Posts tagged as:

wells fargo

Wells Fargo leaves a gap in financing

by admin on July 13, 2010

Smart Real Estate News & Commentary by Chris McLaughlin July 13, 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

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

Going … Going … GONE! 

The LA Investor Summit is SOLD OUT! 

If you would like to put your name on our waiting list please do so ASAP: 

http://www.LAInvestorEvent.com

**********************************************************
Wells Fargo leaves a gap in financing

The closure of much of the Wells Fargo Financial consumer finance operations, which we reported on a few days ago, will result in a gap of funding that may never be fully replaced, according to a weekly credit outlook today by Moody’s Investors Service.  “The contraction of the traditional consumer finance industry leaves a hole that will not be filled by regulated banks with tighter underwriting standards,” said Curt Beaudouin, a senior analyst at the firm in commentary. “A withdrawal of this form consumer lending is credit negative and suggests the prospect of slower economic growth and a stubbornly gradual decline in unemployment.”  The housing and subprime mortgage crises also eliminated residential mortgages — particularly cash-out refinancing — and the ample supply of wholesale funding. Wells’ closure of the Wells Fargo Financial branch network is just the latest move in an industry-wide contraction of consumer finance.

And the gap it leaves, particularly in non-prime mortgage lending, may never be filled.  Beaudouin did, however, note several means of meeting the consumer lending demand left by Wells’ restructuring.  Traditional banking operations — like Wells’ newly expanded community banking network — will likely look to fill the gap.  Retailers will similarly look to fill the gap by offering “creative financing” and other promotions like discounts on retail chain credit cards.  Finally, the void left by the decline of traditional consumer lenders potentially leaves room for new non-bank participants, although Beaudouin noted funding will continue to constrain operations.

Small business loans drying up

According to bank financial reports submitted to the Federal Financial Institutions Examination Council, loans to small businesses dropped from more than $710 billion in the second quarter of 2008 to less than $670 billion in the first quarter of 2010.  Ben Bernanke, chairman of the Federal Reserve, says there are several factors behind the contraction in small businesses lending.  He cited weaker demand from Main Street businesses worried about taking on more debt during tough times, “deterioration in the financial condition of small businesses during the economic downturn,” and a lack of supply of available credit. 

Throughout dozens of similar forums, a couple of issues came up repeatedly. In particular, banks noted they are stuck between a rock and a hard place. On the one hand, banks are being told to increase their small businesses lending, while on the other hand bank regulators are telling banks to tighten lending standards.  For small business owners, the collapse in the real estate market has also created another roadblock to obtaining a loan, since many depend on the value of their real estate as collateral for loans. Additionally, many manufacturers also rely on the value of their equipment as collateral for loans — and those values have fallen off sometimes more than real estate.

More mortgage bureaucracy in LA

The city of Los Angeles passed a city ordinance last week allowing for fines up to $100,000 to lenders and servicers of properties under foreclosure for failing to adequately preserve properties.  RealtyTrac, an online marketplace of foreclosure properties, reports new foreclosure filings in Los Angeles grew by nearly 3,000 properties in May. The state of California is listed as the highest ranked state for foreclosures, on the firm’s website.  However, data compiled by RealtyTrac finds that of the 72,030 properties in default, 15,946 are in real-estate owned status – meaning ownership is now transferred back to the lender. The average sales price for a LA home in foreclosure is $400,000. “The LA ordinance is an example where lenders, servicers now have one more piece of paper to push around in what is becoming a compliance nightmare,” says Dustin Hobbs, spokesman for the California Mortgage Bankers Association.

“The city is essentially asking firms to take responsibly for homes that they technically don’t own yet.”  The passage of a California state law last year, Senate Bill 1137, slows down the foreclosure process by adding an additional 30 day window to satisfy “due diligence requirements” and “in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.”  One servicer said Monday that the additional time means the risk of damage to the property will increase as borrowers grow more disenchanted with the status of the property.

Businesses hire workers because of tax breaks?

