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The Norris Group Real Estate News Roundup 9/2/10

Thursday, September 2nd, 2010

Today’s News Synopsis:

Servicers made over 120,000 proprietary loan modifications in July, and 36,695 HAMP modifications. Pending home sales increased 5.2 percent in July, according to the NAR. MBA reports 30+ day commercial delinquencies increased to 8.22 percent in the second quarter. Freddie Mac’s weekly survey shows mortgage rates dropped again to a rate of 4.32%.

In The News:

The Press Enterprise – “New ways of viewing the housing meltdown” (9-1-10)

“At a meeting last night of the Inland Empire Investors, Norris said the federal government’s apparent agreement to allow banks to delay foreclosing on homes where the owners have ceased paying their mortgages for months on end is probably helping to hold up the economy. After all, the money that isn’t paying mortgages is going into the homeowners’ pockets and being spent on goods and services. Ironic, huhn?”

Mortgage Orb – “Proprietary Mods More Than Triple HAMP Mods” (8-31-10)

“Servicers completed more than 120,000 proprietary loan modifications in July – more than three times the number of mods completed through the federal Home Affordable Modification Program (HAMP), HOPE NOW reports. As reported by U.S. Treasury Department, servicers executed 36,695 HAMP modifications in July.”

Mortgage News Daily – “HUD Secretary Tiptoes Around Another Tax Credit, Pushes Balanced Housing Policy” (8-30-10)

“Donovan said that the dip in house sales in July was not unexpected because it would mark the end of the homebuyers’ tax credit that had been successful in spurring those sales. But, he said, the numbers were clearly worse than expected. The Secretary said, in response the Administration would be launching two additional critical tools in the next few weeks. The first will be an FHA refinancing effort to help borrowers who are underwater in their homes, the second is an emergency homeowners’ loan program to help unemployed borrowers to in their homes.”

NAR - “Pending Home Sales Rise” (9-2-10)

“The Pending Home Sales Index,* a forward-looking indicator, rose 5.2 percent to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1 percent below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.”

Mortgage Bankers Association – “MBA: Commercial Delinquencies Up for CMBS, Flat for Banks in Second Quarter” (9-2-10)

“Between the first quarter and second quarter 2010, the 30+ day delinquency rate on loans held in CMBS rose 1.39 percentage points to 8.22 percent. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.02 percentage points to 0.29 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01 percentage points to 0.80 percent. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.03 percentage points to 0.28 percent. The 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained unchanged at 4.26 percent. ”

Inman - “Communities get ‘First Look’ at many REOs” (9-2-10)

“Federal housing officials have reached an agreement with mortgage lenders that will give nonprofit organizations and state and local governments right of first refusal to purchase foreclosed homes in certain targeted neighborhoods. Lenders participating in the ‘National First Look Program’ represent about 75 percent of the real estate owned (REO) marketplace, the Department of Housing and Urban Development announced Wednesday.”

Housing Wire – “Weekly jobless claims down 1.25% to 472,000″ (9-2-10)

“The Department of Labor said Thursday seasonally-adjusted initial claims fell to 472,000 for the week ended Aug. 28, down from an upwardly revised 478,000 for the previous week. The consensus estimate of analysts surveyed by Briefing.com expected claims to drop to 475,000 last week.”

Housing Wire – “Freddie 30-year FRMs set record low at 4.32%” (9-2-10)

“The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year fixed-rate mortgage (FRM) at 4.32% with an average 0.7 origination point for the week ending Sept. 2, down from last week’s average of 4.36% and a year ago, when the average was 5.08%. This is the lowest rate the survey has recorded since its inception in 1971.”

Housing Wire – “Bernanke says stopping housing bubble was not an option” (9-2-10)

“Speaking before the Financial Crisis Inquiry Commission this morning in Washington, Federal Reserve chairman Ben Bernanke said if steps could have been taken three years ago to stop the bubble in the economy, which eventually lead to today’s recession, it would not have been a prudent decision to do so.”

Housing Wire – “OCC: lending standards loosen somewhat from year earlier” (9-2-10)

“The 2010 survey of credit underwriting practices by the Office of the Comptroller of the Currency showed 65% of banks tightened standards for commercial products and 74% tightened up retail lending. The survey measures the most-common types of credit offered by 51 of the largest national banks for the 12 months ended March 31. The value of the loans surveyed was $4 trillion, or more than 93% of all outstanding loans in the national banking system, according to the OCC.”

Housing Wire – “Serious HFA delinquencies decline in Q110: S&P” (9-2-10)

“Overall delinquency rates for HFA loans remained high, increasing 1.67% between Q409 and Q110 to 6.05%; however, seriously delinquent HFA loans decreased to 6.05% from 6.57%.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor event calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/27/10

Friday, August 27th, 2010

Today’s News Synopsis:

Nearly 900,000 loans that were current at the beginning of this year are now over 60 days delinquent or in foreclosure as of July. GDP growth in the U.S. slowed to an annual rate of 1.6% in the second quarter. Commercial property sales totaled $8.7 billion in July.

In The News:

Orange County Register – “Californians feeling a little rosier” (8-27-10)

“Californians are feeling a little better about the economy now, although their optimism about the future has dimmed, according to Chapman University’s August consumer confidence survey. The school’s California Composite Index of Consumer Confidence, conducted the first three weeks of August, rose to 84.2 this month from 82.7 in May — the fourth consecutive increase in the index.”

San Francisco Chronicle – “California foreclosure bill is losing steam” (8-27-10)

“SB1275 would require lenders to provide homeowners with a fully considered decision on a loan modification prior to starting foreclosure. The bill addresses what some say has become a far too common phenomenon for homeowners who are delinquent on their mortgages: While negotiating a loan modification, their lender forecloses. The proposed rules would allow the homeowner to sue if that occurs.”

Housing Wire - “Nearly 1m More Mortgages Go From Current to Delinquent: LPS” (8-26-10)

“Almost 900,000 loans that were current at the beginning of the year are at least 60 days delinquent or in foreclosure as of July, according to the July 2010 month-end report released by Lender Processing Services’(LPS). Although delinquency volume fell 2.3% month-over-month in July to 9.3%, it remains near historically elevated levels — and record high numbers of delinquent loans are still entering the system, according to LPS. The volume of delinquencies increased 1.4% year-over-year.”

Housing Wire – “Q2 GDP revised to annual rate of 1.6% growth, imports rose 32.4%” (8-27-10)

“Second-quarter economic growth in the US slowed to an annual rate of 1.6%, which is slightly better than what analysts were projecting but down from prior Commerce Department estimates.”

