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The Norris Group Real Estate News Roundup 2/7/11

Monday, February 7th, 2011

Today’s News Synopsis:

The MBA reports $110 billion in commercial and multifamily mortgages were originated in 2010. 36,500 mortgages were modified through government and proprietary programs in December, according to Fitch Ratings. Altos Research announced plans to release a new, forward valuation model for real estate. S&P claims 80% of the loan modifications that took place over the last 3 years defaulted again within 2 years.

In The News:

Mortgage Bankers Association – “MBA: Strong Fourth Quarter Drives 2010 Commercial/Multifamily Mortgage Bankers Originations 36 Percent Above 2009 Levels” (2-7-11)

“Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010 – an increase of 36 percent from 2009″

Mortgage Bankers Association – “MBA: Only 11 Percent of $1.4 trillion of Non-Bank Commercial/Multifamily Mortgage Debt Set to Mature in 2011″ (2-7-11)

“Of the $1.4 trillion balance of outstanding commercial/multifamily mortgages held by non-bank investors, only 11 percent of the total ($155 billion) will mature in 2011, and 9 percent ($125 billion) in 2012″

Press Enterprise – “Surveys project Gen Y’s impact on for-sale and rental housing” (2-7-11)

“Gen Y forms a large consumer group–even a bit larger than the Baby Boomers, according to a report published by Meyers LLC, an Orange County based real estate research company. Meyers cites a report by the Marcus and Millichap commercial brokerage that 20-to-34 year olds constituted a 65 percent share of job gains in 2010.”

Washington Post – “Republicans call for swift action to weaken Fannie and Freddie” (2-7-11)

“Republicans unveiled a four-point outline of how they want to overhaul the nation’s troubled mortgage system, including shrinking the number of mortgages owned by the troubled companies.”

Housing Wire - “Mortgage modifications drop 57% from 2009 peak: Fitch” (2-7-11)

“Servicers modified 36,500 mortgages through government and proprietary programs in December 2010, down 57% from the peak of 86,500 in April 2009, according to Fitch Ratings.”

Housing Wire – “Altos unveils forward-looking valuation model” (2-7-11)

“The AltosEvaluate forward valuation modeling forecasts changes in a property’s sale price three, six, or 12 months into the future based on the strength or weakness of any local real estate market.”

Housing Wire - “BarCap reveals a new mess in mortgage servicing: Remittance reports” (2-7-11)

“For modified loans, remittance reports are not specifying the exact amount of forgiveness, forbearance and the recapitalization of principal. But they are added to the cash flows, confusing investors who can only see a hole of information between the beginning and ending loan balance.”

Housing Wire – “Fannie Mae multifamily funding drops 14% in 2010″ (2-7-11)

“Fannie Mae financing for multifamily properties in 2010 dropped 14% compared to 2009, with substantial decreases in funding to manufactured housing communities and senior housing.”

Housing Wire – “S&P: Loan mods fail to keep distressed borrowers afloat” (2-7-11)

“The New York-based rating agency said 80% of the loans cured by a modification in the time period stretching from 2007 to 2010 defaulted again within 24 months.”

Housing Wire – “FDIC will base insurance charges to banks on risk, not deposits” (2-7-11)

“Banks that take more risk with their investments will be forced to pay more in insurance costs to the Federal Deposit Insurance Corp., according to rules finalized on Monday.”

Bloomberg - “REITs Seek to Lure Pension-Fund Money From Private Equity” (2-7-11)

“The National Association of REITs found that a portfolio 30 percent invested in commercial property shares delivered a higher return relative to one more heavily tilted toward private-equity funds, based on a study to be published today on the group’s website.”

Housing Wire - “U.S. Homeowners in Foreclosure Process Were 507 Days Late Paying” (2-7-11)

“U.S. homeowners in the foreclosure process were an average of 507 days late on payments at the end of last year as lenders handled a record rate of mortgage delinquencies, Lender Processing Services Inc. said today.”

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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206-TNG Radio – Jon R. Daurio 12-25-10

Friday, December 24th, 2010

Jon Daurio

John R. Daurio

Chairman of Kondaur Capital


 

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This week Bruce is joined by Jon R. Duario. Jon is the chairman and chief exective officer of Kondaur Capital. He founded Park Place Capital in 2001, and sold it to Ameriquest Mortgage Company in 2002. After the sale, the name of the business changed to Sprint Funding Corp, and Jon remained as president through May 2006. He received his Juris doctorate and Masters from UFC, and his BA Cum Laude from Harvard. He is also a fifth degree black belt in Tae Kwon Do.

This week Bruce is joined once again by Jon Daurio.  Mr. Daurio is currently the chairman and chief executive officer of Kondaur Capital.  Previously, Mr. Daurio co-founded Parkplace Capital in 2001, sold that business to Ameriquest Mortgage Company in ’02.  After the sale the name of the business was changed to Sprint Funding Corp.  John remained with Sprint as president, general counsel through May of 06.  John founded Encore Capital Corp., a national wholesale residential mortgage banker.  Mr. Daurio received his juris doctorate and masters from USC and his bachelor of arts degree cum laude from Harvard, and somehow in his spare time managed to get a fifth degree black belt in Tae Kwon Do.

Note pools most frequently involve a competitive bid situation, but not always. When a large pool of loans, or any pool of loans for that matter, is being sold, the seller typically will sell those loans.  Most analogous to what I think people would understand to be a sealed bid, although it’s not literally in a sealed envelope or anything like that, so it is a competitive bid situation.  Many of our sellers that we’ve dealt with repeatedly though will sell or deal with us on a negotiated trade basis, meaning that they’ll deal directly with us, and I believe they do that because we have proven ourselves over the last 3 and a half years that we’ve been in business and buying these loans to be if not the most competitive bidder meaning we’re paying the highest prices for these loans, at least the most experienced and, I’ll use the term easiest, purchaser to deal with because the purchase of these loans is not an easy procedure, and there’s tons of laws and issues that have to be addressed when a loan is purchased and servicing is transferred.

Its hard to imagine the infrastructure you have to have to do diligence on for a pool of loans, especially if it’s all over the country. That’s one of the reasons Daurio’s company has almost 500 employees and growing.