According to the Treasury Department, businesses have added 4.5 million workers under a new program that provides tax breaks for hiring unemployed workers.  The bill, which was passed in March, exempts businesses that hire people who have been unemployed for at least 60 days from paying the 6.2% social Security payroll tax through December. Employers get an additional $1,000 credit if new workers stay on the job a full year. 

The administration released the report, which looked at the period from February through mid-May, in hopes, it says, of raising awareness about the credit – and of course not because it sounds good before November’s congressional election.  Unsurprisingly, the report does not estimate how many of those jobs would have been added without the tax break, since businesses run by anyone who has mastered 2nd grade math are not going to hire people just to get a fraction of their wages back through a tax break.  Alan Krueger, the Treasury Department’s chief economist, says, “”I would be cautious about attributing [additional hiring] to the HIRE Act.”  Indeed.

DSNews.com – Mortgage firms close

During the first half of 2010, the number of mortgage-related firms to close or fail jumped by more than a quarter from the same time last year, according to industry data released week. The increase was driven by financial institution failures as the number of non-bank lenders to close has dwindled.  Based on information tracked by the online industry resource Mortgage.com, the period between January 1 and June 30 of this year saw 109 mortgage-related failures and closings. The figure represents a 27% increase from the 86 closings reported during the first half of 2009.  

Bank and credit union failures have both doubled when compared to the first six months of last year, with the number of banks to go under tallying 86 over the last two quarters and credit union collapses at 11. Non-bank closings, on the other hand, fell by more than two-thirds during the same period to 12.  An analysis by MortgageDaily.com of bank failures and regulatory orders suggests this year’s bank failures will end up between 175 and 200. FDIC Chairman Sheila Barr has indicated that bank closings will likely pick up pace and peak during the latter half of this year.

NFIB – Business optimism down

The National Federal of Independent Businesses’ (NFIB) says that the small business optimism index fell by 3.2 points in June, dipping to 89, after posting several months of gains.  The report is based on 805 responses to a random survey of NFIB members.  “70% of the decline this month resulted from a deterioration in the outlook for business conditions and real sales gains,” the NFIB survey concluded.  The survey showed that only 10% of firms plan new hiring, down 4 points from May, and about 8% of firms plan to reduce their workforce, up one point from the previous month. Small businesses account for a major share of jobs in the U.S. economy.  The number of business owners planning to make capital expenditures over the next few months fell a point to 19%, 3 points above the 35-year record low, the NFIB said.  “This indicates that the ‘inventory’ stimulus in this cycle is likely fading,” the report concluded.

Now for our real estate education section… 

When to Seek Outside Investors

Novice short sale investors typically rely upon traditional mortgage products to fund their short sales; combined with personal loans, hard money lending and savings this strategy is more than sufficient to build a strong portfolio. However, there comes a time when outside investors may be the wisest choice. Learn when to seek outside investors and when to go it alone with these quick tips:

1. Seek outside investors when your growth strategy requires capital beyond your ability to self-fund. Sounds simple enough but a surprising number of short sale investors continue to struggle with traditional mortgage loans and slow self-funding mechanisms rather than turn to outside investors. This is primarily due to the following fallacies:

The belief that finding investors is hard work and will take longer than planned.   The reality is a large number of people are searching for ways to obtain better than average returns without the headache and hassle of timing the market or dealing directly with real estate. Show them the money and you will be surprised at the number of investors able and willing to fund your next purchase.

The belief that you will be at the beck and call of the investor. While it’s only natural that an investor take an active interest in how their funds are performing, the reality is they do not want to be bothered with the minutia and mundane tasks involved in the investment. Most investors simply want a return with the least amount of time and effort required. The last thing they want to do is micro-manage every detail of your daily life.

2.  Seek outside investors when the level of input equals or exceeds the anticipated output. What this means is that the deal needs to be big enough to attract the interest of an investor that is seeking higher than average rates of return.

