All told, we’ve lost 8.4 million jobs since the recession began in December 2007.  Now we’re told this year will see a job recovery, with payrolls adding an average 95,000 per month. Yet the unemployment rate will be around 10% — higher than the current 9.7%.  Some in the media seem surprised by this. But as we explained a week ago, since 1990 the U.S. work force has expanded by 113,000 workers each month — mainly from young people and immigrants entering for the first time. 

Monthly job growth below 100,000 isn’t enough. It’s the economic equivalent of paddling a boat five miles an hour upstream against a current going 10 miles an hour the other way. No matter how hard you paddle, you still end up downstream.  Also as noted, the new Council of Economic Advisers report amounts to an admission that past “stimulus” efforts have failed.  Yet, even now, Congress is crafting a new $85 billion “jobs” bill. Instead of creating jobs, this bill will do what the last did: create a sluggish economy and long-term dependency on government.  We’re not saying every element of it is bad. But it’s built around a special tax credit for businesses that hire workers or give them a raise. Even those who would benefit from it are skeptical.  “There’s certainly nothing wrong with giving a tax break to a business that’s hired a new worker, especially in these tough times,” Bill Rys, tax counsel for the National Federation of Independent Business, told the Associated Press. “But in terms of being an incentive to hire a lot of workers, we’re skeptical.”

Now on to our real estate investing educational section…

Understanding Audits

Just the mere mention of an IRS “audit” strikes fear in the heart of most Americans; in fact, many would be short sale investors are so overwhelmed by the prospect they completely avoid the topic altogether. Unfortunately, what you don’t (want to) know can still hurt you when it comes to taxes; after all, ignorance of the law is no excuse and you must still sign-off on all tax forms prior to the final submission. Understanding a little about audits can go a long way toward preventing problems in the first place.

1. The very first thing to understand about audits is that they are not as common as most people imagine….in fact, audit rates have steadily declined over the past decades. In 1963 over 5.5 percent of all Americans were audited. In 2008 only .80 of Americans were audited – less than 1 percent of taxpayers annually. Audit rates for landlords do not appear to be any higher than that of the average population according to “How to Beat the IRS at Its Own Game” by Amir Aczel and approximate that of most small business owners. Real estate dealers and investors also appear to garner roughly equivalent audit rates.

2. Automated Under-reporter Program. Although not widely known, the IRS compiles and compares payment data submitted by banks, financial institutions and property managers, repair co’s etc.. against rental receipts and mortgage interest payments claimed by landlords. When the amounts don’t match, it automatically triggers further investigation.

3. Avoid round numbers. Yes, they are easier but it raises a red flag that the amount in question could be “made up” rather than real. 

4. State and federal returns should match. Sounds simple but it’s a common mistake likely to trigger additional scrutiny at one end or the other.

5. Don’t file early. Why give IRS additional time to decide whether or not to audit your return? Remember, they have three years to make up their mind…more than sufficient time!

6. Stay within market averages! The IRS makes good use of average market rates for each area and you should too. Avoid renting or selling to friends and family where it could be construed as a gift, barter or other irregularity in need of additional “attention” (ie, an audit).

7. Keep those receipts. Without a doubt, good record keeping is the first defense against an audit. When in doubt, make a note and include it with your tax return.

Bottom line: Don’t cheat on taxes but also don’t become so fearful of an audit that you miss available tax write-offs and deductions. Stay within the legal limits and use aggressive tax strategies to reduce taxes and maximize profits.

See you at the top!

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

Copyright Loss Mitigation Institute LLC 2009.

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)

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

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

About the author:

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

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

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