Housing Wire – “Bernanke outlines three options for additional economic stimulus” (8-27-10)

“Bernake said that the zero interest rate policy (ZIRP) is unlikely to change in the coming months. He also doesn’t see any short-term risk of deflation. However, federal economic stimulus can only drive recovery temporarily. For a sustained expansion to take hold, growth in consumer spending and business fixed investment needs to come more into focus, he said.”

Housing Wire – “Fitch expects to keep downgrading CMBS through 2012″ (8-27-10)

“Downgrades on commercial mortgage-backed securities are expected throughout the next one to two years, according to Fitch Ratings’ managing director Mary MacNeill. She said this based on the approximately 1,900 bonds, a total of $71bn, that Fitch lists with negative future outlooks.”

Housing Wire – “Commercial real estate gets boost in July from strong office demand: RCA analytics” (8-27-10)

“July was the second most active month in commercial property sales this year, according to a Real Capital Analytics (RCA) report released today. Sales totaled $7.8bn, almost double the volume of July 2009 commercial real estate (CRE) sales.”

Housing Wire – “Fannie Mae July mortgage portfolio up 4.1% from year earlier, prices two-year deal” (8-27-10)

“Fannie Mae’s mortgage portfolio through July is up 4.1% from the year ago yet down somewhat from June, and the GSE issued nearly half the mortgage-backed securities during the month than in did last July. Fannie ended July with gross holdings of nearly $812 billion. That figure stood at $770.4 billion last year and $817.8 billion in June.”

Bloomberg – “Banks Need New Capital on Housing Dip, Whitney Says” (8-27-10)

“U.S. banks need more capital to withstand a renewed drop in the housing market, according to analyst Meredith Whitney. Banks aren’t prepared for a ‘double-dip’ in housing, which ‘it looks like we are having,’ Whitney said today on Bloomberg Radio”

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189-TNG Radio – Christopher Thornberg 8-28-10

Friday, August 27th, 2010

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Christopher Thornberg

Founder and Principle of Beacon Economics


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September 17th, 2010, The Norris Group returns with its award winning event I Survived Real Estate 2010. The Norris Group has assembled an incredible line up of industry experts to discuss the state of REO from the inside. Topics will include regulatory intervention and aftermath, bulk buying, myths and facts, and opportunities emerging for real estate professionals. 100 percent of the proceeds support the Orange County affiliate of Susan G. Komen for the Cure. This event would not be possible without generous help from the following platinum partners: Foreclosure Radar and Sean O’Toole, the San Diego Creative Real Estate Investors Association and Bill Tan, Investors Workshops and Shawn Watkins and Angel Bronsgeest, Invest Club for Women and Iris Veneracion and Bobby Alexander, Claudia Buys Houses, The Business Press, Frye Wiles, MVT Productions, and White House Catering.

This week Bruce is joined by Christopher Thornberg. Christopher is the founding principle of Beacon Economics, and is widely considered to be one of California’s leading economic forecasters. He is an expert in economic forecasting, regional development, real estate dynamics and labor markets. He was one of the earliest and most adamant predictors of the housing crash and the recession that followed. In 2008, he was appointed chief economist for the California State Controller as well as the Controller’s Council of Economic Advisors. He serves on the advisor board of Paulson & Company Inc., one of Wall Street’s most successful hedge funds. Dr. Thornberg holds a PhD in business economics from the Anderson school of UCLA, and a BS in business administration from the state university of New York at Buffalo.

Public sentiment tends to wander between optimistic and pessimistic. No one wants to believe that this recovery might be too slow. Instead, people either hope for a rapid recovery, or they panic over a double dip. Earlier in the year, people were far too optimistic about a rapid recovery, and now they are in a state of unwarranted pessimism. Thornberg does not believe that either of those beliefs are true. He believes that slow growth is most likely going to occur.

Expectations can have an economic impact. Forecasters tend to think that the stock market is a leading indicator of the economy. Paul Samuelson once said “The stock market has predicted 9 out of the last 5 recessions.” We must remember that when we see market swings, it has a material impact on the economy. When the market dumps 15 percent, you are literally talking about a couple trillion dollars in wealth disappearing from the U.S. economy. That does have an influence on spending, particularly at the top end of the income scale. From that perspective, unwarranted worries can create a self fulfilling prophecy and slow the economy.

Over the last 20 years, we have seen unprecedented volatility in the equity markets. We would help ourselves by putting in some rules to dampen that volatility. Thornberg describes the problem as “the tail controlling the economic dog”.

GDP growth in the 90s was caused by stocks. In 2000, it was from real estate equity withdrawal and profits. Currently, our limited growth seems to come from stimulus money. Thornberg does not believe there will be any sort of big driver, and that is part of the reason we will have a slow recovery.

In the mid 70s, there was a consumer let down with the oil shock. Consumers responded to the loss of jobs, high energy prices, and the overall pessimism by cutting back on spending, and that caused a down turn. At the back end of that down turn, consumers who were under-spending started to ramp up their income. They then bought the car they would have bought during the down turn plus another one. That caused a huge surge in consumer spending growth.

Similarly, in the 2001 down turn, we saw a cycle in business spending. Business spending was very high, and then it collapsed. When business spending came back in 2002, we pulled out of the down turn and we got back to normal growth in 2003.

This time, there is no single great source that will cause us to bounce back. The economy was vastly overheated in 2008, and the pain of the down turn was severe, because the pull back occurred in multiple markets at one time. The government got massively involved in both monetary and fiscal policy. In their attempt to stabilize things, they prevented our imbalances from returning to a steady state.

Consumer spending should represent about 80 percent of income, and the other 20 percent should go to savings, taxes and a couple other things. In the midst of the asset bubble, we went from 80 to 84 percent. That extra 4 percent represents approximately half a trillion dollars in excess spending. Savings rates have popped back up in the midst of the crisis, which is good, but the pain of that decline in consumer spending was profound on the economy. As a result, part of the stimulus package was a huge cut in taxes. Right now, Americans are the lowest tax rate in 65 years. This has steadied consumer spending at 82 percent of income. The government is running a deficit of $1.4 trillion per year. At some point, the government will have to raise taxes. When they raise taxes, consumers are going to have to cut back on spending, and that will slow the economy.