3. Seek outside investors when the investors experience or contacts can accelerate your growth. This is the essence of “smart money” and a critical component to growing from a small-time investor to a major player. In fact, this is such an essential criteria that many novice investors deliberately seek out deals just to attract the interest of highly qualified investors with good contacts or experience. Remember, “dumb money” only brings money to the table whereas “smart money” bring experience, contacts and otherwise fills a much needed void in your long term investment strategy.

Think of short sale investing like any other small business start-up; who you bring to the management team and/or board of directors is just as important (perhaps even more important) than the actual product or service. With the right people, nearly any endeavor can become a raging success. To learn more about finding and working with outside investors as well as other information you can use to grow your real estate portfolio, attend one of our free webinars.

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 }

Understanding Volatility Versus Risk in Short Sale Investments

by Chris McLaughlin on April 16, 2009

 

Real Estate News & Commentary by Chris McLaughlin, April 16, 2009
http://www.shortsalesriches.com/welcome.html

——–

No money, no credit – but an honest desire to succeed? 

That’s all it takes to get into the lucrative business of

finding and flipping short sale properties.  We’ve had

people go from zero to six figures in less than six months! 

 

See if there’re any spots left for this webinar tonight where

we explain it all Thursday @ 8:30 PM ET, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/344712594

———

Loan modification program starts

The Treasury Department announced that the first six participants to sign up for President Obama’s loan modification program are JPMorgan Chase, which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo, $2.9 billion; and Citigroup, $2 billion.  The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.  A statement issued by Wells Fargo said, “We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership.”  Left unsaid is the fact that now the second wave of foreclosures will begin, as banks decide which loans are worth trying to save and which are not.

 

Details of the loan modification program

Only loans where the cost of the foreclosure would be higher than the cost of modification will qualify.  The modification plan calls for the bank to reduce interest rates so that the monthly obligation is no more than 38% of a borrower’s pre-tax income, and the government would then kick in money to bring payments down to 31% of income.  Mortgage servicers (banks and mortgage companies) can also reduce the loan balance to achieve these affordability levels, and the government will share in the cost of the reduction, up to the amount the servicer would have received if it had reduced the interest rates. 

 

Treasury will not provide subsidies to reduce rates to levels below 2%.  In addition to subsidizing the interest rates, servicers will use Treasury funding to pay for incentives for themselves, homeowners, and investors.  The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current.  It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.  Homeowners will even get up to $1,000 a year for five years if they keep up with payments.  The funds will be used to reduce their loan principals.  “We’re confident we’ll have enough money,” said Treasury spokesman Andrew Williams.  Of course you will…if you run out, you’ll just print more, right?

 

Housing starts down

The US Commerce Department said housing starts fell 10.8 percent to a seasonally adjusted annual rate of 510,000 units, the second lowest on records dating back to 1959, from February’s 572,000 units.  Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto, said, “While the situation in housing and in the labor markets is not necessarily deteriorating, it’s clear that there is no real sign of recovery whatsoever…taken together, both releases will put a damp on the nascent optimism we’ve seen in the markets in the past couple of weeks.”  Analysts had expected an annual rate of 540,000 units for March. 

 

JPMorgan beats expectations

JPMorgan Chase said its net income for the first quarter was $2.1 billion, or 40 cents a share.  This was down 10% from a year ago, but still beat expectations.  According to Thomson Reuters, analysts were only anticipating a profit of $1.38 billion, or 32 cents a share.  The strong investment banking performance was driven by a revenue surge in its fixed income division, but Chase’s credit card division reported a net loss of $547 million, down from a profit of $609 million a year ago.  The bank cited a sizable increase in allowances for loan losses and higher charge-offs, or loans the company doesn’t think are collectable.  CEO Jamie Dimon expressed interest in paying back TARP funds, and unlike Gold Sacs, says Morgan can pay them back without issuing stock.  After what some call Goldman Sac’s accounting sleight of hand, and KBW’s downgrading of Wells Fargo, it will pay to watch the details in this reporting. 

