Multiple states are cooperating in an investigation to determine whether or not lenders violated foreclosure laws when seizing houses from delinquent borrowers. The U.S. is now the second largest holder of U.S. debt. A survey from the National Association for Business Economics shows that economists expect gross domestic product will increase 2.6% in 2010 and 2011. According to a Thomson Reuters survey, 63% of potential home buyers are discouraged from buying a home because of the current economic conditions.

In The News:

MERS - “Statement by R.K. Arnold, President and CEO of MERSCORP, Inc.” (10-12-10)

“Claims that MERS disrupts or creates a defect in the mortgage or deed of trust are not supported by fact or legal precedents. This is often used as a tactic by lawyers to delay or prevent the foreclosure. The mortgage lien is granted to MERS by the borrower and the seller and that is what makes MERS the mortgagee.”

NAR - “NAR’s HouseLogic Launches Campaign to Help Military Families Sustain Homeownership” (10-11-10)

“The National Association of Realtors®’ HouseLogic, a free, comprehensive consumer website about all aspects of homeownership, today launched Operation Home Relief, a new Facebook Causes campaign. The campaign aims to increase awareness, rally support and raise funding for USA Cares, a nonprofit organization that provides counseling and financial foreclosure assistance to post-9/11 active duty U.S. military service personnel, veterans and their families. HouseLogic will donate $1 to USA Cares every time someone ‘likes’ the Operation Home Relief Cause page on Facebook and will match individual donations made to the cause, up to $20,000.”

Sign on San Diego – “Q&A: What’s going on with foreclosures?” (10-11-10)

“BofA – the only lender to have halted foreclosures in all 50 states – estimates that it could resolve the issue in as quickly as two or three weeks. Stan Humphries, an analyst with Zillow.com, an online real estate database, estimates that it could take 60 to 90 days for the entire industry to deal with the ‘robo-signer’ problem. But Humphries adds that the process could take longer if political pressure mounts for a wider-reaching examination of foreclosures.”

Los Angeles Times – “California might join probe of lenders that seized homes” (10-12-10)

“California officials are considering joining a multistate investigation of whether lenders have violated foreclosure laws when seizing houses from delinquent borrowers. The investigation, which is expected to be publicly announced Wednesday, is spearheaded by Iowa Atty. Gen. Tom Miller.”

Of Two Minds – “Imagining A Middle Class Does Not Create One” (10-12-10)

“Another measure of ‘middle class’ is even simpler: a middle class household owns some wealth. It could be a retirement fund, a free-and-clear home, a business, income property or gold/cash/investments. By that measure, the middle class comprises at best 20% of the populace.”

Bloomberg - “Foreclosure Freeze May Slow U.S. Homebuyers on Legal Worry” (10-10-10)

“A halt in home foreclosures at the largest U.S. mortgage firms may sideline buyers worried about legal issues, further depressing sales at a time when distressed properties account for almost a quarter of all transactions.”

Zero Hedge – “Three Horrifying Facts About the US Debt ‘Situation’” (10-12-10)

“this week we overtook Japan, leaving China as the only country with greater ownership of US Debt. And we’re printing money to buy it. Setting aside the fact that this is abject lunacy, this policy is trashing our currency which has fallen 13% since June… as in four months ago. Want an explanation for why stocks, commodities, and Gold are exploding higher? Here it is.”

Bloomberg - “Economists Cut U.S. Growth Forecasts Through 2011, Survey Shows” (10-11-10)

“Gross domestic product will increase 2.6 percent this year and next, according to the median of 46 economists surveyed by the National Association for Business Economics from Sept. 2 to Sept. 21. A May poll projected growth of 3.2 percent for both years. Economists also cut estimates for personal spending, employment and consumer prices.”

Housing Wire – “Zillow 30-year FRM rates hit record low for fourth consecutive week” (10-12-10)

“The 30-year, fixed-mortgage rate decreased from a week earlier, setting a new record low for the fourth consecutive week at 4.13%, according to the Zillow Mortgage Marketplace weekly update.”

Housing Wire - “Analysts optimistic on 3Q MBS REIT earnings” (10-12-10)

“With the end of the GSE buyouts, prepayment speeds slowed on agency MBS, peaking for Fannie Mae 30-year MBS at 29.9% in April and dropping down to 24.9% in September.”

Housing Wire – “Total Mortgage Services lowers rate on jumbo mortgages anticipating comeback” (10-12-10)

“Total Mortgage Services, a Connecticut-based mortgage lender/broker, sees a comeback in the jumbo mortgage market. The firm said because of a significant improvement in both competitive pricing and market liquidity for jumbo loans, it’s rate for a 30-year fixed jumbo mortgage is down to 4.9% for a loan up to $729,000.”