We have a lot of deleveraging going on. 23 percent of Riverside is not making a house payment. Because so many people aren’t making their house payments, Bruce believes that people will have plenty of money to spend. Thornberg disagrees, because he does not feel that the money saved from not paying mortgages will amount to that much. Mortgage payments in the U.S. amount to 15 percent of income. Thornberg believes the non-payment of mortgages only adds up to .5 percent of personal income. That is a much smaller number than what happens to personal income as a result of the rise and fall of the unemployment rate.

Bruce explains that in California, a house payment typically represents 40% of someone’s gross. When they don’t make mortgage payments, that saves money, and that fuels GDP. Thornberg understands this, but 1/3 of homeowners in California homeowners own their house free and clear. Of the 2/3rds that are left, the majority are still making their payments. You only have 10 percent of the people in the state that aren’t making their payments. Thornberg does believe that this will make a small difference in the economy, but it is not as significant as people make it out to be.

Bruce asks, “What does seeing a 2.6 10-year T-build tell you?” Thornberg laughs and exclaims that the t-builds are in a bubble. You got to call it as you see it. Sometimes that works and sometimes it doesn’t. A few years ago, Thornberg claimed the housing market was going to crash, and he was right. One of the worst forecasts Thornberg ever made happened 3 months ago when he claimed that interest rates would never go lower. Thornberg has seen some crazy things happen lately. He never could have forecasted this. He believes these things have been driven by worries about sovereign debt in Europe, and a potential for a double dip. This is why Bruce asked his question about Thornberg’s expectations for the t-build, because people’s fears have skewed a lot of categories.

The raw ratio of prices to income will show you that we have not seen a level of retraction that brings us back to the levels we were at in 2000. Prices are still high in comparison to income, but once you adjust for interest rates, affordability levels have never been this great. We have never seen such an affordable housing market when considering current interest rates. Thornberg does not believe that the current interest rates will be maintained. They are going to rise, but he wonders when they will rise and how fast they will rise. If we are on the path to recovery, we could have problems if the credit bubble pops rapidly. If interest rates increase 4.5% to 6.5% in 6 months, then it will severely damage the housing market.

Fannie Mae is planning to hire 1,000 REO agents in Southern California. This tells Bruce that Fannie intends to release inventory; perhaps as soon as the 4th quarter. FHA has 73,000 REOs and 555,000 people that are 90 days late. There are a lot of properties that the bank has not released, but we also have to be concerned about the properties that the banks are not foreclosing on yet. There are probably 4 to 5 million homeowners that are behind on their payments.

Because affordability is so good right now, there will probably be some demand for the shadow inventory. One thing that distinguishes California from states live Nevada, Florida and Arizona is the fact that we did not over build. Nevada and Florida have years of home supply.

Rental vacancies typically stay high after a recession, but vacancies are actually starting to drop quite quickly, especially in California. Thornberg does not believe there will be enough inventory in California, so when the shadow inventory gets released, it will probably be easily picked up. Thornberg believes we will have a stronger housing market over the next couple years because of the inventory levels in relation to the population. It surprised Bruce to hear Thornberg speak so positively about the housing market.

Bruce and Thornberg do not believe we have pent-up demand, but Thornberg does believe that we have a lack of overall supply. When you look at permits over the past 20 years, the numbers show that we have not built enough housing relative to the population growth since 1995. Even in the midst of the bubble, Thornberg believes we were only building an amount that was appropriate for our population growth.

The builders do not have many vacant unsold homes right now, but their competition, which is an REO, is going to be much to competitive. This competition will force them to build smaller houses. Going forward, Bruce believes that vacant homes are going to increase a tremendous amount. Thornberg does not believe prices will come back a lot.

The kind of building going on right now is on the basis of already finished lots. The inventory of finished but unused lots is disappearing rapidly. In the peak of the housing bubble, local economies ramped up fees. Given what people were willing to pay, there were enormous profits to be made in the sale of a new home. Now that the bubble is gone, cities need to reduce their fees, but they probably won’t. Right now, local governments have a lot of pressure placed on them because of the down turn in revenues. Thornberg believes we will have crowded housing, because many people will not be able to purchase new property due to the excessive fees.

In a down turn, people tend to start living together rather than moving out. This is actually starting to change, which is part of the reason why apartment vacancies are going down. We are not in a strong recovery, but it has been a year since the recession ended. Things have stabilized, and fears are beginning to lift.

Overall, jobs are down right now, but that is mainly due to losses in the public sector. Construction jobs actually bounced a decent amount from June to July. Thornberg does not believe the construction industry will come roaring back to what is was like 5 or 6 years ago, but we are seeing more stability in that sector.

Here are the pros and cons of our current situation: On the con side, we still have problems in the housing market. Many people are not making payments and many are underwater. California has some of the worst unemployment rates, which means we have more to recover from. On the pro side, prior to this down turn, this state was driven by internal demand. This means that our demand was coming from consumers with excessive amounts of false housing equity. At the same time, our external sources of growth were getting hammered. The dollar was over-valued and housing was too expensive, which made it hard to run a business here. Those internal sources of demand will not come back. On the other hand, with a weaker U.S. dollar and cheaper housing, other things will begin to improve. Despite our high unemployment rate, people are beginning to migrate back to California.

The percentage of homeownership is probably headed down. Thornberg does not believe that this is a real concern. He does not believe there are any particular benefits for owning vs renting.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Thank you for being a Gold Sponsor for I Survived Real Estate 2010: Adrenaline Athletics, Benton Investment Group, Community RE-Invest Group, Delmae Properties, Elite Auctions, Entrust California, Everlast Photography, Inland Empire Investors Forum, Keystone CPA, Landwood Title, Las Brisas Escrow, Leivas Financial Services, Mike Cantu, North San Diego Real Estate Investors Association, Northern California Real Estate Investors Association, Personal Real Estate Investor Magazine, Realty 411 Magazine, San Jose Real Estate Investor Association, Rick and LeeAnne Rossiter, San Jose Real Estate Investor Association, Starz Photography, Summit Solutions, Tony Alvarez, Wealth Point, and Westin South Coast Plaza.

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188-TNG Radio – Joseph Magdziarz 8-21-10

Friday, August 20th, 2010

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Joseph Magdziarz

2011 President,
The Appraisal Institute

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This week Bruce is joined by Joseph Magdziarz. He is the current Vice President of the Appraisal Institute and he will become the President Elect in 2010 and President in 2011. He has been associated with the Appraisal Institute for 38 years.

Bruce begins by asking if Joseph if he considers business nowadays to be usual or unusual. Joseph has seen similar conditions in the late 80s and early 90s, but for many people, this is a new experience.

