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

Friday, August 27th, 2010

christopher-thornberg

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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The Norris Group Real Estate News Roundup 8/24/10

Tuesday, August 24th, 2010

Today’s News Synopsis:

Existing home sales experienced a dramatic decrease of 27.2 percent in July, according to the NAR. Housing production decreased by 10 percent in June. The CAR reports California home sales decreased 20.8 percent in July. Statistics from the California Employment Development Department show that 7,100 jobs were lost from July 2009.

In The News:

NAR - “July Existing-Home Sales Fall as Expected but Prices Rise” (8-24-10)

“Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.”

CBIA - “California Housing Production Increases in July, CBIA Announces” (8-24-10)

“According to statistics compiled by the Construction Industry Research Board (CIRB), permits were pulled for 4,165 total housing units in July, up 35 percent from the same month a year ago but down 10 percent from June. Permits for single-family homes totaled 1,951, down 9 percent from July 2009 and down 31 percent from the previous month, while multifamily permits totaled 2,214, up 134 percent from a year ago and up 25 percent from May.”

Mortgage Bankers Association – “Wells Fargo Tops U.S. Commercial/Multifamily Servicers in MBA Mid-Year Rankings Report” (8-24-10)

“The Mortgage Bankers Association (MBA) today released its mid-year ranking of commercial and multifamily mortgage servicers as of the end of June 30, 2010. Topping the list of firms is Wells Fargo with $462.8 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $307.9 billion, Berkadia Commercial Mortgage with $202.6 billion, Bank of America Merrill Lynch with $133.4 billion and KeyBank Real Estate Capital with $124.7 billion.”

CAR - “July sales and price report” (8-24-10)

“California home sales decreased 20.8 percent in July compared with the same period a year ago, while the median price of an existing home rose 10.4 percent from July 2009, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.”

Housing Wire – “Disappointing Homes Sales Unlikely to Reverse Course” (8-24-10)

“Predictions that home prices may drop into double digits continue to drag down sales. Bill Gross, managing director of the world’s biggest bond fund, PIMCO remarked that the idea of a rebound anytime soon is ‘ludicrous.’ In a meeting at the US Treasury last week, Gross called for combining the government-sponsored entities into one entity that insures the majority of current and future originations.”

Housing Wire – “60% of Delinquent Mortgages Not in Loss Mitigation” (8-24-10)

“According to a study from the State Foreclosure Prevention Working Group (SFPWG), 60% of borrowers with mortgages delinquent by 60 days or more are not being forwarded to the servicer’s loss mitigation department.”

Bloomberg - “Purchases of Existing Homes in U.S. Probably Slumped in July” (8-24-10)

“Sales of U.S. previously owned homes probably plunged in July to the lowest level since March 2009, evidence the market is restrained by foreclosures and limited job growth, economists said before a report today. Purchases dropped 13.4 percent from June to a 4.65 million annual rate, according to the median of 73 forecasts in a Bloomberg News survey. A decline would be the third in a row.”

Orange County Register – “Corona del Mar is O.C.’s ‘coldest’ market” (8-24-10)

“The pricier the town, the harder it is to sell a home there right now, the latest O.C. home inventory report from Steve Thomas at Altera Real Estate shows. Corona del Mar, for example, was Orange County’s ‘coldest’ market in the past 30 days. In theory, it would take 11 1/2 months to sell all the homes on the market there at the current sales pace, the highest ‘market time’ for any O.C. community in the 30 days ending on Aug. 19. Other ‘cold’ markets likewise tend to be home to some of O.C.’s most expensive housing.”

Orange County Register – “Real estate, building jobs down 5% in July” (8-24-10)

“Indeed, construction suffered the largest year-over-year decline among every employment category, the state Employment Development Department reported. Construction jobs fell by 7,100 positions from July 2009, down nearly 10%. Construction jobs totaled 65,700 in July, state figures show.”

Orange County Register – “Broker: No tsunami of repo’d homes to hit market” (8-24-10)

“This shadow inventory has to be worked through, but is not going to occur as a tsunami of distressed properties to hit the market all at once. Instead, we are going to witness slow increases and drops over the next few years. This slow absorption will not pull down values like it did at the beginning of this downturn and it will keep a lid on any substantial appreciation. Once employment improves, the pathway to an eventual healthy and stable recovery will occur.”

Looking Back:

One year ago, 45,079 new and resale houses and condos were sold statewide in one month. Home sales in the Bay Area hit a 4 year high. The Federal Reserve accepted $2.3 billion in investor requests for financing to purchase legacy commercial mortgage-backed securities.

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 7/22/10

Thursday, July 22nd, 2010

Today’s News Synopsis:

CAR reports California home sales decreased 4.2 percent in June. Statistics from the NAR show existing home sales 5.1 percent in June. Ascension Capital Group predicts total bankruptcy filings will top 1.63m in 2010, and increase nearly 10% in 2011. Eight million homeowners are currently not paying their mortgage.