Housing Wire – “63% of Americans do not want to buy a home according to Reuters research” (10-12-10)

“According to a survey done by FindLaw.com, a Thomson Reuters company, 63% of respondents said they are steered away from buying a home because the current economic conditions. Only 8% said they are more likely to buy a home because of the state of the economy. About one quarter, 28%, said economic conditions do not sway their opinion about purchasing a home.”

Housing Wire – “Hoenig remains consistent with calls for no additional quantitative easing” (10-12-10)

“Speaking in Denver to the National Association of Business Economists, Thomas Hoenig said he understands the Fed’s desire to ‘do something, anything’ to revive the economy, but maintaining the zero-interest rate policy and starting a second round of quantitative easing aren’t it.”

Bloomberg - “Obama Backs State Foreclosure Probe, Against Nationwide Freeze, Gibbs Says” (10-12-10)

“President Barack Obama is throwing his support behind state attorneys general looking into filings of allegedly faulty home foreclosures while rejecting a nationwide freeze on home foreclosures because of potential ‘unintended consequences,’ said a White House spokesman.”

Bloomberg - “Real Estate `Trophy’ Prices Up 19% in Flat Market: Chart of the Day” (10-12-10)

“The CHART OF THE DAY shows prices for ‘trophy’ commercial properties are up 19 percent since bottoming in New York, Washington, San Francisco, Boston, Los Angeles and Chicago. The Moody’s/REAL Commercial Property Price Index tracking the entire U.S. has gained 1 percent from a seven-year low in October 2009.”

Bloomberg - “Foreclosure Delays May Cost U.S. Banks Up to $6 Billion, FBR’s Miller Says” (10-12-10)

“Faulty foreclosures may cost U.S. lenders $2 billion for every month that home seizures are delayed and the tab could reach $6 billion, according to Paul Miller, the bank analyst at FBR Capital Markets.”

Looking Back:

One year ago, Fitch reported that 60 percent of borrowers from 06 to 07 had negative equity. Interthinx’s Mortgage Fraud Index estimated that fraud decreased by 4 percent from Q1 to Q2 of 2009, but increased by 7 percent from Q2 of 2008. Statistics from MDA DataQuick showed that Southern California home sales increased by 5 percent from October of 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 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.

Alan Greenspan expressed concern that a decrease in home prices might cause the U.S. to slip back into recession. The Census Bureau estimates the homeownership rate will fall to 62% in 2012. Moody’s reports strategic delinquencies are falling on jumbo mortgages. Construction spending remained relatively flat with just a 0.1 percent increase last month.

In The News:

Bloomberg - “Greenspan Says Drop in Home Prices Might Bring Back Recession” (8-1-10)

“Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a ‘quasi-recession’ and the economy might contract again if home prices decline.”

Los Angeles Times – “Builders’ pricing strategies are aimed at creating sales urgency” (8-1-10)

“The first bump occurs when ground is broken for the project. Then builders up the ante when the streets go in, and again when the model homes begin to take shape. Prices go up for a fourth time with the big opening splash.”

USA Today – “Homeownership rate continues to slide” (8-2-10)

“Fresh projections say the rate could plummet to about 62% as early as 2012 and almost certainly by the end of the decade. Homeownership rates haven’t been that low since they hit 61.9% in 1960. The share of households that own their homes has been sliding since the housing bubble burst in 2006. The rate fell again in the second quarter of this year to 66.9% — the lowest since 1999 — from a peak of 69.4% in 2004, the Census Bureau says.”

Mercury News – “June construction activity rises 0.1 percent” (8-2-10)

“Construction spending rose 0.1 percent in June, the Commerce Department reported Monday. While that was better than the decline economists had forecast, the government sharply revised down its estimate of activity in May to show a drop of 1 percent rather than the 0.2 percent dip initially reported.”

Housing Wire – “Strategic Defaults Falling on Jumbo Mortgages, Relative to Smaller Loans: Moody’s” (8-2-10)

“According to a weekly credit report from Moody’s Investors Service, jumbo mortgage delinquencies, in this case delinquencies on mortgages over $1m, are almost equal to mortgage delinquencies for smaller mortgages. The agency monitors the risk of default across mortgages that are bundled into bonds and sold as residential mortgage-backed securitizations.”