The way the market works, which is the majority, on a competitive basis, a pool of loans is given with information about the loans, the address of the house, the credit history of the borrower, the terms of the existing loan, the payment history, especially since I focus on non-performing loans, when the last payment was made, where those payments were made and you get what’s called an indicative bid.  We at Kondaur as well as others give an indicative bid stating, “If all of the information that you’ve provided to us is true, this is what our price would be.  However, we need to conduct a due diligence review of the loans in order to A. verify that the data that you’ve given us is true, and B. determine what other types of compensating factors or issues that could change what we offer for loans.  I will note that Kondaur Capital Corporation is unique and has a reputation as being the nation’s only true loan level bidder, meaning when we receive a pool of loans; let’s say 1,000 loans, we give 1,000 individual loan prices and allow the seller to cherry pick us. Bruce was surprised to hear this.

Many of Daurio’s competitors are surprised when Daurio explains to them which loans he doesn’t like out of a pool of 1,000. For example, I might say, “Okay, well I like your prices on these 820 loans, but I don’t like it on this 180 loans.”  Many of our competitors in that situation will say, “Well wait a second, we’ve gotta re-price because we assumed we were going to purchase all the loans.”  And that’s in essence the difference.  It’s that we do a meticulous, an extensive review of each individual loan to the point that each individual price stands on its own.  So in answer to your question, ‘How long does that take?’  Typically that takes us between two and three weeks to complete.

This is not for the purpose of getting the indicative bid. The indicative bid is something that we do on a macro basis or a modeling basis that would give a price.  And then the final price takes us about two or three weeks.

The value of a loan I would say is what a ready, willing and able buyer would pay for that loan, and because I am a ready, willing and able buyer, my purchase price is an accurate depiction of what the value of that loan is.  And in turning the value of that loan, we spend a tremendous amount of efforts analyzing both what the expected sale price would be of the home securing the loan assuming that we’re going to take title to the house as part of the resolution effort which we do approximately 75% of the time.  The (indistinguishable) majority by paying for a deed in lieu of foreclosure as opposed to foreclosing on the loan, as well as an analysis of what is the current credit situation of the borrower, which we determine with very little information available to us because during that bidding process we’re not allowed to contact the borrower.  We have to rely on existing servicing and collection notes and the origination file that might or might not be available.

For every 100 loans purchases, Kondaur eventually owns the house as an REO about 75% of the time. For the other 25% of loan purchases, Kondaur is selling the loan on a one-by-one basis or refinancing it.  With the available FHA programs, Kondaur could successfully do a refinance of the loan about 4% of the time.  About 1% of the time the borrower’s actually able to come up with funds to give me a short payoff where Kondaur will forgive a fairly significant amount of the principle balance but they’ll be able to pay me.  Or Kondaur will modify the note either by principle forgiveness and/or payment reduction, but in that situation Kondaur won’t hold it; it’ll still sell the note or it’ll sell it as is.

Kondaur sells 100% of the REOs that it takes title on, even after we’ve taken property back.  As Jon said in the past segment, when Kondaur takes title to a house as REO it is very, very quick if there are people still in the house to go through any of the cash for keys process.  Or, if the occupant won’t cooperate, an eviction process, and then Kondaur rehabilitates the property to put it in turn-key condition, meaning that whoever buys the house doesn’t have to put any money into the house in order to live in it, and then sell it.  Typically, Kondaur has a REO off the books within about 3 months.

There are some opportunities for investors willing to come in and pay at a lesser price and close these things in a week.  This prevents Daurio from taking the 3 month journey. But again, we don’t take cash because we have a need for liquidity.  I’m very, very fortunate in this sense that my company is very well capitalized.  We have access to well over a billion dollars of capital.  But the reason why we do it is I am very pessimistic on a national basis and especially in the Inland Empire as to home prices in 2011 and 2012.  So if there is an expected, which I think in the Inland Empire could be as high as another 1% per month decrease in the value of the homes.  If I get cash today, it’s better than trying to get under contract in 3 months.  This is a side note:  we, with rare exception, will ever accept a purchase offer where the close of escrow is beyond 30 days.

FHA has about 555,000 people 90 days late or more, and they only have 50,000 current REOs.  Daurio is interested in getting pools of loans that are able to be purchased from the Department of Housing and Urban Development.  He is currently dealing with members of HUD.  He is trying to figure out how we might be able to buy and/or service their loans.

Another thing that makes Kondaur Capital somewhat unique in this market, especially relative to other people that are buying these loans, is I require only two representations and warranties on behalf of the seller: that they own the loan, and that they can sell it.  Meaning that if they breech either of those representations or warranties; they didn’t own the loan or they didn’t have the ability to sell it, I can mandate under contract that they have to buy it back.  Things like title, what leans are on the property, I take upon myself the responsibility for determining that, and the way we determine it is rarely by a full-blown title insurance policy, but there’s a product that many of the title companies make available called an ownership and encumbrance, or ONE report, and that’s what we rely on for trying to determine what leans exist against the property or what the situation is with who really owns the property and how title is held.

We never buy a loan that’s in the MERS system.   One of the things that we require before we close on the purchase of any loans is that the loans are out of MERS before we purchase them. From the day I started the company and built it we wanted it out of MERS.  I won’t say I anticipated these kinds of issues, but I always want to try to minimize the number of parties that are involved and the resolution of the loan.  One of the reasons why we do very few short sales is because typically in a short sale the borrower’s going to vacate the house by selling it, and we’d rather just pay them for a deed in lieu of foreclosure and then sell the house ourselves.

Daurio has noticed some attitude changes of the occupants in the 3 years that he has been doing this. This is because of the media making borrowers more aware that owners of loans, like myself, would be willing to pay them for a deed in lieu of foreclosure despite the fact that they haven’t made payments for months or even years.  We’ve seen some people that are more amiable to take that because they didn’t even know it was available.  Then we have some borrowers that because of the publicity of issues on litigation with respect to issues like modifications or MERS or the robo-signer issues or things like that they’re holding out.  I guess there’s actually a third thing, and the third thing is that people are just making economic decisions that unlike what we offer at Kondaur Capital Corporation to a borrower to vacate, the borrowers are making economic decisions saying, “Okay, you’re willing to give me X dollars, but I could stay in my house rent-free for X number of months,” and the two don’t equate.  So therefore it’s economically better for them to remain in their house rent-free than it is to accept what so many of my competitors offer which is simply a nominal amount of money.