Bruce asks Joseph to explain what is similar about our current market and the market of the late 80s. The declining prices of real estate but the cause of these declines is significantly different.

Something radically changed a few months ago in the appraisal business. The Home Valuation Code of Conduct (HVCC) agreement between the Attorney General Cuomo and Fannie Mae and Freddie Mac caused this change. A few years before the HVCC came out, Joseph was lobbying with Congress about the pressure being put on appraisers to make inflated home appraisals. People were happy with many appraisers, because they received high appraisals, but this problem put ethical appraisers out of business, because they would not cooperate with people who wanted their home values inflated. Some of the new people coming into the business may have given into the pressure to make bad appraisals because they did not have the established relationships with lenders that some of the well known appraisers had.

The goal number for an appraiser is market value. Bruce asks if that is still the goal that appraisers are shooting for. Joseph says that is what appraisers are trying to estimate but some of the values coming out are closer to distressed asset value rather than market value.

Bruce asks if something has changed in the appraising process or if the changes are coming in after the appraiser states a market value and someone attempts to correct them. The definition of market value has not changed since 1989. The methodology has not changed either. Joseph thinks that many appraisers have not experienced a distressed market such as the market we are currently in. The HVCC, and the lenders’ choice to move much of their business to appraisal management companies, have caused a lot of problems.

This is one of the first markets we have had in 10 years in which we have declining prices. It is legitimate to have a 90 day old comp that is worth less today than it was when you first got it. Bruce asks if the big problem is that we do not have enough fully repaired homes as comps in comparison to vacant REOs. Jospeh says it’s very localized. Joseph says this is a big problem in some parts of the country, but the real problem occurs when all the occurring sales are foreclosures and short sales.

The definition of market value is the meeting of the minds between a buyer and a seller, each equally motivated and knowledgeable, and without undue pressure. If you have a bank with many foreclosures, they are more motivated than a typical seller would be. They will often dispose of those assets at a lower price which makes none of those properties a valid comp. The motivation of the buyer and seller is important when evaluating market value.

TNG’s business is buying and fixing properties that need work. TNG typically puts $35,000 dollars into a repair job, and they typically end up with a property that is worth about $140,000. It is very hard to get $35 grand worth of credit. There seems to be a rule which only allows a ten percent credit limit for the kind of properties that TNG deals with. Bruce asks Joseph to explain this issue. Joseph explains that this issue relates back to a Fannie Mae/Freddie Mac guideline that says when you have an adjustment greater than 10 percent, you need to explain it. As the percent of adjustment increases, the sale becomes less comparable. There is no ten percent requirement. This is just a guideline, but unfortunately, some of the underwriters believe it to be a rule.

Bruce has had trouble with this guideline. For example, Bruce had 6 offers on a property being sold at 122,000, but then the appraisal came at 102,000, and then the review appraisal came in at 85,000. That is far from what 6 buyers thought the market value was. In the end, Bruce did not sell this property and he kept it as a rental home. If an appraiser is not able to honor the market decision of a buyer, then the market price in some areas will go down further for no good reason. Part of this problem goes back to the HVCC stating that there needs to be a firewall between people originating a loan and people doing appraisals. At this time, that firewall is the appraisal management company. One of the main complaints that Joseph is getting is that many appraisals are being done by appraisers who are not experienced enough in their geographic region.

Bruce asks how appraisers are assigned properties to appraise. Some companies broadcast assignments to everyone on their approved list, so the first person to sign up for the job gets it. The problem with the AMC is that they are not giving these jobs to experienced appraisers. The AMC is focused on getting these jobs done quickly rather than effectively. Better appraisers are missing out on jobs because they cost more. They are hiring people with not enough experience.

The Appraiser’s Institute company has 26,000 members. Each one of these members receives notifications saying that they need to have the proper experience necessary to get jobs done properly, otherwise the Appraisers Institute will take aggressive enforcement against any member who accepts a job that they are not qualified for. These members are also given information on how to turn in unqualified appraisers.

In July, the current president of the Appraisal Institute met with Congress to discuss this issue. He also reminded them a few years before that these problems were occurring, and they failed to act on those problems back then. These problems do not look like they will be dealt with until some time next year. A few bill are pending but nothing will be done until next year.

Bruce asks if the Appraisal Management Companies has to be run by someone with an appraisal background. This is a problem that the Appraisal Institute has been lobbying for as well. There are appraisers who have had their licenses revoked that are now supervising other appraisers. Joseph thinks it would be better if appraisers were required to be licensed within their state.

Bruce asks if communication is allowed between agents and appraisers who are working for Fannie or Freddie. Joseph says this is not forbidden. The loan officer is not allowed to communicate with the appraiser, but Realtors and management companies can communicate with appraisers. Appraisers have an obligation to verify information given to them about a sale. This is a misunderstood rule that Bruce has had difficulty with. Bruce has called appraisers who told him that he was not allowed to talk to them.

Bruce asks Joseph about what the fee was for an appraiser before HVCC and what that fee is now. This is one of the five biggest problems that the Appraisals Institute currently has. Not all appraisal management companies are the same. In Chicago, GAMCO uses Appraisal Institute members, and they give designated members 90 percent of the fee, and they give non designated members 80 percent of the fee. What Joseph has heard nowadays is that management companies are starting to take 50 to 60 percent of the fees. When that happens, the better appraisers refuse to work for those companies. That leaves the new appraisers with the ability to get into the business, and they may not be qualified. Joseph fears that these rules may cause some very knowledgeable people leaving the business. Another problem with management companies is that they require a 24 to 48 hour turn around time. This does not allow appraisers to get to know the market value of a specific market.

We now have the ability to use automated appraisals (AVM), but these automated appraisals are trumping appraisals made by actual appraisers. These automated appraisals are done on a statistical basis. The problem with these reports is that they do not use comparable sales. These automated appraisals essentially come up with a median value rather than a market value. These mechanical appraisers are not capable of looking next door to a certain property in order to obtain a better understanding of the value of the home being examined.

Joseph is can be seen September 11th at our I Survived Real Estate 2009 event.

Joseph C. Magdziarz, MAI, SRA is the 2009 vice president of the Appraisal Institute. He will become the president elect in 2010 and president of the Appraisal Institute in 2011.

Magdziarz has been an active member of the Appraisal Institute for 38 years. He has served in a variety of capacities at all levels of the organization.