In The News:

CAR - “June sales and price report” (7-22-10)

“Home sales decreased 4.2 percent in June in California compared with the same period a year ago, while the median price of an existing home rose 13.6 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.”

NAR - “Existing-Home Sales Slow in June but Remain Above Year-Ago Levels” (7-22-10)

“Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.”

Housing Wire – “Servicers Dissect HAMP, Short Sales at Loss Mit Conference” (7-22-10)

“While Home Affordable Modification Program (HAMP) often gets a bad rap in the press, panelists at the loss mitigation conference in Dallas Thursday were less inclined to call the program a failure although they pointed to some weaknesses.”

Housing Wire - “HUD to Probe Claims of Mortgage Discrimination” (7-22-10)

“The US Department of Housing and Urban Development (HUD) announced Wednesday that it will launch a series of investigations to determine if the lending practices used by certain mortgage lenders violated the Fair Housing Act. Questions arose after the New York Times published an article demonstrating that firms may have illegally denied mortgages to expectant mothers and families experiencing short-term disability.”

Housing Wire – “Bankruptcy Creates Many Problems in Mortgage Loss Mit” (7-22-10)

“Total bankruptcy filings are projected to top 1.63m in 2010, and increase nearly 10% and nearly 9% in 2011 and 2012, respectively, according John Griggs, chief operating officer of Fort Worth-based Ascension Capital Group. Griggs said the rate of bankruptcy filings closely follows rates of foreclosure, unemployment and strategic default. Ascension projects unemployment will remain high through the end of 2010, then flatten out and reduce and hover around 8% by late 2011 or early 2012.”

Inman – “Record low rates spur refis but not sales” (7-22-10)

“The survey showed 30-year fixed-rate loans averaging 4.56 percent with 0.7 point, essentially unchanged from last week’s 4.57 percent reading, but down from 5.2 percent a year ago and a new low in records dating to 1971. The 15-year fixed-rate mortgage also hit a low in records dating to 1991, falling from 4.06 percent last week to 4.03 percent with an average 0.7 point. At this time a year ago, those loans averaged 4.68 percent.”

Inman - “A view on 62% homeownership” (7-22-10)

“Eight million homeowners are currently not paying their mortgage, and we believe 6 million of them will lose their home to the bank in the next two years. This will reduce the homeownership rate to 62 percent”

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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183-TNG Radio – Tony Alvarez 7-17-10

Friday, July 16th, 2010

Tony-Alvarez

Tony Alvarez

Author and Investor

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This week Bruce is joined by Tony Alvarez. Tony is a successful investor. He now lectures inside and outside California. Tony is the author of Breaking Into The REO Business. How I Went From Bankruptcy to $7.2 Million in 7 Years While Making Friends.

After the Multi-Millionaire event, Tony spent five years writing his book. Some self proclaimed real estate educators are using things like infomercials to rip people off. Tony was speaking in Vegas some time ago, and while he was there, he heard a story from a young man who spent $40,000 on real estate classes. When this young man was later sent the list of all the classes he paid for, he realized that they were taking place in different states, and he had no way to pay for the traveling expenses. Tony has met many people who are paying large sums of money to learn about real estate, and many of them are being scammed.

You do not need to pay $15,000 to learn how to buy a house. Tony’s book is 25 dollars. You can check out Tony and his website at www.tonyalvarez.com. Tony put a lot of effort into writing this book, and if you can get past the first 10 pages of his book without understanding that he really wants to help you, then you are missing the point. Tony only teaches about what he knows, and Tony knows all about the REO business. 95 percent of the houses he has bought were been bought using REO agents.

The third section of Tony’s book is called “14 distinctions for the lazy and incompetent.” Tony works very hard at what he does. Bruce thinks that Tony’s definition of “lazy” can be more easily translated to “efficient.” Tony focuses his attention on what he knows well, and he kicks everything else to the curb. Tony retires when the REO business is not performing well.

Tony was ready to sell his investment houses 3 years before the last peak. Before Tony sold his houses, Bruce advised him to hold on for a little longer. Three years later, near the end of the real estate boom, Bruce advised Tony to sell. Tony made 3 million dollars by taking Bruce’s advice. Tony claims that Bruce Norris makes a millionaire nearly every day he teaches. After Tony sold his houses, he bought two homes near rivers, and spent two and a half years on vacation. Tony works really hard when he works, and when he is done working, he stops completely.

When Bruce speaks at an event, he often gets an ovation afterwards. Bruce has noticed that every time Tony speaks at an event, Tony has a line of people trying to hug him afterwards. That is not a typical response.

Some people might feel intimidated by Tony, because they do not feel that they can compete with his personality. Tony interviewed the REO agents he worked with, and he discovered some of the reasons they chose to work with him. Perhaps the most important reason why these agents chose to work with Tony is because he never lied to them regardless of the consequences. When Tony had a problem with a deal that an agent gave him, he would schedule a meeting with them so that he could personally explain to them why he refused. Tony always explained to his agents what he needed in order to take a deal. Tony does not like telling agents that he does not want a deal; he tells them that he will take the deal when the numbers work for him.