There are many failed loan modifications within these pools. Potentially half of the loans I buy today are failed modifications. Bruce is very surprised by this. Bruce doesn’t understand why a lender would choose the pool method of selling as opposed to making it one at a time.  He would think they would net more by doing this. Daurio thinks it’s more ignorance or purposeful sticking your head in the sand to avoid the issue.  Let’s recall that there is a separation of the owner of the loan and the servicer of the loan.  Many servicers of these loans are the same servicers that were granted the right to service these loans when these were performing loans and therefore the amount of money that the servicers are being paid to service the loans is woefully inadequate for the servicer to properly staff both in terms of quantity and quality of people.  Quite frankly these servicers aren’t staffed to be able to service these loans on a one-by-one basis; and the owner of the loans, even if they get smart enough to realize that this is an issue, is unwilling to pay the servicers to adequately staff.  This is not that bad of a decision because so many of the relationships are adversarial in the sense that a servicer typically makes money on servicing fees and therefore liquidating the loan is not in their best interest.  But it may be for the owner of the loan.  That’s why at Kondaur, we’re an owner servicer.  We do third-party service for some, but those are the entities that understand and we actually make our self obligated to take the route that is the best for the owner of the loan and not necessarily for us.  Daurio tries to align those interests in the contracts he has with them.

This round of foreclosures and not receiving payments is probably creating a lot more overhead for the servicers than they were anticipating. At Kondaur Capital Corporation, when we service with third party service, in our servicing agreements we really retain a tremendous amount of flexibility and authority to do what we think is best.  In fact, I have not taken on third party servicing assignments where the owner of the loan wants to inject their opinion.  In other words, they want to put a limit on how much I could offer for a cash for keys or for a deed in lieu of foreclosure based on things like a percentage of what the loan is worth or a percentage of what the house is worth or a percentage of the unpaid principle balance, all things which I think are irrelevant in determining how much should be offered to a borrower for cash for keys.  What should be offered to a borrower for cash for keys should be the subject of two analyses.  One, if the borrower were to make an economic decision and continue to live rent-free, what is that value relative to what is being offered?  And then secondly, what is the benefit to getting the house quickly, especially when you are like I am where you think housing prices are still going to depreciate fairly significantly in the upcoming months and years.

Bruce just did some research on not just the pricing of California in terms of what homes are selling for, but the cost per month. Cal Poly Pomona does a report and has for several decades, and twice a year they reappraise the same address in many different cities in California.  I went back to 1990 level pricing and compared it to 2010, and I’ll just pick Lancaster/Palmdale.  The actual price is -11% for that 20 year period, dollar for dollar, not inflation adjusted.  Interest rates were 10.2% in 1990, and interest rates now are say 4 and a half.  So you have a 55% discount on the cost of a loan and you have income that’s increased.   So it’s interesting that the market is so unwilling to buy a product that’s virtually on sale at an all-time level monthly.

Daurio agrees, but there are other situations in which, for an owner of a loan such as himself, getting ownership of that house can be faster and better.  It’s not just because he expects housing prices to continue to deteriorate, but also because rent-free borrowers in the house are not expending money on maintenance, and so there is an increased amount of what we call deferred maintenance, which is a great cost.  Thirdly, when we take title to a house by paying a borrower for a deed in lieu of foreclosure, the borrowers are not vindictive as we have heard borrowers have been in other foreclosures where they rip out the piping or cabinetry or plumbing or things like that.  Most of Kondaur’s borrowers, nobody happy about the fact that they’ve lost their home, but they feel like they’re definitely treated better and better off than with their previous servicer.

Bruce feels that is a good point, because somebody can do an awful lot of damage in a bad mood in one day, no doubt about that. Daurio considers this sort of property damage to be criminal. Bruce has found it very hard for anyone to acknowledge that this might be true.  We buy at the trustees sales, and we have sometimes people very blatantly doing things that were detrimental to the property.   You can call the police; you can even go to the extent of a lawsuit and it would be very tough to justify the activity just because it doesn’t seem like you have too many people on your side.

Daurio believes there will be some different occurrences in 2011 from 2010. He see more loans going to default. Also, he see more loss severities, because he believes housing prices will depreciate more in 2011 than 2010.

Kondaur Capital Corporation will begin purchasing commercial loans. Daurio started a subsidiary company called Kondaur Commercial; and it is going to both third-party service and purchase initially small balance commercial loans. By small balance he means 5 million or less.

Kondaur Capital has purchased quite a number of land loans.  It’s just not as large a market as one to four family or small balance commercial. Bruce thinks this would probably entail holding it at this point.  Daurio disagrees saying, “No actually, again, it’s all of a function of so many things in real estate:  you make money on the buy.  We buy land loans when we think we have an exit strategy that is profitable.”

For m ore 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 12/07/10

Tuesday, December 7th, 2010

Today’s News Synopsis:

UCLA economists expect unemployment to remain above 10% until the end of 2012. TransUnion predicts the national mortgage delinquency rate could fall below 5% in 2011. A survey from RealtyTrac shows 60% of Americans believe housing will not recover for another 2 years. According to HOPE NOW, 1.54 million permanent mortgage modifications were completed in the first 3 quarters of this year.

In The News:

The Press Enterprise – “Economic recovery to stay muted” (12-7-10)

“Unemployment in California should start to decline next year but is likely to remain above 10 percent until the end of 2012, an economic forecast released today found. The quarterly forecast from UCLA’s Anderson School of Management suggests that the state will see something in 2011 that has been lacking for more than two years: job growth.”

Wall Street Journal – “U.S. Mortgage Delinquency Rate Could Fall to 5% in ’11″ (12-7-10)

“The percentage of U.S. consumers who are delinquent on their mortgages could fall to about 5% by the end of 2011, from an expected 6.2% at the end of this year, according to a leading credit bureau. Even so, the proportion of consumers who are 60 or more days overdue on their mortgages would still be sharply higher than the historical range of 1.5% to 2%, according to TransUnion LLC, which analyzed about 27 million randomly selected consumer records from its database.”