Housing Wire – “2010 CMBS Modifications Outnumber the Last 2 Years Combined: Trepp” (8-2-10)

“As delinquency increases begin to slow, modifications on CMBS loans are accelerating, according to the analytics firm, Trepp. Further, halfway through 2010, modifications have already passed the amount done in 2008 and 2009 combined. The rate of modifications is set to triple the rate in 2009. In the first seven months of 2010, there have been modifications done on $12.1bn worth of CMBS loans, a 37% increase from the $8.8bn done in all of 2009 and more than four times the $354m modified in 2008, according to Trepp.”

Housing Wire – “Government Refi Wave Could Cost GSE Bondholders $350bn: KBW” (8-2-10)

“Recent record-low mortgage rates have sparked fears amongst investors that a government-driven refinancing wave would boost prepayment speeds back to 2003 levels. According to KBW, there is a cost to such a policy shift, contrary to what supporters of action have said. The agency mortgage-backed securities (MBS) market trades a premium of almost seven basis points. If all borrowers refinanced into the current mortgage rates, roughly $350bn would transfer from bondholders to borrowers, equaling $75bn annually.”

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.

According to the MBA, the delinquency rate for CMBS increased by 1.63 percent during the last half of 2009. Statistics from RealtyTrac show that 2 percent fewer homes entered the foreclosure process in February. Nineteen percent of home listings experienced a price reduction since March 1st.

In The News:

Mortgage Bankers Association – “MBA Report Shows Economic Fallout Continues to Impact Commercial Real Estate Markets/Delinquencies in 4th Quarter 2009″ (3-11-10)

“Between the third and fourth quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 1.63 percentage points to 5.69 percent. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.04 percentage points to 0.19 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01 percentage points to 0.63 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.04 percentage points to 0.15 percent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.49 percentage points to 3.92 percent.”

LA Times – “Fewer homes enter foreclosure process in February” (3-11-10)

“The number of homes caught up in some stage of the foreclosure process in February fell 2% from the previous month to 308,524, a real estate firm will report Thursday. That number is up 6% compared with the same month a year earlier but marked the smallest year-over-year increase since January 2006, according to RealtyTrac Inc.”

Housing Wire – “Sellers Cut Fewer Listing Prices as Home Price Declines Slow” (3-11-10)

“Fewer US homes for sale experienced listing price reductions this month, according to online real estate market Trulia.com. It’s further indication of a leveling out in listing price declines amid government stimulus to buy homes. A new low of 19% of listings currently on the market experienced a price cut as of March 1, 2010, based on Trulia’s database of live listings. Sellers slashed $21.6bn off of listing prices.”

Housing Wire – “COP Cites Missed Opportunities in Federal Bailout of GMAC” (3-11-10)

“GMAC, once the credit arm of General Motors and now the 14th largest bank holding company in the US, could have been placed into bankruptcy and its costly subsidiary operations wound-down, the Panel said.”

Housing Wire – “FDIC Pricing Second Round of ABS” (3-11-10)

“The second round of structured financed notes being issued by the Federal Deposit Insurance Corp. (FDIC) is being priced today. The news comes after the successful launch of the FDIC project to use structured finance as a way to profit from the certain assets of failed banks. It is believed the FDIC is cherry-picking the best performing loans to sell to investors as asset-backed securities (ABS).”

Housing Wire – “Jumbo RMBS Delinquencies Nearing Third Year of Rises” (3-11-10)

“The prime jumbo mortgage market, especially in California and Florida, continues to deteriorate in the residential-mortgage backed securities (RMBS) space, posting rising 60-day or more delinquencies for the 33rd consecutive month, according to Fitch Ratings. And to jumbo market players, the trend is expected to continue for some time.”

Housing Wire – “Weekly Mortgage Rates Dip Again” (3-11-10)

“Freddie Mac’s (FRE: 1.30 -0.76%) weekly survey put the average rate for a 30-year FRM at 4.95% with an average 0.7 origination point for the week ending March 11, down from the previous week when it was 4.97%. A year ago, Freddie’s survey averaged 5.03%.”

Housing Wire – “Storm Brews Over Short Sale Valuations as the Mortgage Market Prepares for HAFA” (3-11-10)

“A storm is brewing between appraisers and broker price opinion (BPO) professionals vying for valuation work for short sales conducted through the Making Home Affordable Foreclosure Alternatives (HAFA) program. The Appraisal Institute — a trade group that represents appraisers — released a public letter it wrote to Treasury Secretary Timothy Geithner on Tuesday, calling for an end of the practice of using BPOs for Making Home Affordable modifications and refinancings, as well as amending the rules for the upcoming HAFA program to require appraisals to determine value for government-incentivized short sales.”