When Tony interviewed 3 of his agents, they told him that they want to be told the truth, and they want investors to treat them pleasantly. An agent’s job is frequently unpleasant, because they have to evict families and they have their asset managers constantly complaining about their inability to sell quickly. Agents receive 30 calls a day from investors who want to buy foreclosures. You need to solve a problem for them. You cannot buy yourself a relationship if you only call for properties that will earn you an easy profit. If you do that, you will only be called for bad deals. You have to care about the agent’s success as much as your own.

Even an agent’s best investors sometimes cause problems. There are times where an experience agent will back out of a deal in the middle of escrow, because they discovered that a deal was not as good as they thought it was. Once you make a commitment to a deal, you need to stick with it regardless of the outcome. Never complain when a deal does not work out to your benefit.

You do not build relationships at the same speed you perform your business. Building a relationship takes more time. Building a relationship requires you to pay attention to the needs of another individual. Tony does research on the agents he works with. He discovered that some of them had children who belonged to baseball teams, so he donated money to the teams and bought from their candy fundraisers.

If relationships are not getting deeper, they are probably falling away. Realtors are going to first call you with their worst deals. You have to explain to them why you cannot do those deals unless they can get the numbers to work. Doing this will set you up for your first great deal.

When Tony buys a property from an agent, he will come back to that agent when it is time to sell that property. Other agents take notice to this kind of business. When the market peaked last time, Tony’s agents had no idea that he had obtained that many properties from them, and they were blown away. When he asked them to help sell those same properties, some of them were even jealous. Tony explained to them that he could not have obtained these properties without them.

Always thank the agents responsible for your success, both privately and publicly. When other agents notice you doing this, they start asking questions about what you’ve done. One of the agents that Tony worked with gained $500,000 in commissions within weeks, because the properties sold so fast. Tony did not have to do that, but in his mind, that is the only fair way to do business. The 1980s version of Tony would not have done this. Back then, Tony would have been selling his properties on his own, and squeezing every penny from the Realtors he worked with.

Tony states in his book that he is “relentless in loving the people [he] meets.” Tony believes that if he is not doing this, then he is not doing his job. Tony does not feel alive when he is not doing that. When you are kind to someone, it positively affects yourself, the person you are kind to, and the witness. Tony believes in a Creator, and he believes that if the Creator created you with that kind response to love, then you should not ignore it. The love you give others will increase your own happiness, and Tony does not believe that there is any other true recipe for success.

Tony’s book is called Breaking Into The REO Business. How I Went From Bankruptcy to $7.2 Million in 7 Years While Making Friends.

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 7/9/10

Friday, July 9th, 2010

Sources:
http://www.nytimes.com/2010/07/09/business/economy/09rich.html?_r=2
http://blogs.wsj.com/wealth/2010/06/29/mansion-foreclosures-surge/?source=patrick.net
http://latimesblogs.latimes.com/money_co/2010/07/30year-mortgage-rate-edges-down-to-new-record-low.html
http://www.boston.com/business/articles/2010/07/09/banks_fight_changes_to_accounting_rules/
http://www.aba.com/Industry+Issues/FASB_advocacy.htm
http://www.dsnews.com/articles/fannie-mae-adopts-new-rules-for-pre-mod-income-verification-2010-06-28
http://www.lpsvcs.com/NewsRoom/IndustryData/Documents/06-2010%20Mortgage%20Monitor/LPS_Mortgage_Monitor_May_2010_Final.pdf

Today’s News Synopsis:

According to Greg Paquin, Sacramento new home sales decreased by 21.3 percent in the second quarter. Foreign home buyers purchased $66 billion of US residential property during the year ending May 2010. The VP of the Federal Reserve Bank of Cleveland believes that the high foreclosure rate is likely to continue for some time. Multiple economic statistics show that the tax credits may have simply hid an ongoing recession in real estate.

In The News:

Sacramento Bee – “New-home sales plunge in Sacramento area” (7-9-10)

“Second-quarter new-home sales in the Sacramento area fell 21.3 percent from the first quarter and by 50.1 percent from the already dismal second quarter of 2009, said Greg Paquin, a Folsom consultant who issued the sales report.”

Housing Wire – “REITs Raised $22bn for Real Estate Investments in 2010: NAREIT” (7-9-10)

“The US Real Estate Investment Trusts (REITs) raised $22bn in initial, debt and equity capital offerings in 2010, and as a whole the industry owns $500bn of commercial real estate assets, approximately 10% to 15% of total institutionally owned commercial real estate, according to a mid-year report by the National Association of REITs, NAREIT.”