Housing Wire – “JPMorgan sees GSE prepayment rates slowing in January” (12-7-10)

“The prepayment speeds on Fannie 15-year mortgages increased 5% last month from October, while Freddie prepayments climbed 8%, according to JPMorgan.”

Housing Wire – “Private mortgage modifications reach 1.5 million to date, 125,000 in October” (12-7-10)

“Hope Now, a private sector mortgage alliance, said the mortgage industry has completed more than 1.54 million permanent loan modifications for homeowners from January through October, as foreclosure suspensions affected foreclosure sales and starts.”

Housing Wire – “American homebuyers suffer from a crisis of faith: survey” (12-7-10)

“A housing conference call organized by real estate listing websites, Trulia and RealtyTrac, revealed 48% of potential homebuyers in America have lost faith in the ability of the mortgage industry and 24% percent lost faith in the ability of the government to manage said market.”

Bloomberg – “Half of Americans Say Home Recovery at Least Two Years Away” (12-7-10)

“Almost six in 10 U.S. adults say a housing recovery is at least two years away, and more than a third say flawed lender practices are partially to blame, according to a survey by Trulia Inc. and RealtyTrac Inc.”

Orange County Register – “Chapman says prospects dim for housing” (12-7-10)

“Although Chapman University foresees modest price gains and increased homebuilding in Orange County next year, lingering problems from the housing bust will continue to dog the market. The number of homes for sale will be large, defaults and foreclosures will grow and consumer anxiety will be high, according to Chapman University’s 2011 economic forecast.”

Looking Back:

One year ago, the MBA reported that delinquency rates increased during the third quarter for most mortgage investor groups. Bernanke claimed the recovery would continue for at least a year, but that the U.S. still had  some trouble to overcome. Six banks were shut down Friday, which would cost the FDIC a total of $2.384billion.

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 200 podcasts in our free investor radio archive.

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192-TNG Radio – Ivan Choi 9-18-10

Friday, September 17th, 2010

Ivan Choi

President of REOMac


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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 Ivan Choi. He is a fifteen year veteran in mortgage banking with a background in finance, technology, retail loan origination, and servicing. He just started his own company called Savia Home Loans. Also, he is president of REOMac; a national non-profit trade organization.

Ivan currently lives in Corona, and previously lived in Irvine. For the last 15 years he has been working in retail mortgage banking. For 14 of those years, he worked with Countrywide Home Loan, which was acquired by Bank of America. He worked with Bank of America for another year, and then decided to start his own mortgage banking company. He has a second job with a national REO outsourcing company.

Mortgage banking is different than mortgage brokering. A mortgage broker originates loans, and puts them through to a major bank for funding. The broker attempts to find the best possible fit, and best possible pricing, for the homebuyer. The mortgage banker is fulfilling loans directly out of their own funding capacity. The money that a mortgage banker uses is essentially his or her own.

Presently, it is very difficult to start a mortgage banking company, because of the meltdown. Another prominent mortgage executive, who worked with one of the big banks until 2008, decided to start his own mortgage banking company. The biggest warehouse line he was able to get was worth about $700,000. That is not worth a week’s worth of loans.

Once your loan money is entirely lent out, you can try to keep that loan in your books, or you can try to sell it to an investor. That investor will provide you with liquidity to buy and sell another loan. You can either sell the underlying note and service the loan yourself, or you can sell both the note and the servicing rights. This is not understood by all people, but servicing rights to the loan has a certain monetary value as well.

In 2006, mortgage bankers were amazed by how generous loan guidelines were. On the flip side, when the mortgage market melted down, Ivan could not believe how difficult it was to obtain credit. We swung the pendulum from allowing too many people to obtain credit, to now allowing too few to obtain it. What is traditionally observed as a “makes sense” loan is now very difficult to obtain.

The present model of mortgage banking is that an originator makes a lot of loans for home buyers, they then package those loans into securities and sell them on the secondary market. Unfortunately, the demand for those securities in the secondary market has dried up, so we no longer have the liquidity that mortgage originators relied on to make loans in the first place. That is why many of those “makes sense” loans can no longer be made today. Currently, Fannie, Freddie, and FHA make up over 70% of the business for mortgage originators and lenders.

New Vista Asset Management Company is a San Diego-based company established 4 years ago by two veterans of the mortgage banking business. The two partners, Jim Park and Jerry Acosta, have a lot of connections both in the mortgage industry and the political world. New Vista serves as an REO asset management company. Any bank that cannot handle REO inventory can hire a company like New Vista to offload those REOs. New Vista is special because it is a multicultural company. Normally, Ivan does not pay attention to the cultural differences between companies, however, this is currently a significant difference because the government is more willing to work with culturally diverse businesses.

Inventory levels have changed pretty dramatically over the last couple years. Foreclosure inventory has been building up for the past couple years. This is because the foreclosure process has slowed down. Ivan believes it will take another 6 to 12 months before we can feel that we are in a foreclosure market. This will be a big relief for real estate agents, because many of them were hurt in 2007 and 2008.

Ivan defines “shadow inventory” as the backlog of foreclosures that have not yet finished the foreclosure process. When people use the term shadow inventory, they often use it to imply there was some evil conspiracy by big banks and the government to artificially hold in properties from the market to do 1 of 2 things: 1) to hold properties back and parcel them out, on a limited basis, to preserve valuations and earn a better return than what they would have received. 2) Mortgage bankers are holding inventory from the market to play magic accounting on the backside, which enables them to put out good quarterly earnings reports, so that their stocks won’t drop. As a former worker for Countrywide and Bank of America, Ivan believes these theories to be untrue.

Fannie and Freddie have double the REOs from last year, but the REO agents do not. Fannie expects approximately 1 million properties to finish the foreclosure process between the 4th quarter of 2010 and the 1st quarter of 2011. Asset management companies and banks can only process so many of those properties. Ivan believes that California cities are probably not capable of getting rid of that many properties with their current level of staff.