At the regional level, Magdziarz has served two terms as Regional Vice Chair and two terms as Region III Chair. He has also been a regional representative for many years. On the national level, Magdziarz served two terms on the Appraisal Institute’s National Board of Directors. He has served as Chair of the Education Committee for five years and has also chaired the National Audit Committee, Instructor and Faculty Committees, and Education and Publications Committees. In addition, he has served on a number of project teams. Presently, he is serving on the ADAPT (MAI demonstration report alternative) project team and the International Education and Designation project team.

Magdziarz has been President of Appraisal Research, Inc. in Rockford, Illinois for 38 years. He resides in Rockford, Illinois with his wife Sandra of 41 years and his bulldog Bella.

Magdziarz is an approved Appraisal Institute instructor for 26 courses in the Appraisal Institute’s QE, AE, CE, and USPAP curriculums. He has also had international assignments in Naples, Italy; Istanbul, Turkey; Seoul, South Korea; and Beijing, Tianjin, and Shanghai, China.

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The Norris Group Real Estate News Roundup 8/16/10

Monday, August 16th, 2010

Today’s News Synopsis:

According to the NAHB, builder confidence fell for the 3rd straight month. The California Homebuilding Foundation reports the housing industry’s economic output has decreased by nearly 80% since 2005. New rules were released which restrict an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. Michael Carliner of Harvard University believes that the decrease in mortgage rates will not offset the effect of decreasing home values on home buyer pessimism.

In The News:

The Hill – “Banks to benefit most from White House program to help fight foreclosures” (8-15-10)

“‘Giving money to the banks isn’t what the government should be doing right now,’ said Dean Baker, co-founder of the Center for Economic and Policy Research.”

Mish’s Global Economic Trend Analysis – “Former Bank Regulator William Black: U.S. Using ‘Really Stupid Strategy’ to Hide Bank Losses – Will Produce Japanese Style Lost Decade” (8-15-10)

“we should be upset there are not more bank failures. The industry has used its political muscle to get Congress to extort the financial accounting standards board to gimmick the accounting rules so that banks do not have to recognize their losses.”

USA Money – “Thoughts of real estate double dip deter investors” (8-14-10)

“‘Housing is entering a double dip in prices,’ says Paul Dales, chief economist at the research group, Capital Economics. ‘They are headed down even more over the next 18 months by as much as 5%. Anyone looking for a short term gain by selling a property is heading for trouble.’”

John Burns – “U.S. Housing Market Statistics” (7-31-10)

This article contains a list of economic statistics which influence the housing market.

NAHB - “Builder Confidence Declines In August” (8-16-10)

“Builder confidence in the market for newly built, single-family homes edged down for a third consecutive month in August, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI declined one point to 13, its lowest level since March of 2009.”

CBIA - “Study Shows Housing Industry’s Economic Output Down 80 Percent Since 2005″ (8-16-10)

“An updated version of The Economic Benefits of Housing report released today by the California Homebuilding Foundation (CHF) in conjunction with the Center for Strategic Economic Research (CSER), confirms that the housing industry’s economic output has fallen approximately 80 percent since 2005, representing a loss of tens of billions of dollars and hundreds of thousands of jobs to the state’s economy.”

Wall Street Journal – “Redfin: Less Than Half of All Home-Sale Attempts Successful in ‘09″ (8-16-10)

“A survey of seven major housing markets found that less than half of all attempts to sell a home in 2009 had, as of last Wednesday, resulted in a sale. The survey looked at how the 500,000 homes that were listed for sale last year in seven of the nation’s biggest counties had fared. Around 47% of those listings had sold by last week, while just 4% of those listings were still active.”

CNBC - “US Banks Get Securities Buy-Back Window” (8-16-10)

“The Dodd-Frank financial reform bill has opened a 90-day window for banks to buy back $118 billion in high-cost securities, a move that would enable them to replace the instruments with cheaper capital but is likely to cause tensions with regulators and investors.”

Housing Wire - “House Price Appreciation Slows in June: CoreLogic” (8-16-10)

“National prices, including distressed sales, rose by 1.4% in June from a year earlier. The yearly appreciation slowed from the 3.7% increase in May from one year earlier. The May increase was revised up from the initial 2.9% estimate.”

Housing Wire – “Fed Publishes Wave of Rules for Mortgage Origination Transparency” (8-16-10)

“The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.”

Bloomberg - “Your House Might Be Underwater for Years: Michael Carliner” (8-16-10)

“Now we’re seeing the opposite mindset. If a potential buyer believes that housing prices may fall more, then mortgage rates of 4.5 percent won’t attract home buyers. Rates could even drop to zero and it might not outweigh consumers’ negative perceptions. Household expectations of future U.S. home price appreciation aren’t directly measured, and are probably based on recent experience. If expectations reflect changes in home prices over the last three years, for example, consumers seem to anticipate annual house price declines of 3.7 percent to 10.4 percent, depending on which of the various house price indexes is used.”

Orange County Register – “Home closing costs are on the rise” (8-16-10)

“A new survey by Bankrate.com shows closing costs are climbing around the country. The average Good Faith Estimate on a $200,000 mortgage this year is $3,741, up from $2,732 in 2009.”

Orange County Register – “5 O.C. hot spots for home price cuts” (8-16-10)

“According to online home tracker Trulia.com, 32.5% of homes on the O.C. market have seen at least one price reduction as of Aug. 1. That compares to 30% in July. Nationwide, 25% of listings had at least one price trim, with the average reduction 10% off the original asking price.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/13/10

Friday, August 13th, 2010

 

 

Video Blog Sources:

ABC News – “Housing Summit May Yield Fannie and Freddie Clues” (8-12-10) To air on  Treasury website Tuesday.

Sacramento Bee –  “Californias’ Income Falls For First Time Since WWII” (8-11-10)

Los Angeles Times – “Fed to resume buying Treasury bonds” (8-11-10)

Foreclosure Radar Report – www.foreclosureradar.com

Inman – “FHA premium changes pushed to Oct. 4″ (8-12-10) 

Today’s News Synopsis:

Equity from the boom has now disappeared and many homeowners are deciding not to pay what they owe. Builders are shrinking the size of new projects as fewer consumers want McMansions. Moody’s sees increasing weakness in the commercial market and the U.S. government appears not to be sure how to move forward to avoid the much talked about double dip recession.

In The News:

New York Times - “Debts Rise, and Go Unpaid, as Bust Erodes Home Equity” (8-11-10)

“During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.”