Housing Wire – “International Investment in US Housing Market Rises: NAR” (7-9-10)

“Foreign home buyers — those with residency outside the US as well as recent immigrants and temporary visa holders — purchased $66bn of US residential property, or 7.27% of the market, in the year ending March 2010, according to the National Association of Realtors (NAR). Based on NAR’s existing home sales information, $907bn of residential sales occurred in the 12 months ending March 2010.”

Housing Wire – “DebtX Sees Commercial Mortgage Values Recover Slightly in May” (7-9-10)

“The aggregate value of commercial real estate (CRE) loans that collateralize commercial mortgage-backed securities (CMBS) rose to 76.6% of the original balance in May, from 76.4% in April, according to loan sale advisor DebtX. Values are up from 75.9% in March and 76.5% in February. CRE loan values are down from 77.6% in May 2009, according to DebtX.”

Housing Wire - “High Foreclosure Rate Likely to Persist, Cleveland Fed VP Says” (7-9-10)

“If past recessions are a guide, the nation’s high foreclosure rate is likely to persist, according to authors at the Federal Reserve Bank of Cleveland.”

Housing Wire – “Bank Bailout May Turn a Profit for Treasury, KB&W Report Finds” (7-9-10)

“The Capital Purchase Program, $205bn in financial firm relief funds from the Treasury’s $700bn stimulus package, the Troubled Asset Relief Program (TARP), is nearly repaid in full and likely to turn a profit, according to a report from broker/dealer investment bank Keefe, Bruyette and Woods.”

Housing Wire – “Ginnie Guarantees $33.4bn of MBS in June” (7-9-10)

“The Government National Mortgage Association — or Ginnie Mae — guaranteed more than $33.4bn of mortgage backed securities (MBS) in June.”

Inman - “Tax credits hid ongoing real estate slide?” (7-9-10)

“The economic data that did arrive confirmed a slipping recovery, but not a double-dip. The Institute for Supply Management service-sector report for June followed last week’s pattern: softer than prior month, and well below forecast (May 55.4, forecast 55, actual 53.8). New claims for unemployment insurance came down 21,000 last week to 454,000, but have been stuck in that range all year long. Mortgage refi applications have begun to rise, but purchase ones fell again, by 2 percent last week, now 42 percent below the end of April.”

Looking Back:

One year ago, the government-insured (FHA and VA loans) share of mortgage applications was 35.9 percent. The average 30-year rate dropped to 5.2 percent. UCLA economists predicted that commercial real estate demand would not return to 2006 levels until 2014. The Financial Crimes Enforcement Network reported that suspicious mortgage activities were increasing significantly.

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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181-TNG Radio – Nancy West 7-3-10

Friday, July 2nd, 2010

Nancy-West

Nancy West

Marketing and Outreach Specialist, Housing and Urban Development (HUD)

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This week Bruce is joined by Nancy West. Nancy is a marketing and outreach specialist for the Department of Housing and Urban Development. She has been working in the mortgage industry since 1977. Nancy joined HUD in 2004, and in 2006 she accepted one of four nationwide marketing and outreach specialist positions.

Non-profit organizations have a special access to a specific list of REO properties. To be considered a non-profit organization, you must be a 501C3 classified company under the IRS. All the requirements for meeting this classification are listed at www.HUD.gov

There is also a special list of REO properties for police officers, firefighters, paramedics and school teacher. These people have the opportunity to buy a HUD REO for 50 percent of the sale value. They are required to occupy the property for 3 years. After those first 3 years, their home value is officially decreased by 50 percent. The difficulty with this program is that these people are restricted to buying in revitalization areas. Right now, there are not many revitalization areas.

Cities and Counties individually determine what they want to do with NSP money. Some cities are acquiring REOs, rehabbing them and reselling them, and others are acquiring REOs and turning them into rental opportunities.

The FBI released a report on Friday about the amount of fraud they are seeing. California, Nevada, Florida, New York and Michigan are experiencing the highest fraud rates, and those states are also experiencing the largest number of foreclosures. Nancy is not sure if these foreclosures are primarily due to consumers, loan officers or realtors. She believes that fraud was committed by many groups, and that no specific group is significantly more responsible than the other.

Loan modification programs are now open to be qualified for. To qualify for loan modification, people are now trying to commit fraud on their modification application. The problem with this strategy is that if they make their financial statement look too poor, they may not qualify for a modification. Bruce knows someone who was recently denied a loan modification due to the fact that they had the ability to make their payments, and then chose to strategically default.

The mission of HUD is to provide a decent, safe, and sanitary home, and a suitable living environment for every American. When Bruce read this, he realized that the word “ownership” was not included in HUD’s mission statement. This made him feel that HUD is now broadening their scope to include the chance that the number of renters may increase in the future. Nancy claims that HUD and FHA has not changed their mission statement. HUD’s mission is to strengthen and provide homeownership and rental properties to the under-served, first time buyers, minorities and elderly. HUD does this in a variety of ways, including Section 8 housing vouchers. FHA wants to specifically promote homeownership to those same people. FHA offers home retention opportunities through the reverse mortgage program. The mission has not changed, it has simply refocused.