In 2008, Mike Novak-Smith had 900 REO listings. Today, he has 105, yet Fannie has double their amount of REOs. There does seem to be a disconnect between their ability to get properties onto the market. Perhaps the players have shifted, and the GSEs are understaffed.

On another topic, delinquencies are very high. In California, delinquency numbers have gone from 5% to 12% in the last 18 months, yet foreclosure numbers have gone down. Bruce believes that lenders do not actually own all these properties. Bruce believes that banks are refusing to foreclose on properties.

The government is involved in the foreclosure process now. There is a huge motivation for the federal government to modify loans or do short sales. The major servicers are now paranoid about going through the normal foreclosure process now, because if they do not fully document everything without offering ever possible solution to the borrower, the government will attack them. If the government believes the lender could have offered a loan modification but chose not to, then the lender gets dragged through the mud. There is a lot of pressure on the lenders to find other solutions.

REOMAC is having an educational event in October in Hollywood, Florida. The title of the event is “New Challenges, New Approaches”. The industry is preparing for a very different new year. Banks and servicers must satisfy their homeowners and their loan investors. At the same time, the government is beating up the banks. The end result is that we have a lot of government initiative and legal changes. The servicer must still find a way to make everyone happy, including the loan investor who has ultimate responsibility for the underlying note. Ivan believes many of the changes in 2011 will be legal related. Ivan does not believe there will be much of a change in public perception, because now everyone has had their shot at beating up people involved in the real estate industry.

The REO business is a very low margin business, and you must have a big team to run a lot of volume. REO inventory has decreased so dramatically that many professional REO broker shops have had to lay off people in the midst of the impending surge in inventory. All the good REO brokers are trying to figure out ways to scale up rapidly, because they don’t want to get caught with their pants down. It’s a Catch 22, because you can’t staff up too far in advance, but you still want to be ready when the opportunity hits.

HAFA guidelines were released on April 1st. Those guidelines were a game changer, because it caused the government to be heavily involved in mortgage servicing and foreclosure processing. Ivan does not believe that short sales will pick up to the high degree that we need them to pick up. Short sale numbers are increasing right now, but when you compare the overall number of short sales to the number of foreclosures, you can see that short sale numbers are still very small. REO is where all the business is going to go.

The event for REOMAC is taking place on October 20th thru the 23rd in Hollywood, Florida. It is the 25th anniversary of a very worthwhile organization.

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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The Norris Group Real Estate News Roundup 9/13/10

Monday, September 13th, 2010

Today’s News Synopsis:

Many predictions are being made regarding the economy and the housing market. Most of the articles have an overall positive outlook on the economy, while most had a negative outlook for the housing market. New delinquencies decreased 8.5% in August. The FDIC said 119 banks failed so far this year.

In The News:

CNBC - “No Double Dip, Stimulus Did Help: IMF Chief” (9-13-10)

“There is unlikely to be a double-dip recession, while the fact that stimulus spending was helpful in containing the crisis is undisputable, Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), told CNBC Monday.”

Housing Wire – “Economist calls latest Basel 3 timeline ‘nonsense’” (9-13-10)

“The Basel Committee on Banking Supervision adopted new standards for the capital requirements of the world’s largest financial firms, mandating the banks hold capital equal to 7% of assets. As HousingWire reported in the Monday Morning Cup of Coffee, the committee increased the minimum common-equity requirement to 4.5% from 2% and stipulated banks hold a capital conservation buffer of 2.5% to withstand potential stress, raising the total common-equity requirement to 7%.”

Housing Wire – “Radian’s new delinquencies drop 8.5% in August” (9-13-10)

“Mortgage servicers reported 9,084 in new delinquent loans insured by Radian Group (RDN: 7.865 +3.49%), a mortgage insurer based in Philadelphia. It’s an 8.5% drop from the 9,930 of newly delinquent loans for Radian in July. Radian’s primary inventory of delinquent mortgages did fall to 137,374 in August, too, down from 138,015 delinquent mortgages in July.”

Housing Wire – “REITs outperform Barclays expectations, long term outlook positive” (9-13-10)

“Real estate investment trusts (REITs) outperformed analyst expectations in the first quarter of 2010, according to a weekly report released today by Barclays Capital. Week-over-week, the National Association of Realtors’ (NAR) composite REIT return index dropped 0.9% to 3,153.3. Despite the decrease, the index is 0.9% higher than one month ago and 33.7% higher than one year ago. The composite return index year-to-date is up 17.2% from 2,690.1 for the same period last year.”

Housing Wire – “JPMorgan analysts bearish on housing recovery” (9-13-10)

“JPMorgan Chase (JPM: 41.20 +3.62%) analysts lowered estimates for a recovery in the housing market between next year and 2014 because the expiration of the homebuyer tax credit slowed demand and overall economic malaise pushed some indicators lower in July.”

Housing Wire – “BofA’s Moynihan see 25% chance of double dip recession” (9-13-10)

“The discussion now is whether we might have a so-called double dip recession – although our experts think the chance of that is low… we’re now putting the chances of a double-dip at around 25%.”

Housing Wire – “Monday Morning Cup of Coffee” (9-13-10)

“At June 30, Horizon Bank had total assets of $187.8 million total deposits of $164.6 million. The FDIC said 119 bank have failed this year, including 23 in Florida. The FDIC recently said the number of banks on its “problem list” is at the highest level since 1993.”

Bloomberg - “U.S. Accelerates in 2011 as Demise of Consumer Is Exaggerated” (9-13-10)

“Debt payments as a share of disposable income fell to 12.46 percent in the first quarter from a peak of 13.96 percent in 2008 and are about in line with the 12.09 percent average of the last 30 years, based on Federal Reserve data. Berner sees the ratio falling to what he considers a sustainable range of 11 percent to 12 percent by year-end. This improvement will help the U.S. economy avoid a relapse into recession and put it on course for 3 percent growth next year, he said. The economy grew 1.6 percent in the second quarter.”

Bloomberg - “Fannie, Freddie Regulator Blames Mortgage-Loan Pools for Poor Performance” (9-13-10)

“Mortgage pools purchased as investments by Fannie Mae and Freddie Mac during the housing boom included more risky and poor-performing loans than those guaranteed by the government-backed firms, their regulator said. So-called private-label securities bought by the two firms from 2001 through 2008 had a bigger share of mortgages with adjustable interest rates and more borrowers with credit scores below 660, two indicators of loans at higher risk of default, the Federal Housing Finance Agency said in a report today.”