RisMedia - “Builders Shrink Homes to Fit Buyers’ Newly Modest Tastes” (8-13-10)

“I do believe the younger generation isn’t looking to build mansions anymore,” Palazzolo said. “They are looking at simpler lives. They aren’t looking for the same houses that the baby boomers were.”

AP - “Homes lost to foreclosure up 6 pct from last year” (8-12-10)

“The number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments. Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, foreclosure listing firm RealtyTrac Inc. said Thursday.”

Market Watch - “Monetary policy in a time of deleveraging” (8-11-10)

“The U.S. economy is on the edge of the cliff, threatening to plunge back into ruinous recession, but the worst part is that Washington won’t do anything to stop it. ”

Bloomberg - “Related News:Opinion · Insurance · Retail .U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff” (8-10-10)

“Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.”

Housing Wire – “Fifth Third Converts 70% of HAMP Trials to Permanent Status” (8-13-10)

“Fifth Third Mortgage Co., the mortgage unit of Fifth Third Bancorp, so far converted 70% of its trial Home Affordable Modification Program (HAMP) plans into permanent modifications.”

Housing Wire – “Moody’s Sees CMBS Delinquency Poised to Rise 9%-11% in 12 Months” (8-13-10)

“Moody’s Investors Service expects the share of commercial mortgage-backed securities loans that are delinquent or in special servicing to continue to rise over the next year. Analysts expect delinquencies to increase by 9% to 11% during the next 12 months with loans in special servicing climbing to about 20%, which would be up from the current 11.3% and 5% a year ago.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/12/10

Thursday, August 12th, 2010

Today’s News Synopsis:

Freddie Mac’s claims the average rate for 30-year fixed loans this week fell to 4.44 percent. RealtyTrac reports that national foreclosures increased 3.6% from last month. Initial unemployment insurance claims increased this week by 2,000 to 484,000, according to the Department of Labor. Foreclosure Radar announced notices of default filings in California slipped 4.8% from June, and notices of trustee sale fell 18.9%.

In The News:

NAHB - “Active Adult Home Builder Activity, Confidence Drop” (8-12-10)

“Builder confidence in the mature-housing market retreated during this year’s second quarter, according to data from the National Association of Home Builders’ 55+ Housing Market Index (55+ HMI) – a quarterly survey of the association’s builder members engaged in the production of mature-market housing. This past quarter’s index values dropped for all areas surveyed, compared to the previous year’s second quarter.”

Associated Press – “Mortgage rates hit low of 4.44 pct.” (8-12-10)

“Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans this week was 4.44 percent, down from 4.49 percent last week. That’s the lowest since Freddie Mac began tracking rates in 1971.”

Inman - “FHA premium changes pushed to Oct. 4″ (8-12-10)

“FHA Commissioner David Stevens announced last week that upfront premiums for FHA mortgage insurance would be rolled back from 2.25 percent to 1 percent on Sept. 7, while annual premiums would nearly double. FHA had raised upfront premiums from 1.75 percent to 2.25 percent in April, to cope with rising losses on FHA-guaranteed loans. The Obama administration promised to reduce upfront premiums if Congress gave it the authority to raise annual premiums beyond their statutory limit of 0.55 percent.”

CNN - “Foreclosures rise in July” (8-12-10)

“The latest foreclosure numbers carried a mixed message: They’re up 3.6% from the month before but down 9.7% from 12 months earlier. In July there were more than 325,000 foreclosure filings — including notices of default, auctions notices and bank repossessions. That is the 17th month in a row total filings exceeded 300,000, said RealtyTrac’s CEO, James Saccacio.”

Sacramento Bee – “42,000 of California’s jobless will get help with mortgages” (8-12-10)

“More than 42,000 laid-off California homeowners are about to get a break. Starting Nov. 1, the government will help them make mortgage payments while they look for another job. Wednesday, the U.S. Treasury Department added $476.2 million to a $64 million state program that will pay jobless homeowners up to $1,500 a month.”

Housing Wire – “Weekly Jobless Claims Swell to 484,000″ (8-12-10)

“The number of initial unemployment insurance claims grew by 2,000 to 484,000 in the week ending August 7, swelling more than expected after last week’s initial figure was revised upward. The four-week moving average rose to 473,500, from the previous week’s revised average of 459,250, according to new data today from the US Department of Labor (DOL).”

Housing Wire - “California Foreclosure Activity Remains Mixed in July” (8-12-10)

“California mortgage defaults and foreclosure activity remained mixed in July, according to ForeclosureRadar, which tracks filings across the state. Foreclosure filings and cancellations dropped in July after rising in June while foreclosure sales rose after dropping last month. Notices of default filings slipped 4.8% from June and 47% from the same month last year. Notices of trustee sale fell 18.9% from June and 30.5% from July 2009″

Housing Wire – “Freddie Mac Economist Finds Growing Investor Preference for Hard Cash” (8-12-10)

“In Freddie Mac’s report, ‘Where Have All the Originations Gone?’ released Wednesday, the government sponsored entity (GSE) said that 25% of 2010 existing home sales are all-cash transactions. This proves to be a growing trend in home buying as the percentage of cash transactions was between 5% and 10% just a few years ago.”

Wall Street Journal - “Foreclosed On—By the U.S.” (8-12-10)

“The Federal Reserve Bank of New York is facing the prospect of foreclosing on a number of properties in the coming months, from homes to commercial buildings, a result of a souring mortgage portfolio it took over when it helped bail out Bear Stearns in 2008.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/11/10

Wednesday, August 11th, 2010

Today’s News Synopsis:

The MBA’s weekly survey shows mortgage application volume increased by 0.6 percent. The Obama will provide the Treasury Department and HUD with $3 billion for aiding homeowners. The NAR reports that most U.S. metro areas experienced a decrease in home prices during the second quarter, and distressed homes accounted for 32 percent of second quarter sales.

In The News:

Mortgage Bankers Association – “Mortgage Applications Essentially Unchanged Despite Lowest Rates in MBA Weekly Survey” (8-11-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending August 6, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 0.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 0.4 percent compared with the previous week.”

Associated Press - “Obama administration to provide $3B in housing aid” (8-11-10)

“The Treasury Department says it will send $2 billion to 17 states that have unemployment rates higher than the national average for a year. They will use the money for programs to aid unemployed homeowners. Some of those states have already designed such programs. Another $1 billion will go to a new program being run by the Department of Housing and Urban Development. It will provide homeowners with emergency zero-interest rate loans of up to $50,000 for up to two years.”