HUD has a few programs that most people are not aware of. Individuals who rent in Section 8 single-family dwellings are typically very successful. Many of them eventually leave the program and become home owners. Also, FHA has the Disaster Relief Mortgage Program which many people are not aware of. This program allows people to obtain a mortgage with no down payment if their home was destroyed in a natural disaster. As soon as a disaster area is declared, FHA issues a notice to lenders that a moratorium has been placed on foreclosure action. Also, HUD sends staff to assist homeowners in disaster areas.

If a consumer wants to qualify for a Section 8 rental subsidy, they must apply at their local housing authority. The housing authority will go over the qualifications with them, and see what properties are available.

Right now, the government has helped make the housing industry more fluid. When the problem first developed, lenders were still interested in lending, not collecting. They did not have the correct staff to deal with the problem. Many people who could not get a modification 3 months ago can get it now. This is because of new programs through Making Homes Affordable program and TARP programs.

FHA has always had a modification program. FHA requires lenders to provide loss mitigation help when borrowers fall 30 days delinquent. FHA also has a forbearance option and a partial claim. HAMP is also a tool that FHA can use. FHA can perform short sales with incentives, and deeds in lieu of foreclosure. There is currently no time benefit for people who take the deed-in-lieu path rather than foreclosure. However, their credit score will not be affected in the same way.

Individuals who simply cannot afford a mortgage will not be eligible for a loan modification. For example, some borrowers would require an 80 percent reduction in their loan balance to be able to afford the mortgage. This is not possible.

Non-owner occupants are currently not eligible for loan modification.

TARP’s funds are currently being used for modifications, not HUD’s. HUD is not currently able to make loans to solve lender problems. However, this kind of loan may be considered in the future.

There was once a program which allowed lenders to get 90 percent of the value of a property from a HUD loan to keep a homeowner in their property. That was either the Hope for Homeowners Program or the FHA Secure Program. When this program first developed, lenders were too optimistic about how many of the deals they would be able to fix with it. It took a lot of time before they realized that this program would not be as successful as they had hoped.

TARP funds can be used to modify principle loan balances, but FHA does not have a program for this yet.

There are some 100 dollar down payment programs for HUD REOs. These programs cannot be used in all areas. Currently all areas have a 100 dollar down payment program for owner occupants. If someone is acquiring a property using FHA financing, they have to pay for the difference between the list price and what they bid, and then another $100. The highest offer will not always win on a HUD property. What ultimately determines whether or not you will win a HUD bid is whether or not your offer will net the most profit.

HUD once had a program for veterans which included no down payment, but when the Housing and Economic Recovery Act was passed in 2008, veterans were required to put down 3.5 percent.

HUD is also in the development business. There are HUD projects that win awards. The mission of Secretary Donovan is to build these residences in an environmentally friendly way.

A new HUD plan has been formulated for 2015 which will make HUD less bureaucratic and more fluid. This will allow them to pay more attention to people in charge of departments. The first goal is to stem the foreclosure crisis. HUD needs to meet the need for quality, affordable rental homes. HUD wants to utilize housing as a platform for improving the quality of life. Home ownership is still a good opportunity. Housing provides wealth in the future by building equity. HUD wants to build inclusive and sustainable communities free of discrimination.

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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180-TNG Radio – Nancy West 6-26-10

Friday, June 25th, 2010

Nancy-West

Nancy West

Marketing and Outreach Specialist, Housing and Urban Development (HUD)

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This week Bruce is joined by Nancy West. Nancy is a marketing and outreach specialist for the Department of Housing and Urban Development. She has been working in the mortgage industry since 1977. Nancy joined in 2004, and in 2006 she accepted one of four nationwide marketing and outreach specialist positions.

Nancy works primarily on educating industry partners to utilize FHA programs. She also explains the finer details of FHA programs to congressional leaders. She participates in many industry conventions, and she also outreaches to consumers through foreclosure and loss mitigation workshops.

Nancy said someone could have worked in the mortgage industry from 2002 to 2007 and never worked with an FHA loan. This was because of the loan limits at that time. The FHA loan limit at that time was $362,790, and the average sale price was over $500,000. Consumers didn’t want to put down over $200,000 to cover the deference between the purchase price and FHA insured loan limits.

Nancy spent a good portion of her career underwriting loans for Fannie Mae, Freddie Mac, FHA, VA, and stated income option ARMs. Nancy noticed many of stated income loans she was receiving appeared to have over-stated income. She turned down many loans as an underwriter, but some lenders were not concerned with quality control.

People can make income documents look very real now because of technology. However, if you used your with, you could search incomes for certain job positions within specific areas. The average income amount you found for the borrower’s job would give you a good idea of whether or not someone was committing fraud on their stated income.

Nancy works in California, Arizona, Nevada, Washington, Oregon, Nevada, Alaska, Hawaii, and Idaho. Arizona, Nevada, and California are three of the most damaged states.