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 8/13/10

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 7/30/10

Friday, July 30th, 2010

Sources:

http://www.govtrack.us/congress/bill.xpd?bill=h111-600

http://maplight.org/us-congress/bill/111-hr-600/357605/total-contributions.table

http://blogs.wsj.com/developments/2010/07/29/popular-zero-down-mortgage-program-makes-comeback/?blog_id=36&post_id=14060

http://www.rurdev.usda.gov/rhs/sfh/brief_rhguar.htm

http://www.rurdev.usda.gov/SupportDocuments/CA%20GRH.pdf

http://money.cnn.com/2010/07/26/real_estate/new_home_sales/?postversion=2010072612

http://www.housingwire.com/2010/07/26/multifamily-rental-demand-catching-up-to-supply-barcap

http://www.bloomberg.com/news/2010-07-27/apartment-rentals-surge-in-u-s-as-foreclosures-rise-job-growth-resumes.html

http://www.housingwire.com/2010/07/27/homeownership-vacancy-rate-level-in-q210

http://www.bloomberg.com/news/2010-07-27/job-cuts-of-500-000-next-year-predicted-for-cities-counties-over-budget.html

http://money.cnn.com/2010/07/29/real_estate/new_face_of_foreclosure

Today’s News Synopsis:

The Commerce Department reports the economy grew by 2.4%. Altos Research predicts home prices will continue to decrease through the rest of the year. According to FinCen, suspicious activity reports for mortgage fraud in 2009 increased by 4% from 2008. Legislation for the Section 502 single-family rural housing program is headed to the President to be signed back into law. The program allows 30-year originations to purchase households or renovate currently owned ones with zero down payment at the time of application.

In The News:

Los Angeles Times – “Economy slows sharply in second quarter” (7-30-10)

“The nation’s economy grew at a modest 2.4% annual rate in the April-to-June period, the Commerce Department said in its first estimate of gross domestic product for the second quarter. That compares with a GDP growth of 3.7% in the first quarter – a figure adjusted up from 2.7% reported earlier. But Commerce officials revised down the growth in the fourth quarter of last year, to 5% from 5.6%, as it did for prior quarters, painting an overall picture of a deeper recession than previous data suggest.”

Housing Wire – “Fannie Mortgage Portfolio Grows 6% on $19bn of Repurchases” (7-30-10)

“Fannie’s book of business include about $19bn of loans purchased from mortgage-backed security (MBS) trusts in June that won’t be reflected as liquidated from MBS until July. Excluding these repurchases, the total book of business would have grown at a compound annualized rate of 0.3% in June. Within the company’s mortgage portfolio, Fannie added $27.6bn in purchases and recorded $6.2bn in sales and $17.2bn in liquidations. Due largely to the $19bn of buybacks, Fannie’s mortgage portfolio grew at a compound rate of 6.3% in June.”

Housing Wire - “Shadow Inventory to Push 2011 Home Prices Lower than ’09: Altos Research” (7-30-10)

“House prices will continue to drop through the rest of the year and will begin 2011 lower than they were in 2009, according to a webinar hosted by Scott Sambucci, vice president of data analytics for Altos Research.”

Housing Wire - “Alleged Mortgage Fraud up 4% in 2009 with LA, Miami in Top Spots” (7-30-10)

“FinCEN notes that suspicious activity reports (SARs) for mortgage fraud in 2009 rose 4% from 2008, and really started speeding up towards the end of the year. Q409 is up 6% from the same quarter one year ago. Further, mortgage loan fraud made up 9% of all SARs filed in 2009, spiking at 11% in Q409.”

Housing Wire – “CMBS Defaults on Track to Break 11% by Year-End: Fitch” (7-30-10)

“Defaults on fixed-rate conduit US commercial mortgage-backed security (CMBS) loans continued at record speeds, on track to reach a cumulative default rate of 11% by year-end 2010, according to credit-rating agency Fitch Ratings. Cumulative defaults rose to 9.48% through June — a 133bp-climb from Q110. This increase is in line with Fitch’s expectation of an 11% cumulative default rate by year-end.”

Housing Wire – “Fed Hikes Mortgage Fee Disclosure Trigger 2% in 2011″ (7-30-10)

“The Federal Reserve Board of Governors today raised the dollar amount of mortgage fees that triggers mortgage disclosure requirements under the Truth in Lending Act and the Home Ownership and Equity Protection Act of 1994 (HOEPA). The Fed raised the trigger 2% to $592, from the current $579, beginning in January 2011. The trigger amount is now 48% higher than the $400 originally set by HOPEA in 1994.”

Housing Wire – “Section 502 May Return with Zero Down Payment Mortgages, 3.5% Guarantee Fee” (7-30-10)

“The National Association of Realtors (NAR) announced Wednesday that legislation for the Section 502 single-family rural housing program under the Department of Agriculture is headed to President Obama’s desk to be signed back into law. The program allows 30-year originations primarily for low-income families to purchase households or renovate the ones they already own with no down payment at the time of application. Loans are guaranteed by the federal government.”

Realty Times - “California gets $700,000 slice of special $1.5 billion homeowner bailout pie” (7-30-10)

“California struck gold, receiving the biggest chunk of a special $1.5 billion federal fund pie for programs that target struggling homeowners in states hardest hit by the housing crash. Earlier this year President Obama announced the $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.”

Looking Back:

One year ago, the Labor Department reported the unemployment rate rose to 9.5. The average 30-year mortgage rate increased to 5.25 percent. Inventory levels in Orange County reached the lowest levels in 4 years.

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 7/12/10

Monday, July 12th, 2010

Today’s News Synopsis:

A study from Wells Fargo suggests that California may not experience a double dip in the real estate market. FICO Inc reports 25.5 percent of customers  now have a credit score of 599 or below. HUD is offering a 10 percent discount on its REO properties for non-profit buyers. Orange County housing inventory has inflated by 48% since the beginning of the year.

