Chris McLaughlin

https://www2.gotomeeting.com/register/500640410

Housing Messages Mixed...and The Next Shoe to Drop

Real Estate News & Commentary by Chris McLaughlin, April 27, 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 reselling 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 this

Tuesday at 8:30 PM ET, 5:30 PM PST:

---------

Housing messages mixed

The Obama administration keeps telling us things are looking up, but the real players in both the economy and real estate are all over the map in both results and predictions. The National Association for Realtors has pulled together some of those confusing housing indicators from last week:

- The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported that home prices rose 0.7 percent from January to February 2009.

- The February 2009 RPX Monthly Housing Market Report said home sales increased month over month in 22 of 25 key metropolitan statistical areas and 13 of these areas posted the largest gain in February 2009 since 2006.

- The National of Association of REALTORS® reported that existing home sales dropped in March 2009, and median prices fell 12 percent from a year earlier.

- First American CoreLogic announced that national housing prices declined 12.2 percent in February from a year earlier and have been in decline for 24 straight months. It predicted that home prices would continue to decline through 2010.

Clarification or more mixed messages?

Just to keep up the confusion by trying to explain it, The National Association of Home Builders reported that production of single-family homes is unchanged, despite falling housing starts. "Today's numbers are right on target with NAHB's forecast, which anticipates that housing starts will bottom out in the second quarter, after new-home sales have stabilized," said NAHB Chief Economist David Crowe. "Single-family starts remained virtually unchanged over the past three months, indicating that we are closing in on a bottom. Multifamily starts - which tend to bounce around from month to month -- were responsible for the decline in total starts as they readjusted following a substantial gain in February." But he warned, "A substantial recovery in housing of the kind that's required to help get the national economy back on its feet will not happen until the logjam in acquisition, development and construction financing has been broken.

Swine Flu hits the market

World stocks tumbled after seven weeks of gains, and both oil and the euro fell on Monday as concerns intensified the spread of swine flu would hit the global economy. Mexico seems to be the center of the outbreak, although cases have spread to countries around the world. As many as 103 deaths in Mexico are thought to have been caused by swine flu, CNN reported. In the United States, the largest number of cases has been reported in New York City. "The swine flu seems to be one of those 'Black Swan' events that has caught the market by surprise. This is a concern as to whether it might impact any potential...recovery chances," said Martin Slaney, head of derivatives at GFT Global Markets. The MSCI world equity index fell 0.7 percent. The U.S. government plans to issue a travel warning later Monday urging Americans to avoid all "nonessential" trips to Mexico because of an outbreak of swine flu, a U.S. official said.

GM slashes jobs, debt, and dealerships

In its latest bid to stay out of bankruptcy, General Motors announced plans to drop Pontiac, cut 23,000 U.S. jobs by 2011, and slash 40% of its dealer network. GM is also offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal. GM's first plan was turned down by President Obama's auto industry task force in February, but this restructuring announcement goes much further.

The company had announced many of the job cuts in February, but Monday's news that GM would have about 38,000 hourly U.S. employees by 2011 represents an additional reduction of 7,000 to 8,000 jobs beyond what GM disclosed in its previous viability plan. The Obama administration's task force said today that the new plan "reflects the work GM has done since March 30 to chart a new path to financial viability," but added that it "has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company." Not exactly a rousing endorsement, is it?

Wall Street Journal explodes at regulators

In perhaps its harshest language yet, the Wall Street Journal takes a crack at mismanagement by Paulson and Ben Bernanke. Here's how the article opens: "The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It's a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse. In the name of containing "systemic risk," our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted."

Now on to our real estate investing education section...

Derivatives - The Next Shoe to Drop?

About the time short sale investors have started to grow weary of watching the evening news a new economic threat is beginning to rear its ugly head - derivatives. While most of the media has been content to talk about falling real estate prices (which are beginning to look good in comparison to other investment options), faltering currencies, corporate bankruptcies and bail-outs only the most fearless dare to mention what is on everyone's mind...the dreaded derivative market.

To get a perspective on the situation consider these startling facts:

The total value of residential real estate in the United States is estimated to be roughly $10 Trillion.

The annual GDP of the USA is roughly $15 Trillion.

The global GDP for the entire world is roughly $50 Trillion.

The total value of all real estate in the entire world is roughly $75 Trillion.