FHA was not a big participant when subprime loans were booming. This prevented HUD from taking the same level of losses. Bruce would imagine that HUD has had some delinquencies from 2008 and 2009. Nancy claims that this is not true. In California, HUD’s delinquency rate for 2008 and 2009 is only at 2.7 percent. Bruce considers that very healthy. FHA never had a stated income program. Over the last two years, FHA has insured over 500,000 loans.

Regardless of the down payment, you always have to qualify for a mortgage. An effort was recently made to raise the FHA down payment limit, but it did not pass. A new bill is passing through congress which would increase down payment requirements according to FICO scores. Right now, FHA is looking to stabilize the market, and FHA is weighing risks and not sure if increasing the downpayment will help in stabilizing the market.

The loan limit in California is $729,760. This will last through December 31, 2010, but we are not sure if this will be extended. There is some legislation out right now which can increase the loan limit for high priced areas.

The down payment percentage does not increase as the price increases. In California, you can go up to 4 units, and you could then get a loan limit of $1,403,400. As long as you are owner occupied the down payment would remain at 3.5 percent.

The higher loan balance has changed who borrows money. The average FICO score for borrowers has increased from 660 to 680. There are a lot of refinances being made right now.

When someone is buying an owner occupied residence, a 100 percent gift fund is allowed to family members, employers and a HUD approved non-profit organizations.

Non-owner occupant loans are only allowed if the individual is buying a HUD REO with 25 percent down. It is also okay for non-owner occupants to streamline refinance on a home that is already owned.

If a borrower has had a bankruptcy, they must wait a minimum of 2 years before being considered. For foreclosures, short sales, or deeds-in-lieu, they must wait 3 years. However, there are exceptions for documented, extenuating circumstances. For example, if there is a death of a child, and the borrower could not pay for expensive medical bills, then they may be considered an exception. For these people, they may only have to wait 1 year.

Sometimes lenders are not aligned with the policies of FHA. FHA’s guidelines are considered minimum guidelines. Almost every lender has extended guidelines. FHA does not have a FICO score requirement, but most lenders have a minimum of 580 FICO score. There are various reasons for lender’s adding overlays to FHA guidelines.  Stating that to protect themselves from their own mistakes does not give the full picture of what I said or meant.  That is only one of the possible reasons, others include examination of own portfolio to determine risks associated with certain types of borrowers and programs, as well as what the investors purchasing these loans in the market want as added layers of protection.

FHA does not actually make loans, it only insures the mortgage. The difference between FHA and private mortgage insurance companies is that FHA insures 100 percent of loans. Because of this, the lender does not have to worry about suffering from a loss. The reason for extended lending guidelines is to protect themselves from their own mistakes.

FHA audits a portion of all their mortgages up front. FHA audits 100 percent of all reverse mortgages, because they are very protective of senior citizens. If fraud is found on a mortgage, then they can ask for an indemnification. If a pattern of fraud is found, then they will remove the lender. FHA has stepped up its auditing of lenders. It now has the ability to pursue lenders more quickly than in the past.

People have a misconception about the home conditions required for FHA. FHA only demands that a house be safe, sound, secure, and free of health issues. FHA does not mandate termite or septic reports.

FHA does not require the use of appraisal management companies, but the lender may require use of such company as it is their right to add overlays and require it. These appraisers are approved by taking a test online, and if they are successful then they are made an FHA appraiser.

All homes repossessed through HUD are listed online. There is a place called Statistics where you can check on what bids have been made on which houses, so you can feel comfortable with the process. Owner occupants are given a ten day priority bidding period for buying HUD REOs. Investors can participate in the bidding process after ten days. In the future, HUD may allow investors to bid on these properties in less than 10 days depending on the condition of the property, but this has not happened yet.

An investor is not eligible to buy an investment property and use FHA 203K loans under current guidelines. However, 203K loans have never gone away for investors on HUD REOs. Bruce did not know this. Unfortunately, investors are still required to put down 25 percent.

When Bruce talked to Nancy two years ago, investors were still required to wait 90 days to resell their houses. There are cases where flipping houses can encourage fraud, but for the most part, investors involved in flipping are doing honest business. However, it should be noted that if a property resells within 90 days and is resold for more than 20% of the investor’s purchase price at auction, there are added requirements and may perhaps not be eligible for FHA financing.

Bruce and Nancy will cover more on HUD approved non-profit agencies next session.

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 6/22/10

Tuesday, June 22nd, 2010

Today’s News Synopsis:

According to the MBA, the level of commercial/multifamily mortgage debt outstanding decreased to $3.31 trillion in the first quarter. The NAR reports existing home sales decreased by 2.2 percent last month. California home sales increased 1.2 percent last month. An amendment to the Wall Street Reform Bill being debated today in Congress would eliminate the hotly contested Home Valuation Code of Conduct.