In The News

Orange County Register – “Homebuilders face ’slow climb’ to recovery” (7-11-10)

“It’s a challenging market, no doubt about it. But builders can find a way to sell homes as long as they pay close attention to their potential buyers. We’ve never subscribed to the idea that the same floor plan and the same marketing campaign will be effective in every situation. It just doesn’t work that way. Builders need to understand exactly what price point, what square footage, what location and what product type will speak to the buyers in a given community. When you understand all those elements, your homes will sell. Take the live-work model, which many builders have struggled with. Earlier this year we opened a live-work community in Stanton, with prices starting at $350,000. So far we have sold all but four units.”

Orange County Register – “Short sales up 74% in region” (7-11-10)

“Riverside County had 3,444 short sales this year, the second-highest number in the region. That’s up 116% from 2009, when the county had 1,593 short sales. San Bernardino County short sales increased 96.7%, to 2,089. During the first five months of 2009, the county had 1,062 short sales.”

Orange County Register – “Tips for the first-time homebuyer” (7-10-10)

“Be prepared. You will be asked for the amount and source of your income; the same for funds for down payment and closing costs; your credit and debt obligations; and permission to run a credit report. Gather your most recent federal tax returns; W2s or 1099s, depending on how you are paid; most recent pay stubs, if salaried; and your most recent statements for bank, investment or retirement accounts. If there are recent large and unusual deposits, be ready to explain where the money came from.”

Sacramento Bee – “Wells Fargo: Housing double-dip not likely in California” (7-12-10)

“San Francisco-based Wells Fargo Bank just released its new California Economic Outlook, saying widespread fears of a derailed housing recovery aren’t likely to materialize in California.”

MSNBC - “Gov’t tries to recoup some Fannie, Freddie losses” (7-12-10)

“The regulatory agency said it has issued 64 subpoenas seeking loan files and other documents to determine whether the sellers of those securities made any false statements or omissions. Fannie and Freddie had tried to do so themselves but have faced resistance in getting the loan documents, said the agency, which was given subpoena power two years ago.”

San Francisco Chronicle – “More consumer credit scores dip to new lows” (7-12-10)

“Figures provided by FICO Inc. show that 25.5 percent of consumers – nearly 43.4 million people – now have a credit score of 599 or below, marking them as poor loan risks. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. And it could be years before this group can restore their scores, even if they had strong credit histories in the past.”

Housing Wire – “HUD Gives Nonprofits, Governments 10% Discount on REO” (7-12-10)

“The Department of Housing and Urban and Development (HUD) will give state and local governments and nonprofits participating in the Neighborhood Stabilization Program (NSP) preference to buy its REO at 10% below the appraised value.”

Orange County Register – “Corona del Mar homes hardest to sell” (7-12-10)

“‘Hardest’ market to sell a home in terms of ‘market time’ (supply of homes for sale vs. new purchase deals inked in past month) is Corona Del Mar. Its market time was 15.3 months to theoretically sell all for-sale homes at the current buying pace. A year ago, this town was at 8.3 months.”

Orange County Register – “‘Unrealistic’ sellers flood O.C. home market” (7-12-10)

“Orange County housing inventory has inflated by 48% since the beginning of the year on the backs of unrealistic sellers. … The bottom line: sellers really need to take a hard look in the mirror and ask whether or not they really can drop to the realistic fair market value of their home. If not, they need to stop wasting everybody’s time and pull their home off of the market.”

Orange County Register – “O.C.’s distressed home market grows by 29%” (7-12-10)

“The active distressed inventory has increased from 2,555 homes at the beginning of the year to 3,307, levels not seen since May of 2009. The distressed inventory now represents 31% of the current active inventory. Last year at this time, there were 2,766 distressed homes on the market, 541 fewer than today.”

Realty Times – “Three Levels of Lead Generation” (7-12-10)

“you should have 6 pictures that show off the house to prospective buyers in under a minute and these should include: 1. The front of the house (try to skip the double garage doors!) 2. The Living Room or Area 3. The Kitchen (2 shots of the kitchen focusing on different aspects from different angles if possible) 4. The master bedroom 5. The master bathroom (put the toilet seat down!) 6. The backyard or area”

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 5/28/10

Friday, May 28th, 2010

Today’s News Synopsis:

Of the homeowners receiving foreclosure counseling through the National Foreclosure Mitigation Counseling (NFMC) program, 58% listed unemployment as the main reason for default. According to MDA DataQuick, Sales of both new and resale houses and condominiums were down 1.3 percent year-over-year. Weekly claims for unemployment insurance have now failed to improve for five straight months. Web searches for rental properties have increased by 45 percent from April 2009.

In The News:

Housing Wire – “Stewart Lender Services Sees Loss Mitigation Business Jump Ten-Fold” (5-28-10)

“Houston-based Stewart Lender Services (SLS), a wholly owned subsidiary of Stewart Title Company, is disclosing that business in its loss-mitigation departments increased ten-fold in the last 18 months. In a conversation with HousingWire, the company reported processing more than 725,000 troubled mortgage loans and generated more than 1m lines of outreach to delinquent borrowers in the past year.”

Housing Wire – “Fannie Clarifies Mortgage Insurance Standards for Loan Purchases” (5-28-10)

“In updating its requirements on finance mortgage insurance for loans it purchases, Fannie introduced the concept of a ‘prepaid mortgage insurance transaction,’ in which the borrower finances all or part of the premium and monthly escrows into the loan amount of a refinance. In this case, the mortgage insurance coverage amount is based on the loan-to-value (LTV) ratio after all closing costs and mortgage insurance are included in the loan amount.”

Housing Wire – “NeighborWorks Finds Unemployment Drives Most Mortgage Defaults” (5-28-10)

“Of the homeowners receiving foreclosure counseling through the National Foreclosure Mitigation Counseling (NFMC) program, 58% listed unemployment as the main reason for default.”

Housing Wire – “Home Builders Quick to Praise Proposed Government-Backed Construction Loans” (5-28-10)

“The Government Printing Office has yet to publicly forward a copy of HR 5409, but the bill, which seeks to establish a construction loan guarantee program for residential builders, is already gaining support from the trade body representing the industry.”