 

Initial jobless claims slow, but joblessness at a record high

The U.S. Department of Labor says initial jobless claims dropped to 610,000 in the week ended April 11, but a record 6 million-plus continued to file unemployment claims during the week ended April 4, the most recent week for which data are available.  That’s up 172,000 from the prior week’s revised tally of 5.85 million.  John Lonski, chief economist for Moody’s Investors Service, said he puts more of his focus on the continuing claims number:  “That tells you that things are getting worse and we’re going to see another rise in the unemployment rate, and that’s not good news.”  He’s right of course; a sinking ship doesn’t stop sinking just because its rate of descent slows down.  The job market is one of the most important foundations of the economy, and one of the greatest causes for concern.

 

Now on to our real estate investing education section…

 

Understanding Volatility Versus Risk in Short Sale Investments

One of the most common mistakes made by novice and veteran short sale investors alike is to confuse volatility versus risk. Unlike the stock and bond market where the principle can go to zero, real estate always retains some type of inherent value. To put it another way, when dealing with stocks and bonds what goes up must come down..and when it does it can drop to zero never to return again. On the other hand, real estate can go down but rarely drops to zero. Companies can and do go out of business. Real estate is still standing. Even if the structure is totally eliminated the value of the raw land beneath remains.

 

This brings us to an important difference between volatility and risk. Risk involves loss. True loss of the type that wipes away fortunes over night. A company is here today but gone tomorrow…along with it the stocks, bonds and investments that represent a lifetime of work. Volatility is different. Volatility means prices can go up and down then up again. It is a function of time – not absolutes. Wait long enough and the inherent value of the land itself will retain some type of value. It might rise, it might fall. It might rise relative to the work able to be performed on it or it might fall related to the value of the interest rate used to finance it…but in all cases the volatility is relative. The land does not cease to exist.

 

Today there are two types of investors – those seeking a return of their capital and those still seeking a return on their capital. In large part, the difference has to do with where they have decided to invest their cash. Those that follow a traditional investment strategy (buy and hold stocks, bonds, treasury bills and keep some cash on hand for an emergency) are watching in utter dismay as they watch some of the biggest business concerns in the nation – indeed the world – drop to a fraction of their former value while others may simple cease to exist. The risk is very real and leaves traditional investors few options rather than attempting to park their cash into ‘safe’ federal treasury bills in an attempt to preserve their capital.

 

On the other hand, short sale investors are still indeed seeking actual returns on their capital – not merely a return of capital. While most are able to turn relatively quick profits, even those that made an early mistake are comforted by the fact that the long term risk is relatively minor…if in fact, even existent. While the price of a home and land may be volatile and subject to increase or decrease over any given period of time…it is equally likely to remain in existence. Unlike financial instruments where absolute loss is a very real concern, hard assets like real estate are primarily a function of time. The inherent value eventually returns.

 

Consider a worst case scenario for each of the following investments:

Stocks/Bonds: Worst case = cease to exist. Value drops to zero and unable to sell.

 

Cash: Worst case = cease to exist. Value drops to zero. Unable to spend (ie, confederate dollars).

 

Real Estate: Worst Case – price drops. Still can rent, sell, owner finance, plant crops or otherwise retain some form of value. Price never drops to zero as land retains an inherent value depending upon use, natural resources and other productivity.

 

See you at the top!

 

 

Chris McLaughlin

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

 

P.S.

 

Don’t miss our webinar Thursday at 8:30 PM EST, 5:30 PM PST:

 

https://www2.gotomeeting.com/register/344712594

 

P.P.S.:

Check out one of the ShortSalesRiches students holding himself as well as us accountable to whether the system truly works!  Go here now to

watch the videos from John Michailids:

http://www.youtube.com/shortsalesriches

and

http://www.willjohnmakeit.com

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

http://www.shortsalescoach.com
http://www.shortsalesriches.com
http://www.reomillionaireclub.com 
http://www.sixfigurebpo.com *************************************************
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 flipping of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook:

http://www.facebook.com/addfriend.php?id=709199143

—

{ 1 comment }

Some Banks Give Back TARP Funds

by Chris McLaughlin on March 11, 2009

Real Estate News & Commentary by Chris McLaughlin, March 11, 2009
http://www.shortsalesriches.com/welcome.html

——–

“2 Careers That Boom in a Recession!”
I’ll tell you about one of these for fr*ee
in my no-charge, no-cost, no-obligation
webinar right here live on Thursday night at
8:30 PM ET, 5:30 PM PST:

https://www2.gotomeeting.com/register/870900265

Why would I do that for no charge?  Because
I want a chance to tell you about the other
high-income opportunity, too.