In The News:

Mortgage Bankers Association – “MBA Analysis: Commercial and Multifamily Mortgage Debt Outstanding Declined 0.9 Percent in First Quarter 2010″ (6-22-10)

“The level of commercial/multifamily mortgage debt outstanding decreased in the first quarter, to $3.31 trillion, according to the Mortgage Bankers Association’s (MBA) analysis of the Federal Reserve Board Flow of Funds data. Declines were driven by drops in commercial and multifamily mortgages held in CMBS and construction loans held by banks and thrifts. The $3.31 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $31 billion or 0.9 percent from the fourth quarter of 2009. Multifamily mortgage debt outstanding rose to $852 billion, an increase of $3 billion or 0.4 percent from the fourth quarter of 2009.”

NAR - “May Shows a Continued Strong Pace for Existing-Home Sales” (6-22-10)

“Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly revised surge of 5.79 million units in April. May closings are 19.2 percent above the 4.75 million-unit level in May 2009; April sales were revised to show an 8.0 percent monthly gain.”

California Builder – “Market Your Way Out of Tough Times” (6-22-10)

“Many businesses think ‘keeping your name in front of the public’ is a valid advertising strategy. It’s questionable at best, but it’s way too risky and low-yield in tough times. Instead, make sure your advertising is only in publications that reach your best prospects, and – this is the most important part – make a specific offer and call to action to get readers of the ad to call you.”

CAR - “May sales and price report” (6-22-10)

“Home sales increased 1.2 percent in May in California compared with the same period a year ago, while the median price of an existing home rose 23.2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.”

Sacramento Bee – “California personal income grows in quarter” (6-22-10)

“Personal income in California grew $14 billion to $1.57 trillion in the first quarter compared with the last quarter of 2009, according to statistics released Friday by the U.S. Bureau of Economic Analysis. The 0.9 percent gain matched personal income growth for the United States, but California ranked 27th among all states.”

Inman - “Social networking sites gobble more traffic” (6-22-10)

“Social networking sites and websites hosting forums grew their market share by nearly 62 percent during the year ending in May — the largest gain among any real estate-related category, according to a new quarterly report from online metrics firm Hitwise. Visits to websites in the real estate category during May were down 24.3 percent from a year ago — the 12th consecutive month of year-over-year traffic declines dating to June 2009, the report said.”

Inman - “California may restrict lender claims over refis” (6-22-10)

“SB 1178, which passed the state Senate in a 30-4 vote on June 3, would extend protection from deficiency judgments to homeowners who have refinanced, but only up to the amount of their original loan. In other words, if the original mortgage was $300,000, and the homeowner refinanced and defaulted on a $350,000 loan, they would not be liable to repay the first $300,000.”

Housing Wire – “House Members Look to Eliminate HVCC, Change Appraisal Process” (6-22-10)

“An amendment to the Wall Street Reform Bill being debated today in Congress would eliminate the hotly contested Home Valuation Code of Conduct (HVCC), which has changed much of the home appraisal process since its introduction last year. The Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009 in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisals. It also limits the interactions between the appraisers and those originating the loan.”

Housing Wire – “Fannie and Freddie Servicers Refinance 53% More Loans in Q110: FHFA” (6-22-10)

“Mortgage servicers refinanced 53% more Fannie Mae Mae and Freddie Mac loans under the Home Affordable Refinance Program (HARP) in Q110 than in the previous quarter, according to the Federal Housing Finance Agency (FHFA). Delinquencies are improving as well in the Fannie and Freddie portfolios. According to the FHFA, the amount of loans behind by 60 or more days declined for the first time in two years, dropping by more than 23,000 to roughly 1.7m in Q110.”

Housing Wire – “Real Estate Owned Inventory to Peak in Summer 2011: BarCap” (6-22-10)

“The amount of REO inventory held by lenders is expected to peak in August 2011 at 545,000 properties, according to analysts at Barclays Capital. In April, REO remained relatively flat, increasing 0.8% from March to 526,000. The influx was primarily due to an increase in REO from the government-sponsored enterprises (GSEs), according to BarCap.”

Looking Back:

One year ago, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold. The Mortgage Bankers Association lowered its forecast of mortgage originations for 2009 to $2.03 trillion. Many lawmakers and businesses were calling for an extension of the $8,000 tax credit.\

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 6/18/10

Friday, June 18th, 2010

Sources:
http://www.dsnews.com/articles/house-republicans-want-penalties-for-strategic-defaulters-2010-06-17
http://www.housingwire.com/2010/06/09/congress-to-consider-fha-reform-mortgage-insurance-hike
http://www.govtrack.us/congress/bill.xpd?bill=h111-5072
http://www.housingwire.com/2010/06/15/reid-urges-3-month-extension-of-homebuyer-tax-credit
http://www.housingwire.com/2010/06/16/mortgage-defaults-foreclosures-drop-across-california-foreclosureradar
http://www.dsnews.com/articles/fhfa-orders-fannie-freddie-to-delist-stock-from-nyse-2010-06-16
http://www.dsnews.com/articles/fbis-mortgage-fraud-crackdown-expected-to-yield-hundreds-of-arrests-2010-06-14
http://www.fbi.gov/pressrel/pressrel10/financialfraud_061710.htm
http://www.dsnews.com/articles/fitch-projects-steep-re-default-rates-on-hamp-modifications-2010-06-16