The derivative market is roughly $516 Trillion...excluding private transactions between non-reporting entities.

Obviously the problem is huge which is one reason big banks are eager to settle the real estate related problems as soon as possible in order to position themselves - with cash in hand - for the next stage of the economic playbook. By now there should be one burning question on the minds of every savvy short sale investor; "Which banks are heavily invested in derivatives?"...well, that is a good question and one in which we have an answer. In order of shock and awe are the derivative investments of some of the biggest names in the banking industry as of the end of 2008 as represented by a percentage of their risk based capital is as follows:

Wachovia: Approximately 53 percent

Bank of America: 194 percent

Citibank: 258 percent

JPMorgan Chase: 430 percent

HSBC: 595 percent

Scary isn't it? This means that for every dollar of capital held by HSBC, they have nearly $6 of exposure to the derivative market however, all of these banks are above the suggested maximum of 25 percent exposure so at what point does it even matter? This type of scenario is what has many economic experts calling for the end of the historic strategy of buying and holding stocks, bonds and even dollar based currency for the foreseeable future as one bubble after another continues to burst.

Remember, the entire global GDP is only $50 trillion....which would not even be enough to "bail-out" Citibank alone should the derivative market collapse. Now ask yourself, where do you intend to park your hard earned money over the coming years? Stocks? Bonds? Currencies backed by governments forced to bail-out one bad investment after another?

How about putting it into the one tangible asset that provides the fundamentals required for a great return, flexible financing, long term tax breaks and a historical precedent unlike all others...real estate. The choice is yours - listen to the same media pundits that lead you down this path and believe the rhetoric about the market moving upward or cash out while you still can and invest in something safe for the long haul. Just remember, when the derivative shoe finally does drop...you heard it here first.

See you at the top!

Chris McLaughlin

https://www2.gotomeeting.com/register/500640410

P.S.

Don't miss our webinar Tuesday night at 8:30 PM ET, 5:30 PM PST:

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:

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1 Comment

Bank of America loosening short seller policy

04-24-09

https://www2.gotomeeting.com/register/386978354

Bank of America loosening short seller policy

Real Estate News & Commentary by Chris McLaughlin, April 24, 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 this

Sunday at 8:00 PM ET, 5:00 PM PST:

---------

BOA loosening short seller policy

Bank of America (BOA) says it will relax its policy on payoffs connected with short sales. Large banks have been demanding money for home equity lines and second mortgages that would otherwise be worthless if the short sale property went to foreclosure. BOA has been among the least cooperative of all banks in agreeing to short sale payoff terms, demanding 10 percent of what the homeowners owed on the equity line balance or second mortgage before signing off on the short sale, which is necessary for the deal to go through. BOA spokesman Terry Francisco says the new policy is "less arbitrary, more rational."

New policy

BOA's new policy is to ask for five percent of the sale proceeds on the short sale, net of realty commissions, closing, and other costs. Some short sellers point to problems, though: The bank's previous 10 percent policy meant they'd demand $20,000 on a $200, 000 equity line balance, but under their new policy it will cost the short seller $15,000 if the net proceeds are $300,000" on a short sale, even though the economic value of their holding may in fact be zero. Says the Realty Times: "Bottom line for investors: If there's a Bank of America second mortgage or credit line on the house you're after in a short sale, work the new numbers. At least some of the time you might be surprised that the answer from the big bank is now 'yes.'"

MBA Chairman testifies

David G. Kittle, CMB, Chairman of the Mortgage Bankers Association (MBA) testified yesterday in front of the House Financial Services Committee at a hearing on H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009. He expressed reservations about some aspects, including the patchwork of state and local mortgage lending laws and the requirement that lenders retain at least five percent of the credit risk of non-qualified mortgages. According to Kittle, the risk retention provision would make it impossible for many lenders to compete, lessening credit availability increasing costs to borrowers. He also asserted that the definition of "qualified mortgage" was too restrictive, including in its present definition some jumbo loans, fixed 25 - 40 year mortgages, FHA, VA, and even some Fannie and Freddie mortgages.

Freddie Mac grows portfolio and delinquencies

Freddie Mac, announced that its mortgage investment portfolio grew by an annualized 65.8 percent rate in March, while delinquencies on loans it guarantees accelerated. Its portfolio increased to $867.1 billion, for an annualized 31.0 percent increase year to date, up from $712.5 billion in March 2008. The delinquencies that increased stress on the company's capital jumped to 2.29 percent of its book of business in March from 2.13 percent in February and 0.77 percent in March 2008. Freddie Mac said the temporary suspension of foreclosures, which expired on March 6, contributed to the increase in single-family delinquency rates.