And I can’t do it in an email.

But if you’re finally ready to blast out of
this economic mess, then get a move on… I’d
hate for you to miss out, because we always fill
up a day or so early.  See if there’re any spots
left:

https://www2.gotomeeting.com/register/870900265
———
The government gives…and now the banks say no thanks.  With all the scrutiny (much deserved, in my opinion) these banks have received lately, a few of the well capitalized banks that were asked to participate in the TARP program are now saying that they’d like to return the money and get out of the program.  They are tired of the media spotlight, and even though the money came cheap, they don’t want Uncle Sam running their internal operations.  So who’s nice enough to send us back the money?

Signature Bank of New York announced that it would return the $120 million it received from the government just three months ago.  It indicated that the new restrictions on executive compensation weren’t palatable to them, so they’re ready to return the money.   And the rumor mill for who else will return the money continues, but The New York Times reported today that TCF Financial Corporation, Iberia Bank of Lafayette, LA, Goldman Sachs and Wells Fargo are among those who  may just give it all back.

So why did they take it in the first place?  Actually the big boys like Goldman and Wells were asked to do so.  Former Treasury Secretary Hank Paulson asked that all major financial institutions participate so that they wouldn’t be singled out for taking it and therefore a run on the bank would ensue. 

The financial markets traded sideways most of today.  As of 2:30 PM ET, the Dow Jones Industrial Average was down 38.47 to 6,888.02 and the Nasdaq was up 2.25 to 1,360.53.

Now on to our real estate investing education section …

“You can’t know it all. No matter how smart you are, no matter how comprehensive your education, no matter how wide ranging your experience, there is simply no way to acquire all the wisdom you need to make your business thrive.”   Donald Trump

Whether you like Donald Trump or make a mad dash for the remote at the first sign of bad hair, one thing is certain…he thinks big and has been around the block a few times when it comes to real estate. Short sale investors should take note of the above words of wisdom from one of America’s larger than life billionaire real estate investors; trying to do everything your self is a recipe for failure when it comes real estate. Savvy short sale investors understand when to seek outside help and how to avoid the burn-out, excessive cost and time traps that often turn a would-be profitable enterprise into a money pit.  The following represent the most common jobs best left to others:

  1. Education. Like Trump said, there simply isn’t any way to acquire all the wisdom you need to make your business thrive; it would require all of your time and effort while leaving you little time to do anything else – like actually invest in short sales! Instead, team up with others that have the skills, knowledge and networks you need. Invest in the best information and education you can afford when first getting started then hit the ground running – your first deal will more than make up for the difference.
  2. Sales & Services. Put a team of hardworking sales and service experts in your courtyard then deduct the cost from taxes. Very few people are able to break even when doing sales and service related work on their own; not only do they take longer and typically yield less impressive results since they are not experts in the area but the IRS excludes deducting for one’s own time unless you are a full-time professional in the area. When you calculate the total cost of hiring others to do the job for you, 9 times out of 10 you will come out ahead by taking the tax deduction and moving on to bigger and better things.
  3. Renovations. While sweat equity may be the only way for some people to get into the game, renovations can be costly, time consuming and expensive to tackle on your very own. Calculate the cost of doing all the work on your own then get creative about hiring help; bartering, hiring day labor or independent contractors can drastically reduce the time required to get the job done at a fraction of the cost. Don’t forget, you can have a company perform all the screening, background, payroll and taxes on your behalf – another major time saver!