Bloomberg - “REIT Chief Executives See Strengthening Market for Asset Sales” (3-11-10)

“Investors with abundant cash and few deals to chase are driving up commercial property prices, real estate chief executive officers said today.”

Bloomberg - “Apartment Vacancy Rates in U.S. to Decline in 2010, CBRE Says” (3-11-10)

“Apartment vacancies in the U.S., which reached a record high of 7.4 percent in 2009, will fall this year as job losses stabilize and fewer new rental homes enter the market, CB Richard Ellis Group Inc. said. The vacancy rate will decline to 6.8 percent in 2010, the property broker said in a report today. Effective rents, or what tenants pay after concessions, will end the year less than 1 percent down from the fourth quarter of 2009. Rents fell 4.7 percent in the final quarter of last year from a year earlier. “

The U.S. Treasury Department reported 66,465 permanent loan modifications over 8 months. Delinquencies on prime jumbo loans increased to 10 percent in January. According to Altera Real Estate, distressed property sales increased in Dana Point and Laguna Beach. Unemployment in the U.S. construction industry increased to 24.7 percent in January.

In The News:

California Builder – “2010 Economic Forecast: The Bear Turns Bullish” (2-8-10)

“In April of 2009, we reversed our tune and called for a ‘W,’ which would be an improvement in the market until the tax credit expired. However, with the federal tax credit extended through June for all buyers, and affordability far better than we imagined at the time, the risk of a second leg down has been significantly reduced.”

Housing Wire – “House Committee Investigates HAMP ‘Effectiveness’” (2-8-10)

“The US Treasury Department launched HAMP in March 2009 to allocate capped incentives to borrowers for the modification of loans on the verge of foreclosure. After eight months in the program, the Treasury reported 66,465 permanent loan modifications in December, up from 31,382 permanent modifications in November.”

Housing Wire – “Fitch Says Prime Jumbo RMBS Near 10% Delinquent” (2-8-10)

“The performance of US prime jumbo loan performance within residential mortgage-backed securities (RMBS) slipped again in January as serious delinquencies (60+ days past due) rose for the 32nd consecutive month and edged closer to 10%, according to the latest market commentary from Fitch Ratings.”

Housing Wire – “Monday Morning Cup of Coffee” (2-8-10)

“The editorial argues the $111bn in mortgage losses covered by the Treasury Department was justifiable as an emergency measure to keep the housing market from collapsing entirely. But with continued losses projected in 2011 and 2012, covering the GSEs in perpetuity would cost more than $1.6trn, on top of the national debt of $12.3trn.”

Housing Wire – “BofA Lends $758bn in 2009″ (2-8-10)

“Bank of America (BAC: 14.48 -3.47%) said it extended more than $758bn in credit in 2009, including nearly $180bn in Q409. BofA originated $87bn in first mortgages to fund purchase or refinance loans for more than 400,000 borrowers in Q409. That total includes $23bn in mortgages made to 151,000 low- and moderate-income borrowers. For the year, BofA originated $378bn in first mortgages for more than 1.7m customers, including $87bn in mortgages to more than 561,000 low- and moderate-income borrowers. In Q409, BofA originated $3bn in home equity and reverse mortgage loans, bringing the total for 2009 to $13bn.”

Orange County Register – “South coast: short sales, foreclosures up” (2-8-10)

“Most of our south coast cities went against the grain and reflected the opposite of the countywide trend by seeing an increase in distressed properties for sale. Two weeks ago, Dana Point’s percentage of short sales and foreclosures was 24.7%, which has risen just slightly to 24.8%, according to a biweekly report by Steven Thomas of Altera Real Estate. Laguna Beach also saw a slight increase in distressed properties. The percentage of short sales and foreclosures rose from 9% two weeks ago to 9.3%.”

Orange County Register – “1-in-4 U.S. construction workers jobless” (2-8-10)

“The U.S. construction industry’s unemployment rate hit 24.7% in January as another 75,000 American construction workers lost their jobs.”

Realty Times – “Developing Referral Relationships” (2-8-10)

“The primary objective of your first contact, like the objective of any other first sales call to a new prospect, is to book an appointment. The first appointment might take the form of an exploratory session aimed at determining the wants, needs, and desires of the lead, or it might be an appointment to conduct a buyer consultation or listing presentation. The secondary objective of your first contact is to open the door, establish trust and respect, demonstrate your knowledge, and establish your position as a reliable resource.”

Looking Back:

One year ago, the MBA ranked Wachovia as the leading national commercial and multifamily loan servicer. Geithner promised that lenders receiving financial rescue would be required to offer mortgage modifications. A total of 70 banks were shut down within the first month of 2009.