Durable good sales fall again

The Commerce Department said today that new orders for U.S. durable goods slipped 0.8 percent in March, falling for the seventh month out of the last eight, even though the fall was less than expected. Analysts polled by Reuters had forecast orders for long-lasting manufactured goods to drop 1.5 percent. Anna Piretti, senior economist at BNP Paribas in New York says, "I wouldn't really read this as positive news, but clearly I would say the momentum is less negative than we saw a couple of months ago.'' Where have we heard that before?

Now on to our real estate investing education section...

Ride the Green Tide: Timely Short Sales Tips

Short sale investors searching for unique ways to differentiate their property from the competition need only go green. Whether or not you are a tree-hugger or simply business savvy, riding the green tide is an excellent way to attract the attention of prospective buyers, qualify for potential tax breaks, take advantage of tax credits and actually increase the selling price of homes in your portfolio.

Use these calculations to determine if it is worth the time and money to transform a former energy hog into a lean, green energy efficient money machine:

Tally up the total cost of the improvement including labor, taxes and supplies.

Discount city, county, state or federal tax incentives or other credits you may be eligible to receive.

Calculate the long term potential energy savings as compared to standard builder's model of the same item. Be sure to quantify this in very specific terms for each upgrade put into place. For example, let's assume you install a new water heater expected to save an additional $20 per month or $240 annually. Over a 30 year mortgage that water heater would save $7,200 in energy costs alone.

Since most people don't think that far ahead also include a five to seven year calculation...ie, in five years it would save an additional $1,200. Do this for each item in the home to show potential buyers how buying your home makes financial sense both today and in the future.

Add up the five, seven and thirty year savings then do a little bragging. Don't assume it is obvious...make it a selling point to show how cost effective this home is compared to others on the market.

Get creative. Often some of the best ideas cost the least. For example, changing bulbs to energy efficient models is an inexpensive modification that adds significant savings to the bottom line of buyers. Here are a few other green ideas to get you started:

Appliances - stove, refrigerator, dishwasher, microwave etc...

Lighting - search for florescent and/or LED

Water Heater, Pool/Jacuzzi Heater

Local landscaping - less water and less time

Tile floors - easy to keep clean and never need to be replaced like carpeting

Ceiling fans, whole house fans and other alternative cooling methods

See you at the top!

Chris McLaughlin

https://www2.gotomeeting.com/register/386978354

P.S.

Don't miss our webinar Sunday at 8:00 PM ET, 5:00 PM PST:

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

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

* 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:

---

0 Comments

Fortunes, Freedom and Fear - The Time are a Changing

04-21-09

Real Estate News & Commentary by Chris McLaughlin, April 21, 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 this
tonight at 8:30 PM ET, 5:30 PM PST:

---------

PPIP comes under fire

Inspector General Neil Barofsky, a fierce skeptic of the bailout schemes, has come out with an official report expressing concern over Tim Geithner's Public-Private Investment Partnership (PPIP). In a report issued today, the report said "The sheer size of the program ($2 Trillion) ... is so large and the leverage being provided to the private equity participants so beneficial, that the taxpayer risk is many times that of the private parties, thereby potentially skewing the economic incentives." Under plans unveiled by Treasury, for every $1 of private investment, Treasury would invest $1 and could provide another dollar in a nonrecourse loan. That money could then leverage a loan from another government fund backed mostly by the Federal Reserve, a step that Barofsky said would dilute the incentive for private fund managers to exercise due diligence. Barofsky recommended that Treasury not allow the use of Fed loans "unless significant mitigating measures are included to address these dangers."