See you at the top!


Chris McLaughlin

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

P.S.

The Recession Proof Real Estate Investing webinar is this Thursday at 8:30 PM ET, 5:30 PM PST.  Don’t miss out … click here:

https://www2.gotomeeting.com/register/870900265

 

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

—

{ 0 comments }

A Love Letter from Citigroup’s CEO

by Chris McLaughlin on March 10, 2009

Real Estate News & Commentary by Chris McLaughlin, March 10, 2009
http://www.shortsalesriches.com/welcome.html

———

“2 Careers That Boom in a Recession!”
I’ll tell you about one of these for fr*ee
in my no-charge, no-cost, no-obligation
webinar right here at 8:30 PM ET tonight:

https://www2.gotomeeting.com/register/496858047

Why would I do that for no charge?  Because
I want a chance to tell you about the other
high-income opportunity, too.

And I can’t do it in an email.

But if you’re finally ready to blast out of
this economic mess, then get a move on… I’d
hate for you to miss out, because we always fill
up a day or so early.  See if there’re any spots
left:

https://www2.gotomeeting.com/register/496858047

———–
Can one letter make a difference?

That’s what it seemed like today.  Positive words weren’t coming from our President or members of Congress, and yesterday’s interview with Warren Buffett, where the billionaire told everyone that our economy had fallen off a cliff, certainly spooked many investors.  But Citigroup CEO Vikram Pandit sought to give his employees some good news about his battered company.

“I am most encouraged with the strength of our business so far in 2009. In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007. In January and February alone, our revenues excluding externally disclosed marks were $19 billion,” wrote Pandit.  The CEO further stated that its capital strength remained strong and that any “stress test” performed by the government should confirm that.  The stress test is likely to take into consideration tangible common equity; Pandit notes that Citigroup has $81 billion in common equity and its tangible common equity ratio stands at 11.9%. 

And a few more eyebrows were raised today about the CEO compensation for Wells Fargo’s John Stumpf.  Wells Fargo took $25 billion from the Troubled Asset Relief Program but awarded its CEO Sumpf  $13.8 million in compensation.  This comes on the heels of an investigation by New York Attorney General into the bonuses paid to Merrill Lynch executives’ prior to the company’s sale to Bank of America.

Now on to our real estate investing education section …

Numbers to Know – Personal Debt to Personal Assets Ratio

As short sale investors seek funding to purchase distressed and below market value properties, one important number to know is one’s own personal debt to personal assets ratio. Lenders and banks of all sizes are increasingly cracking down on marginal buyers so prepare to put your best foot forward by making it easy to lenders to like what they see.

The Personal Debt to Personal Assets ratio is easy to calculate and puts a positive spin on many small buyers just breaking into short sale investing. By providing a quick ratio that summarizes the total debt to total asset value, the bank is able to determine how much of your assets are financed versus equity positions. This can also be very useful for seasoned investors that have large equity positions but still carry large loans.

How to Compute

To calculate the personal debt to personal asset ratio simply tally up the total of your personal debt then divide by the total of your personal assets. The final number will be the ratio. For example, let’s assume you hold a current mortgage plus other debt in the amount of $250,000 with a household income of $50,000.

Based strictly upon your debt to income ratio you could be considered a marginal buyer. On the other hand, if you held other assets free and clear in the amount of $750,000 then the personal debt to asset ratio would show $250,000/$750,000 or only 33 percent rage.  That means for every .34 cents in debt you owe, you have assets of $1 available. The lower the ratio the better since it shows an alternative source of potential collateral above and beyond that of the real estate in question.

How to Use

Use the personal debt to personal asset ratio rather than debt to income ratio if you have high equity positions, own valuable assets or real estate outright, have low income levels (for example, a fixed retirement income or variable self-employment income) but desire the ability to demonstrate ample assets to secure funding to purchase short sale property. Avoid this ratio is you are already over your head in debt or have a very high income which may be better reflected in the debt to income ratio instead.

How Do You Measure Up?