NAR - “Broad Stabilization in Second Quarter Metro Area Home Prices with Strong Sales” (8-11-10)

“In the second quarter, 100 out of 155 metropolitan statistical areas1 (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year 91 areas had higher prices, while only 26 MSAs experienced annual price gains in second quarter of 2009. The national median existing single-family price was $176,900 in the second quarter, up 1.5 percent from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32 percent of second quarter sales, down from 36 percent a year ago.”

Sign on San Diego – “Price reductions on San Diego homes increase” (8-11-10)

“As of Aug. 1, 23 percent of all the homes for sale in the City of San Diego had seen a price reduction, says a report by Trulia.com, a real estate website. That’s compared to July where 20 percent of the homes for sale in San Diego had experienced a price cut. The average price reduction was 8 percent. On a national level, Trulia estimated that 25 percent of all home listings have had at least one price reduction. The average size of the cut was 10 percent of the original list price, chopping an estimated $30.1 billion in value.”

Housing Wire – “Foreclosures Down 5% in First Half of 2010: Foreclosure Listings Nationwide” (8-11-10)

“Foreclosure Listings Nationwide said second-quarter foreclosures rose 1% from the year ago and declined 4% from the prior quarter. More than 1.6m properties began the foreclosure process during the six months ending June 30, representing a nearly 7% decline from a year ago.”

Housing Wire – “Fitch Sees $100bn in Special Servicing CMBS Loans by Year End” (8-11-10)

“Commercial real estate loans that require special servicing continue to climb with the total volume projected to reach $100bn by the end of 2010. These loans are used as collateral in commercial backed mortgage securitizations (CMBS).”

Housing Wire – “FHA Postpones Premium Changes until October” (8-11-10)

“Last week, Federal Housing Administration (FHA) commissioner David Stevens announced plans for implementing FHA’s new mortgage insurance premium structure. Based on industry feedback to the announcement, the FHA postponed the premium fee changes on all new case numbers for one month, and will now implement them on Oct. 4, 2010.”

Housing Wire – “Most Borrowers Choose Fixed-Rate Mortgages for Refinancing, Freddie Says” (8-11-10)

“Borrowers who are refinancing their homes are taking advantage of the lowest fixed-mortgage rates in the past 50 years, according to Freddie Mac’s quarterly Product Transition Report today. The report indicates 95% of refinance loans completed in Q210 were processed with a fixed-rate mortgage (FRM).”

Bloomberg - “Fed Reverses Exit Plans, Sets $2 Trillion Floor for Holdings” (8-11-10)

“Officials directed the New York Fed’s trading desk to reinvest what economists estimate will be $15 billion to $20 billion a month in maturing agency and mortgage-backed securities back into U.S. Treasuries. The purchases will help keep Treasury yields and mortgage costs low and prevent the level of monetary stimulus from shrinking further.”

Realty Times – “Top 10 Things You Need to Know About Self-Directed IRAs” (8-11-10)

“IRAs Can Purchase Almost Anything. A common misconception about IRAs is that purchasing anything other than CDs, stocks, mutual funds or annuities is illegal in an IRA. This is false. The only prohibitions contained in the Internal Revenue Code for IRAs are investments in life insurance contracts and in ‘collectibles.’ Since there are so few restrictions contained in the law, almost anything else which can be documented can be purchased in your IRA. A ’self-directed’ IRA allows any investment not expressly prohibited by law. Common investment choices include real estate, both domestic and foreign, options, secured and unsecured notes, including first and second liens against real estate, C corporation stock, limited liability companies, limited partnerships, trusts and a whole lot more.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/10/10

Tuesday, August 10th, 2010

Today’s News Synopsis:

The new FHA short refinancing program will provide additional refinancing options to underwater homeowners starting Sept. 7. According to Integrated Asset Services, nationwide home prices increased 1.1% in the second quarter. Zillow reports California’s current rate on 30-year mortgages is 4.34%. CoreLogic estimates that short sales in Arizona, California, Florida and Texas will cost lenders $310m in unnecessary losses in 2010.

In The News:

Sign on San Diego - “Q&A: Pulte Homes exec on the San Diego housing market” (8-10-10)

“Q:Why is your company looking to build in the San Diego market? A: We are trying to be very strategic in our land acquisitions because there is a limited availability of finished lots. We see the economy starting to recover here with companies beginning to invest, especially in the high-tech and biotech markets. Engineers are relocating here. It tells us the demand is there.”

Housing Wire – “FDIC Launches Unit to Liquidate Banks under Dodd-Frank” (8-10-10)

“The CFI will review bank holding companies (BHCs) with more than $100bn of assets as well as non-bank financial companies designated as systemically important by the new Financial Stability Oversight Council. The CFI unit will also carry out the FDIC’s new authority to implement orderly liquidations of failed BHCs and non-bank financial firms.”

Housing Wire – “Home Prices Nationwide Increase 1.1%: IAS360″ (8-10-10)

“Integrated Asset Services, LLC (IAS), a Denver-based collateral valuation and default management service firm, released its latest IAS360 House Price Index (HPI) Tuesday reporting that collectively, nationwide home prices increased 1.1% from the first quarter of 2010 to the second. This is down 0.9% from the same period last year and down 16.7% from the survey’s all-time HPI high in Q407.”

Housing Wire – “FHA Short Refinancing Program Likely to Have Low Impact on Housing: KBW” (8-10-10)

“As HousingWire reported last week, the new program will provide additional refinancing options to underwater homeowners starting Sept. 7. To be eligible for the new loan, the homeowner must be underwater but still current on the mortgage. A credit score of 500 or better is required, and once refinanced and insured by the FHA. The new refinanced loan must have a loan-to-value ratio of no more than 97.75%. The borrower’s existing first-lien holder must agree to write at least 10% of the unpaid principal balance, and it must bring the borrower’s combined loan-to-value ratio (LTV) on that first mortgage to no more than 115%. The existing refinanced loan cannot be an FHA-insured one.”

Housing Wire – “Zillow: Weekly Rate on 30-Year Fixed Rate Mortgage Averages 4.3%” (8-10-10)

“The 30-year fixed-mortgage rate (FRM) slightly increased week-to-week nationally to an average of 4.3%, according to the Zillow Mortgage Marketplace weekly update. This is up 0.02% from the record low set last week. Regionally 30-year rates are varying, but the majority of states saw an escalation. California’s current rate is 4.34%, up from 4.33% last week, as is New Jersey’s at 4.28%, up from 4.27%.”