Credit Card rules are a changin'

President Obama will meet on Thursday with administration officials and credit card company executives to press CEOs to adopt practices designed to protect consumers. In the meantime, existing legislation, designed to ban card companies from abruptly jacking up interest rates and fees and prevent young adults from getting credit cards, will be going ahead in Congress. But even if Congress doesn't pass the legislation, Federal Reserve rule changes set to kick in next year would stop higher interest rates from being imposed when consumers are late paying unrelated bills. The changes also stop companies from averaging finance charges from two previous cycles, a practice that dings consumers who carry a balance and pay it off. This year, credit card legislation made it out of a Senate committee, but just barely, by 12-11. The Senate bill is even tougher than the House bill, preventing credit card issuers from raising interest rates and fees even if the consumer's general credit risk goes up. A top industry advocate, Scott Talbott of the Financial Services Roundtable, said that if credit card companies can't charge fees and interest based on general risk, all card holders will have to pay more because customers with good credit scores will have to subsidize those with weaker credit scores. "It's going to reduce credit and make it more expensive for everyone," he said. "That's not what we need for the financial markets."

Leading economic index down .3%

The Conference Board's Leading Economic Index declined 0.3% last month, showing the recession may persist through the summer. The drop was steeper than the 0.2% analysts polled by Reuters were expecting. It also fell 0.2% in February, which was originally reported as a 0.4% drop. Over the last six months, the index has fallen 2.5%, compared to the smaller 1.4% drop for the previous six months. The Coincident Index, a measure of current conditions, fell for the third month in a row, by 0.4%, primarily due to declines in employment and industrial production. The Lagging Index, which provides a glimpse backward, has been on a downward trend since July 2007, the Conference Board said. Its 0.4% decline in March was caused by weakness across all of its components, which include duration of unemployment, inventory levels, and outstanding loans. "The recession may continue through the summer, but the intensity will ease," said Ken Goldstein, an economist at the Conference Board. Hey, where have we heard that before?

More cash for car companies

An independent oversight report on the Treasury Department's corporate rescue fund said the Obama administration will extend $500 million to Chrysler through the end of April as it tries to reach an alliance with Fiat, and up to $5 billion through May to help General Motors restructure outside of bankruptcy. The UAW, which represents about 26,000 workers at Chrysler and 62,000 at GM, and is under pressure along with bondholders and banks to help Chrysler and GM slash debt so they can restructure. The central issue for the UAW and the car companies is reaching an accord on restructuring the finances of a multi-billion-dollar retiree health care trust. GM said on Monday it would cut another 1,600 salaried jobs by May 1, as part of a plan to slash its global salaried work force this year by about 10,000, or 14 percent. GM also aims to cut 37,000 hourly jobs worldwide by the end of the year.

Bailout fund running low?

Only $109.6 billion in resources remain in the government's $700 billion financial rescue fund, but Treasury Department officials said they expect the fund will be boosted over the next year by about $25 billion as some institutions pay back money they have received. Geithner said the Bush administration had committed $355.4 billion in resources before it left office, and the Obama administration has since committed an additional $30 billion to AIG and $5 billion to auto suppliers, bringing the total for what the administration termed "exceptional assistance" to $152.4 billion. Another $218 billion has been committed to banks to bolster their capital reserves. So far, that program has disbursed nearly $200 billion to more than 500 banks nationwide with more applications pending. Former Treasury Secretary Henry Paulson had once set a goal of having $250 billion disbursed to banks. Oh well, if we run out of money we can always just print more, right? It's all the rage.

Now on to our real estate investing education section...

Fortunes, Freedom and Fear - The Time are a Changing

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin.
And the first one now
Will later be last
For the times they are a-changin.

Bob Dylan

While the media continues to report the decline of real estate, the rising vacancy rates among commercial holdings and the trend toward lower returns on rentals or other investments, short sale investors are still managing to bring in big bucks. Given the ultra-low returns on dollars, stocks, bonds and other traditional investments one would wonder why the American public hasn't taken a second look at historically low interest rates and realized a correction will take place sooner or later.

Amazingly, it's simply because they don't truly believe in change. Most American's today believe the buy and hold strategy of faithfully putting away a few dollars for a rainy day will fund a decent lifestyle. Work at a job and start a 401-k to assure an easy and comfortable retirement. Let stock brokers and fund managers handle your hard earned money for you...like Madoff and others who "know best" what how to best put your money to work.

Rather than profit from the time-tested value of land and real estate, they would rather take a chance on "buy and hold" stocks and bonds. Indeed, rather than think for themselves or open their eyes to the massive challenges facing the nation as a whole, they would rather leave their future retirement and the lives of their children to the provision of Uncle Sam. Unfortunately, history tells us this is not the road to wealth - few governments in the world have ever provided more than a subsistence existence to the population and all Ponzi schemes eventually fade away.