.80+ = Find another measure…this doesn’t present you in the best light

.60 to .79 = A tough sale to prospective bankers without an extremely compelling deal in today’s climate

.40 t0 .59 = Do-Able once you find the right lender. You are in a solid position with enough equity to cover the new loan even if the value dropped to zero (a highly unlikely proposition).

.20 to .39 = Strong position.

0 to .19 = Expect the royal treatment as lenders scurry to secure a gold-mine like you for their portfolio.

Make sure you sign up for tonight’s webinar at 8:30 PM ET, 5:30 PM PST.  Do so my clicking here:

https://www2.gotomeeting.com/register/496858047

See you at the top!


Chris McLaughlin

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

P.S.

Don’t miss this great video testimonial about short sale coaching:

http://www.youtube.com/watch?v=CFp0ylr3mQI&feature=email

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

—

{ 0 comments }

Dow Plunges Below 7,000 as AIG Lost $61 Billion and Needs More

by Chris McLaughlin on March 2, 2009

Real Estate News & Commentary by Chris McLaughlin, March 2, 2009
http://www.shortsalesriches.com/welcome.html

—-
You know the drill.  Hey mom, can I have another dollar?  Well, it wasn’t quite like that, but the folks over at insurance giant AIG are coming back and asking for more, and the fact that the government gave the insurance behemoth $150 billion and still needs to up its allowance has investors panicked. 

The financial stock got hammered today – Citigroup down 11%, Bank of America down 14%, and Wells Fargo was down 13%. So they hit the panic button and began to SELL.  And the Dow Jones Industrial Average now stands below 6,900 for the first time in over a decade.  The Dow has been cut in half – in October 2007 it stood over 14,000 and today is below 7,000.

AIG had received a whopping $150 billion from the government so far (Uncle Sam owns 80% of AIG), but it needs more – to the tune of $30 billion more.  After all, AIG lost $61.7 billion in its fourth quarter.  And its CEO, Edward Liddy, told CNBC that he can’t rule out having to come back for more: “It really depends on what happens to the capital markets from here,” he said. “Back in September we had a liquidity crisis of unbelievably large proportions, and that’s been stabilized. Our cash liquidity is fine right now, but now because the capital markets are in such a freefall we’re fighting another issue, which is do we have enough equity to support the debt that we have.”  That’s CEO speak for heck yes we’re coming back for more!

Now, let’s back up for a little reflection on where we stand today with our nation’s economy, and its impact on the overall real estate market…

Let’s first thank President Obama.

He’s the most popular president since Reagan.  Or Kennedy. 

And I just love the guy!  He’s making me and my students millionaires.  And his latest budget proposal is going to make it even easier for you to have the same success that we’ve been having.

So let’s talk about how his new budget proposal’s going to make you rich…

See, this economic mess starts and stops with toxic mortgages.  It’s that simple.  It’s what caused the chain reaction that took down banks, credit, consumer spending, and even the Wall Street hedge funds that bought “commoditized” mortgages.

Here’s the facts: any government spending that does not address fixing bad mortgages will not fix the economy.  You cannot spend your way out of debt.  It’s that simple!!  So let me repeat it for any politicians who may be reading:  You cannot spend your way out of debt.

If you don’t believe me, try it!

Understand this: if any bill coming from “Disneyland on the Potomac” doesn’t address bad mortgages, it’s only going to divert money away from the problem.  Waste precious resources.  And deepen the recession.

Onward.

Now comes our commander in chief, bless his heart, to make matters worse.  And before you accuse me of Obama bashing, hear me out…

He’s proposing reducing mortgage deductions on your income tax return.  Simply put, he’s raising your taxes if you have a mortgage.  The National Association of Realtors, the National Association of Builders, and the Wall Street Journal all say it will cause housing values to slump further.  Granted, the tax boost is only on the so-called “rich,” but all three sources unanimously agree that it will slam the middle class too. 

Call it trickle-down poverty.

So know this: Obama’s course of action only means more foreclosures, more short-sales, more BPOs, more REOs…  can you see why I’m loving it?