Inman - “Agents sell more higher-priced homes in California” (5-28-10)

“Real estate professionals in California sold slightly fewer homes in April than they did a year ago, according to a report by real estate data company MDA DataQuick. Sales of both new and resale houses and condominiums were down 1.3 percent year-over-year, to an estimated 37,481 units. That a 0.5 percent increase from March, however. The median price for a home in the Golden State stayed flat month-to-month at $255,000, but was a 15.4 percent increase from April 2009.”

Inman - “Low rates won’t fix economy” (5-28-10)

“Nothing has changed in the fundamentals behind the rate decline, certainly not in Europe. U.S. manufacturing has enjoyed temporary inventory rebuilding and export sales (April orders for durable goods soared 2.9 percent), but the overall economy is more ‘L’ than ‘U.’ April personal spending was flat, and weekly claims for unemployment insurance have now failed to improve for five straight months.”

Inman - “Hitwise: Rental sites gaining ground” (5-28-10)

“Popular search terms indicate that consumer interest in rentals is growing, according to a webinar presentation by Web metrics firm Experian Hitwise. The firm’s data indicates that despite recent upticks in home sales, real estate-related searches fell 22 percent year-over-year in April — the 11th straight month of year-over-year declines, the firm said. For the past 10 months, however, searches related to rentals have been increasing. In a custom real estate website category for rentals (excluding vacation rentals), searches climbed 45 percent year-over-year in April, the firm said. Heather Dougherty, the company’s director of research, gave the presentation.”

Orange County Register – “VACATION RECOVERY” (5-28-10)

“Even in a damaged market, the vacation rental industry is making a rebound this season, with demand up in Orange County beach cities and more homes available to rent than last year. The National Association of Realtors reported recently that the vacation home market is mending its wounds – sales are up 8 percent nationwide, according to an investment and vacation home buyers survey.”

Looking Back:

One year ago, the delinquency rate for mortgage loans on one-to-four-unit residential properties was 8.22 percent. New home sales increased 0.3 percent to an annual pace of 352,000. C.A.R. reported a 49 percent increase in California home sales in April 2009.

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 11/2/09

Monday, November 2nd, 2009

Today’s News Synopsis:

The NAR’s Pending Home Sales Index increased by 6.1 percent from August. The Mortgage Bankers Association reports that mortgage bankers and subsidiaries made an average profit of $1,358 per loan. The Housing Financial Services Committee has approved of an amendment that may terminate the HVCC. According to the FDIC, the total number of bank failures in 2009 has now reached 115.

In The News:

NAR - “Pending Home Sales Rise for Record Eight Straight Months” (11-2-09)

“The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.”

Mortgage Bankers Association – “MBA Study Shows Continued Production Profits For Independent Mortgage Bankers and Subsidiaries” (11-2-09)

“Independent mortgage bankers and subsidiaries made an average profit of $1,358 on each loan they originated in the second quarter of 2009, according to the Mortgage Bankers Association (MBA). This profit marks an increase from the first quarter of 2009 when profits averaged $1,088 per loan, according to the MBA’s most recent Quarterly Mortgage Bankers Performance Report. This report measures the performance of independent mortgage bankers and subsidiaries of banks, thrifts and hedge funds.”

Inman - “Vote on tax credit expected this week” (11-2-09)

“Congress has approved a one-year extension of higher loan limits for mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac, and an amendment that would extend the first-time homebuyer tax credit has been incorporated into a Senate bill to prolong unemployment benefits. A procedural vote on the unemployment benefit legislation, HR 3548, is expected today, Congressional Quarterly reported, with final passage by the end of the week.”

Los Angeles Times – “Home valuation code could soon undergo major revamp” (11-2-09)

“Could the controversial appraisal system imposed nationwide by mortgage giants Fannie Mae and Freddie Mac in May — and now tied to lowball property valuations, busted home sale transactions and higher fees to consumers — be on its way out? It just might be. Under a bipartisan amendment approved Oct. 22 by the House Financial Services Committee, the Home Valuation Code of Conduct would be terminated early in the existence of a proposed new Consumer Financial Protection Agency.”

Housing Wire – “CIT Seeks Bankruptcy After $4.5bn Bailout” (11-2-09)

“Commercial lender CIT Group Inc. (CIT: 0.2676 -62.83%) on Sunday confirmed weekend reports that it would proceed with a bankruptcy filing shortly after receiving its second multi-billion-dollar private capital bailout in just over three months.”

Market Watch – “9 more U.S. banks fail; $2.5 billion hit for FDIC fund” (10-30-09)

“The closings brought the 2009 total to 115 in 2009 — the first year since 1992 that more than 100 banks have gone under. The banks as of Sept. 30 had combined assets of $19.4 billion and deposits of $15.4 billion, the FDIC said.”

McClatchy – “How Goldman secretly bet on the U.S. housing crash” (11-1-09)

“In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.”

Bloomberg - “Washington Beats U.S. Housing Slump on Obama Budget” (11-2-09)

“Demand for new homes is growing faster in the Washington area than in any other major U.S. city as existing inventory shrinks and a record $3.52 trillion federal budget fuels the local economy. Builders took out construction permits on 4,442 single- family homes in the Washington metropolitan area in the third quarter, up 11 percent from a year earlier, according to the Census Bureau. Nationwide, permits fell 17 percent.”

Bloomberg - “Commercial Real Estate Debt Spreads Rise as Fed Rejects Bonds” (11-2-09)

“Yields on bonds backed by hotel, shopping-center and skyscraper loans rose relative to benchmarks amid concern that a U.S. program to spur lending may see a slowdown in demand after Federal Reserve rejected five securities, according to Barclays Capital. The gap, or spread, on top-ranked commercial-mortgage backed securities increased 0.15 percentage point to 6.10 percentage points more than benchmark swap rates for the week ended Oct. 29, Barclays data show.”

Orange County Register – “Forecast predicts 9.5% O.C. house-price gain” (11-2-09)

“Home-data firm First American CoreLogic (Santa Ana HQ pictured left) predicts that Orange County house prices will be up 9.5% next August from this past summer. If accurate, the median price of an Orange County house would increase by nearly $48,000 from the $500,000 median reported by DataQuick in August and September.”

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