No dear reader, the current financial order may not survive...and neither may millions of more retirement accounts or pension funds. Consider the roaring 20's...it was a time of unprecedented economic prosperity, massive gains in real estate, easy credit, luxury and growth. The nation was intoxicated by parties, the industrial improvements of the day and most of all...the expansion of riches due to financial instruments like stocks and bonds. Then, like now, it went south. Newspapers and media reports indicate some opted for suicide, others lived a life of poverty never to recovery while a few - very few indeed - went on to make family fortunes that survived until the present day.

Who were those that thrived while others were lining up outside of soup kitchens? Those that bought land and other hard assets for pennies on the dollar. The examples don't end there; remember the scene in "Gone with the Wind" where the father tells a stubborn daughter the only thing worth fighting for is the land. It's more than a quaint idea...it's the stuff fortunes and freedom are made from. Britain was built on the acquisition of land. The Greek and Roman empires only recognized the rights of their "free" citizens...all of which were landowners. In fact, going back for thousands of years the single item of value which differentiated the wealthy and free citizens from the rest is land...or in today's vernacular - real estate.

Like the old Bob Dylan tune, the order is rapidly fading and those that are first are likely to come up last as financial guru's give way to the time tested road to riches gleaned from real estate. Real estate might be slow right now but it will later be fast. The nation elected a new President on the podium of change. The financial figures have fallen one by one and indeed, the line is drawn. Learn how to profit from the change rather than rely on past promises by learning how to control your own financial future with short sale investments.

See you at the top!

Chris McLaughlin

P.S.

Don't miss our webinar tonight at 8:30 PM ET, 5:30 PM PST:

http://www.youtube.com/shortsalesriches

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:

and

http://www.willjohnmakeit.com

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

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

* 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:

---

1 Comment

Freddie Mac Economist Says Housing Near Bottom

04-20-09

Real Estate News & Commentary by Chris McLaughlin, April 20, 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 this

Tuesday at 8:30 PM ET, 5:30 PM PST:

---------
Freddie Mac says housing sales are near bottom

Frank Nothaft, chief economist of Freddie Mac, said on Saturday that housing sales are nearing a bottom, with foreclosures accounting for a third of all sales. But you knew there's a "but" coming, right? Yup...Nothaft added that unemployment and house price declines will trigger foreclosures as prime borrowers become delinquent and add to foreclosure risk. But he did point out that Federal Housing Administration lending is up sharply, with FHA loans at the largest share of the U.S. housing market since 1942, and mortgage rates at a 50-year low.

BoA reports profit-sort-of-maybe

Bank of America joined the parade of sort-of-profitable banks, reporting a first quarter profit of $4.2 billion -- well ahead of expectations. But like the others, it warned of "deteriorating credit quality," which drove the stock sharply lower in early trading. Lewis cited growing credit problems at the bank, specifically the firm's consumer-related loan portfolios, as more and more Americans found themselves out of work or filing for bankruptcy. Bank of America's credit card division, for example, swung to a net loss of $1.8 billion during the quarter, hurt by rising credit costs. The bank also added $6.4 billion to its loan loss reserves in the quarter. No one knows the extent of the credit card meltdown - the next wave of trouble to hit the economy, and even printing bundles of money won't help that. Ken Lewis, Bank of America's chairman and CEO said in a statement: "We understand that we continue to face extremely difficult challenges primarily from deteriorating credit quality driven by weakness in the economy and growing unemployment."

Key survey says recession slowing

The key National Association of Business Economics' (NABE) April Industry Survey "provides fresh evidence that the U.S. economy's recession is abating," said Sara Johnson, an analyst on the survey and an economist at IHS Global Insight. "Declines still out number gains, but fewer firms are reporting declines and more are reporting gains," Johnson said in a statement. "This suggests that the economy is at an inflection point but has not yet reached a turning point." Employment also remained depressed in the first quarter, with 39% of firms reducing payrolls, and only 14% adding workers. But the outlook for jobs in the near future is slightly better: 33% of companies plan to reduce payrolls over the next six months, while 16% plan to increase employment. More telling is that income levels were dismal in the first quarter. For the first time in the history of the survey, more firms were reducing wages and salaries than raising pay. The survey is based on data from 109 businesses and industry groups from the first quarter of 2009.