Yep, the worse the housing market gets, since we have the absolute best foreclosure and pre-foreclosure systems available, the richer my student’s get. 

Easy money, that’s what it is.

Find out for fr*ee how they’re doing it here, and why it’s easier than you may think…

https://www2.gotomeeting.com/register/834885107

By the way, I wasn’t kidding when I used the “m” word.  There are actual millionaires being made with our strategy.  You can see why our fr*ee webinars are jam-packed.  I keep hoping that we will have more lines available.  But after a move like his latest one, I’ve got an open $500 bet that any openings will fill up even earlier than usual.  Any takers?

I hope so … now on to our real estate investor education section…

What’s Better – Short Sale Real Estate or a 401-k/Other Retirement Account?

Common wisdom says you should work 30 or 40 years, participate in a corporate retirement plan and then hope and pray you have enough funds set aside to carry you through retirement and into old age. Unfortunately, fewer people than ever have access to a defined benefit plan leaving them alone in the fight for future profits.

In addition to the ever declining defined benefit plan, job stability is a increasingly viewed as a relic of a bygone era. In fact, recent research finds most workers remain on a job for less than 5 years….a number of importance since many vesting programs take 5 to 7 years. Against all odds, some Americans make it to retirement while working at the same company but even then, retirement benefits may not be the big help expected.

Given the prospects of spending ones retirement years in poverty, reliance upon Social Security benefits and pension plans or investing in real estate what is the best course of action? Let’s compare the pro’s and con’s of each starting with what can (and does) go wrong with traditional retirement accounts.

Risk #1 – Corporate bankruptcy. Beginning with Enron, millions of retirees and other workers have watched in despair as their former nest eggs shrink due to economic stressors or even outright fraud. Worse, corporations are beginning to shed high cost benefit plans by filing bankruptcy on non-profitable portions of the operation. Restructuring that places non profitable segments of the corporation into subsidiary status is on the rise in order to salvage the company while allowing future obligations to float.

Compare short sales where you control when to hold, when to fold, when to sell and even how often to buy and at what price. Why rely upon others for the financial security needed during retirement when you can count on yourself instead?

Risk #2 – Future Taxation. While many retirement plans are tooted as the best way to reduce the tax hit by deferring taxation into the future when you are likely to be in a lower tax bracket, there is no guarantee that tax brackets will remain the same. In fact, most experts agree the current trend toward inflated debt is likely to result in increased taxation many years into the future.  Even worse, discussion surrounding “means testing” is already taking place leading some experts to predict high taxation on future retirement withdrawals well into your retirement years.

Consider your short sale options where you can buy or sell at any time without pre-payment penalties, early withdrawal fees or other costly options designed to part you from your hard earned profits.

Risk #3 – Redundancy. Workers with company invested retirement plans suffer a double risk in the event of a job loss; not only does their income suffer but so does their retirement plan. How many times have you been told to diversify your retirement? It’s a cornerstone to minimizing risk – yet millions of Americans are at greater risk than ever due to the economic downturn by working and investing with the same company.

Short sale real estate provides a much needed diversification for workers worried about how an economic down turn may impact their employer or sector of the industry. Consider the benefits of investing in short sale real estate as a way to increase profits, reduce risk and protect your financial future.

See you at the top!


Chris McLaughlin

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

P.S.

Don’t miss this great video testimonial about short sale coaching:

http://www.youtube.com/watch?v=CFp0ylr3mQI&feature=email

Copyright Loss Mitigation Institute 2009.
All Rights Reserved.

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

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

    * Owner and Supervising Broker of one of Florida’s
     largest Real Estate firms, running 4 different
     offices, supporting nearly 450 agents, uniquely
     positioning him to help thousands of investors
     make money in the biggest market opportunity ever!

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

     * On twitter: http://twitter.com/mclaughlinchris
     * On facebook: http://www.facebook.com/addfriend.php?id=709199143

—

{ 0 comments }

← Older Entries