Housing Wire – “DebtX June CRE Loan Value Up to 77.4%” (8-10-10)

“The value of commercial real estate (CRE) loans that collateralize commercial mortgage-backed securities (CMBS) priced by DebtX rose to 77.4% at the end of June from 76.6% in May, the loan-sale adviser said in a press release Tuesday.”

Housing Wire – “Short Sales Cost Lenders $310m More Than Necessary, CoreLogic Study Finds” (8-10-10)

“The study projects that more than half of short sales happen in Arizona, California, Florida and Texas and will cost lenders an estimated $310m in unnecessary losses during all of 2010. These losses average $41,500 per short sale. Potential fraud, such as flipping or offer misrepresentation, likely happens in one in every 53 short sale transactions. CoreLogic examined a representative data sample of single family residence (SFR) short sale transactions from the past two years, representing 98% of real estate transactions and 85% of mortgage financing details, the firm said.”

Housing Wire – “Risk of House Price Decline Slightly Shrinks in PMI Index” (8-10-10)

“The Q310 market risk index, which uses Q110 data, dropped to 51.9 from 53.8. The score indicates the probability (from zero to 100) that the price of homes will on average be lower after two years. And while the risk of declines is less, economic analysts say house prices will likely continue to drop.”

Bloomberg - “`Buy and Bail’ Homeowners Get Past Loan Restrictions” (8-10-10)

“Real estate professionals call it ‘buy and bail,’ acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s ‘underwater,’ or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan. The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency.”

Bloomberg - “Investors Doubt Mortgage-Bond Revival Until 2012, Moody’s Analysts Say” (8-10-10)

“Investors doubt the market for home- loan securities without government backing will revive until 2012, according to Moody’s Investors Service. About 74 percent of attendees surveyed for a June conference by the New York-based rating company responded that issuance, which essentially halted in 2007, will make a substantial ‘comeback’ no sooner than 2012, Moody’s analysts Navneet Agarwal and Brian Harris wrote in an Aug. 6 report.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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The Norris Group Real Estate News Roundup 8/9/10

Monday, August 9th, 2010

Today’s News Synopsis:

The percentage of American single-family homes with mortgages in negative equity decreased by 1.8% from the first to second quarter.  Freddie Mac is requesting $1.8 billion in federal aid after a $6 billion loss in the second quarter. Freddie Mac’s single-family inventory rose by 84.2% and its multifamily inventory doubled from last year. PIMCO fears the U.S. may be entering a period of deflation, and JPMorgan Chase expressed concerns that our financial system may crash in 2015.

In The News:

MSNBC - “Fewer U.S. homeowners have ‘underwater mortgages’” (8-9-10)

“The percentage of American single-family homes with mortgages in negative equity fell to 21.5 percent in the second quarter from 23.3 percent in the first quarter and 23 percent a year ago, according to the Zillow Real Estate Market Reports.”

Los Angeles Times – “Freddie Mac requests $1.8 billion in aid after loss” (8-9-10)

“Government-controlled mortgage buyer Freddie Mac is asking for $1.8 billion in additional federal aid after posting a larger loss in the second quarter. Freddie Mac said Monday it lost $6 billion, or $1.85 per share, in the April-to-June period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with a loss of $840 million, or 26 cents a share, in the second quarter a year ago.”

Housing Wire – “Flooded with Housing Inventory, Freddie REO Sales Surge Despite Foreclosure Alternatives” (8-9-10)

“Year-over-year, Freddie’s single-family portfolio increased 84.2% and the multifamily portfolio doubled. Monday morning’s quarterly results reveal a 655% increase in forbearance agreements, where distressed homeowners simply get more time to begin paying back the mortgage. These forbearance agreements numbered 21,673 at the end of the first half of 2010, up from 2,869 at the end of the first half of 2009.”

Housing Wire - “The Scope: JP Morgan Estimates Nearly 9m Mortgages Eligible for New FHA Refinancing” (8-9-10)

“There is $870bn worth of underwater mortgages that could be eligible for the new Federal Housing Administration (FHA) short refinance program announced last week, according to JPMorgan. Additionally, there could be as many as 8.9m loans eligible for the program, worth an aggregate balance of $2.3trn, which includes underwater borrowers and mortgages eligible for the Home Affordable Modification Program (HAMP).”

Housing Wire – “Zillow Sees 3.6% Dip in US Home Prices as More Underwater Mortgages Come up for Air” (8-9-10)

“For the 14th consecutive quarter, national US home values declined 3.2% year-over-year during Q210, according to a quarterly market report produced by real estate listing website Zillow. The average sales price for residential properties was $182,500 during the quarter, down 0.6% from the Q110 price of $183,700. In Q210, 21.5% of mortgage properties were in negative equity positions, compared with 23.3% in Q110.”

Housing Wire – “PIMCO: US On Verge of Turning Japanese?” (8-9-10)

“The US may be nearing a long period of limited growth with the risk of deflation that would bring the nation’s economy very close to that of Japan during the 1990s, according to investment-management firm PIMCO.”

Housing Wire – “Monday Morning Cup of Coffee” (8-9-10)

“Federal Reserve chairman Ben Bernanke said there are options to re-shape US housing finance that don’t involve government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. ‘There are a variety of organizational forms that might replace Fannie Mae and Freddie Mac that could likely provide mortgage credit without the systemic risks associated with these institutions in the past,’ Bernanke said in a July 23 letter to Ohio Democrat Rep. Marcy Kaptur, according to reports by multiple media reports.”

Bloomberg - “Crash of 2015 Won’t Wait for Regulators to Rein in Wall Street” (8-9-10)

“The financial system experiences a crisis ‘every five to seven years,’ JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told the Financial Crisis Inquiry Commission in January. By that measure, the next crash could come by 2015 — years before new banking reforms are in place. Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world’s banks until 2018 to comply with limits on how much they can borrow.”

Orange County Register – “Real estate loss hammers Calif. pensions” (8-9-10)

“The $200 billion California Public Employees’ Retirement System (CalPERS) earned 11.4 percent return in the year ended June 30 — despite losing 37.1% on its real estate bets through March 31. The $130 billion California State Teachers’ Retirement System (CalSTRS) was up 12.3 percent in the same year after losing 12.4% on its property holdings.”

Orange County Register – “Unsold homes up 57% this year” (8-9-10)

“The number of homes for sale on the Orange County housing market has mushroomed to 11,414 in the 30 days ending last Thursday. That’s up 57% since ‘inventory’ began a steady rise at the start of the year, according to the latest report by Altera’s Steven Thomas.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

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