Paul Volker says recession will slow

Adding to NABE's prognosis, Paul Volcker, senior economic adviser to President Barack Obama, said that the U.S. economic recovery will be a "long slog" but that the rate of decline "is going to slow." Speaking at a financial markets conference at Vanderbilt University in Nashville, Tennessee, Volcker called it a "great recession," as opposed to a Great Depression. "The lack of a good strong recovery works against a strong financial system," he said. The financial system "is not quite comatose, but it's on life support." Volcker warned against a rush by Congress to act too hastily on financial reforms and an overhaul of the financial system. "The temptation is to act quickly, but we have to act comprehensively," he said.

Now on to our real estate investing education section...

Fighting Fair - Foreclosure Requirements Take Toll on Short Sales

Short sale investor are increasingly confronted with the prospect of losing out on a short sale deals as sellers seek to maximize the time they are able to live in a home for "free." A plethora of informational items are advising sellers to fight foreclosure and use stall tactics including entertaining multiple short sale offers and fighting foreclosure technicalities.

Learn how to identify stalling tactics and avoid wasting time on sellers playing the waiting game by understanding the basics of foreclosure requirements and delay techniques.

Foreclosure Requirements

Notice of Default - must contain information on money owed and time allotted for payment.
Recording of Notice of Default
Notice of Property Sales Date
Notification of Redemption Period
Notification of Foreclosure Commencement
Publication of Intended Foreclosure in public forum/legal notices.

Each of these may be governed by specific state requirements but should provide a general overview of the major steps. If any of the above are not specified or fail to conform to time or other legal requirements the current homeowner has the right to petition or file a complaint, effectively extending the time period to comply.

Short Sale Steps

Short sale investors may be able to spot potential delay tactics merely by asking if the seller is entertaining other offers; be cautious when working with a seller that seems minimally concerned with the details and overly concerned with obtaining a written offer of any type. While it could simply be an indication of a motivated seller, it may also be a play designed to keep the stream of offers rolling in while they are busy at work elsewhere.

Some short sale investors have the opportunity to actually review paperwork held by the seller. If you are fortunate enough to do so, keep an eye out for glaring inconsistencies which could trigger a protracted dispute. The last thing you need to become involved with is an extended closing or convoluted scheme designed to keep the seller in a home rent free while your time and money is tied up with a trip to nowhere.

Learn how to qualify and quantify your positions. Just like any good investor, short sales should have a time and profit potential in mind prior to actually making an offer. Use deadlines and escapes clauses to your benefit in order to maximize returns and minimize headaches. Sweeten the pot by offering a few hundred dollar reward for a quick closing or negotiate other items important to the seller and/or bank to get the deal done in a timely manner. Don't be afraid to think out of the box but avoid unnecessary complications that could become a stumbling block in their own right.

See you at the top!

Chris McLaughlin

P.S.

Don't miss our webinar Tuesday at 8:30 PM ET, 5:30 PM PST:

http://www.youtube.com/shortsalesriches

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:

and

http://www.willjohnmakeit.com

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

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

* 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:

---

2 Comments

General Growth Properties files for bankruptcy

04-17-09

https://www2.gotomeeting.com/register/357681810

General Growth Properties files for bankruptcy

Real Estate News & Commentary by Chris McLaughlin, April 17, 2009
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General Growth Properties files for bankruptcy

The U.S. real estate sector witnessed one of its largest failures yesterday when General Properties, the second largest mall owner in the U.S., filed for bankruptcy protection. While the company has been making money at the operating level, it was forced into bankruptcy on account of it not being able to refinance mortgages. The company blamed it on the collapse of the credit markets. Mike Prew, an analyst with Nomura securities said, "This underscores that real estate companies are most vulnerable to refinancing risk rather than market risk." Indeed, liquidity problems can lead to solvency problems. The competitors of General Growth Properties must be looking for cheap pickings from the real estate portfolio of the company. How endemic is the problem? What about the fate of smaller real estate companies? What is the likely impact of this on banks that have made loans to real estate companies? Scary and depressing.

Joseph Stiglitz lambasts the bank rescue initiatives of Obama administration

Nobel Laureate Joseph Stiglitz, who, some weeks ago, described the toxic asset plan of Tim Geithner as "privatizing of gains" and "socializing of losses," came down heavily on the bank rescue initiatives of the U.S. government in an interview yesterday. According to Stiglitz, the size of the Troubled Asset Relief Program (TARP) is not big enough to adequately capitalize the banking system, and tax payers' return from TARP is just about 25 cents on a dollar. "The bank restructuring has been an absolute mess," said Stiglitz. Stiglitz also expressed concern about the links between Wall Street and the President's advisers. Citing potential conflicts of interest, Stiglitz said those who designed the rescue plans are, "either in the pocket of the banks or they're incompetent."

Credit-card securities under pressure

According JP Morgan's Bankcard Index, an indicator of credit card market performance, charge-offs (card credit debt gone bad) increased from 8.4 percent in February to 8.82 percent in March. This is in line with the rise in unemployment rate. Despite the increase in charge-offs, JP Morgan expressed optimism in the future performance of the credit card market on account of the positive impact of the Federal Reserve's Term Asset-Backed Loan Facility, a program aimed at reviving consumer lending. Obama administration officials will meet executives of credit card companies next Thursday to discuss lending practices and rates charged. The government is considering introducing a legislation to curb "deceptive" practices (read, hidden fees and usurious interest rates) of credit card companies.

Banking stress test

As part of introducing its plan for bringing about financial stability, the Obama administration has been conducting stress tests and what-if analyses to evaluate the impact of the economic environment on the banking system. The government will disclose the assumptions underlying the stress tests on April 24. Between April 24 and May 4, the banks - some 19 of the nation's largest -- that are participating in the stress tests will have an opportunity to comment on the test framework. On May 4, the government will announce the results of the tests and highlight the capital adequacy requirements of the banking system given the different economic scenarios. The test results are likely to provide fodder for both critics and supporters of the government bailout plans.

Residential Capital hiring 1000 people

Some good news, at last. Residential Capital LLC, the mortgage unit of GMAC, has announced it is hiring 1000 people to meet the requirements of business growth. With over $10 billion in losses over the last couple of years, Residential Capital's very survival was in question not so long ago. GMAC announced last September that it was planning to fire over 50% of Residential Capital staff and close down all its offices. The firm received $6 billion bailout from the government last December and has benefited from the growth in demand for refinancing on account of drop in mortgage rates.

Now on to our real estate investing education section...

Time is On Your Side - Short Sale Investors

Like the old Rolling Stones song "Time is one my side" short sale investors may also find themselves joined by millions of Americans who have come running back to real estate after taking a temporary respite. Wondering why? It's simple. Real estate has historically been one of the few roads to real wealth throughout the world. Going back as far as Greece, Rome and other empires, those that owned land and the underlying natural resources were the wealthiest in the land. It's a simple time tested fact.

However, that isn't the end of the story, Another equally important phenomena is at work. Namely, short term losses are typically less important than long term gains. Over time, the inflationary pressures exerted by a capitalistic based economy result in a rise of all asset groups. Consider these interesting statistics...

On any given day, roughly half of all investors will make a profit while the other half of investors will lose money.

Over a one month period of time, roughly 55 percent of investors will make a profit while the rest lose money.

Over a three month period of time a little over 60 percent will make money while the rest lose.

Over a year that may grow to as high as 70 percent and eventually, if you take the time period out long enough, close to 100 percent of people will "make" money.

So, how can so many people make money while still losing so much? It's simple. Most investments are measured in nominal terms prior to taxes, interest, holding fees and other expenses. Next, the time value of money means it is entirely possible to "make money" while watching the true purchasing power of an investment shrink.

The same trends hold true for real estate as other investments. While it is entirely possible to lose money now and then, the long term potential is quite positive for turning profits related to buying short sale real estate. History has also shown this to be true; hold long enough and real estate invariable looks like a real steal. Not convinced? Just take a look from the pages of history itself; each of these were scorned as a bad buy. Today they would be pocket change for large private investors like Trump.

The Louisiana Purchase: The United States paid roughly $15 million dollars for what later became Arkansas, Missouri, Iowa, Oklahoma, Kansas, Nebraska, parts of Minnesota, North and South Dakota, Wyoming and Colorado.

The Alaska Purchase: Costing just over $7 million dollars, Alaska was considered little more than a barren wasteland by many.

The Florida Purchase: At $5 million dollars, the original purchase price of Florida could barely cover the cost of many personal estates today.

See you at the top!

Chris McLaughlin

https://www2.gotomeeting.com/register/357681810

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About the author:

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

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

* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
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