Today’s News Synopsis:

Statistics from MDA DataQuick shows 40,965 new and resale houses and condos were sold statewide last month. The state Franchise Tax Board has received applications claiming about 80 percent of the funds allocated for the home buyer tax credit. Mortgage brokers and realtors are complaining that the HVCC has produced low-ball appraisals that have blown up deals, while appraisers argue the change has harmed appraisal quality. A survey from Coldwell Banker Real Estate shows that 52 percent of single homeowners prefer buying in suburb areas.

In The News:

DQNews - “California May Home Sales” (6-18-10)

“An estimated 40,965 new and resale houses and condos were sold statewide last month. That was up 9.3 percent from 37,481 in April, and up 4.9 percent from 39,051 for May 2009. California sales for the month of May have varied from a low of 32,223 in 1995 to a peak of 67,958 in 2004, while the average is 47,024. MDA DataQuick’s statistics go back to 1988.”

San Francisco Chronicle – “First-time home-buyer credit may vanish soon” (6-18-10)

“The state Franchise Tax Board has received applications claiming about 80 percent of the funds allocated for the credit. Although it’s hard to predict, tax board spokeswoman Denise Azimi says the credit could be gone within a few weeks.”

Wall Street Journal – “Realtors, Brokers Target Home-Appraisal Rule” (6-18-10)

“The mortgage-broker and real-estate industries are pushing to have a measure that would kill new home-appraisal rules inserted into pending legislation to overhaul financial-sector regulation. The Home Valuation Code of Conduct, adopted in May 2009 to ensure appraiser independence, bars mortgage brokers and bank loan officers from selecting appraisers. Mortgage brokers and realtors complain that the rules have produced low-ball appraisals that have blown up deals, while appraisers argue the change has harmed appraisal quality.”

Inman - “Singles flock to suburbs” (6-18-10)

“While young Millennials seem to have a preference for suburbs, they’re not the only ones. Singles of all ages are more likely to buy a home in the burbs, according to the results of a survey by national brokerage company Coldwell Banker Real Estate. The company conducted a national online survey of 1,050 single homeowners in April. It found that 52 percent of singles chose to buy in suburbia rather than getting ‘bachelor or bachelorette pads’ in urban or rural areas.”

Housing Wire – “GSEs Plan Chinese Drywall Mortgage Forbearances” (6-18-10)

“Under the authority of its ‘Unusual Hardships’ policy, Fannie is directing its mortgage servicers to provide borrowers impacted by Chinese drywall up to six months of forbearance on their monthly mortgage payment and to minimize the derogatory credit impact for borrowers who are current on their loans and complying with the terms of the forbearance.”

Housing Wire – “FinCEN Says Foreclosure Scam Reports Rose Dramatically in 2009″ (6-18-10)

“The number of suspicious activity reports (SARs) from financial institutions related to foreclosure scams dramatically increased last year, according to a new report from the Financial Crimes Enforcement Network (FinCEN). The report also noted that the type of foreclosure scams also evolved during the reporting period, which covered Jan. 1, 2004, through Dec. 31, 2009. FinCEN said foreclosure rescue scams increased substantially in the last eight months of 2009.”

Orange County Register – “Pimco: No quick recovery for big properties” (6-18-10)

“Distressed properties may be hard to sell, making a quick recovery unlikley. Commercial real estate prices will remain 30% to 40% below 2007 peaks for three to five years and may not return to 2007 peaks until end of the decade.”

Realty Times – “Developing The Skill Of Qualifying Buyers” (6-18-10)

“The longer the time the buyer has been looking, the lower the motivation. We have to wonder why a buyer has not been able to find a home in six months. Are they looking for something that doesn’t exist? Are their expectations too high for the marketplace? Do they just enjoy the process of kicking foundations? When someone said to me that they had been looking for more than 90 days, I wanted to know what they were looking for and the reasons why they hadn’t found it yet.”

Realty Times – “Little Change Seen in Mortgage Rates This Week” (6-18-10)

“Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.75 percent with an average 0.7 point for the week ending June 17, 2010, up from last week when it averaged 4.72 percent. Last year at this time, the 30-year FRM averaged 5.38 percent.”

Realty Times – “How To Make Buyers Want Your Home” (6-18-10)

“Countertops are fixtures in homes. So making sure that you select the best material to endure the daily wear and tear is important. If we’re talking about the kitchen, for instance, there are many options: granite, tile, recycled glass (for a green option), solid steel, composite stone, butcher block, laminate, and even concrete. Yes, that last one sounds surprising but concrete is being used for countertops and laminate isn’t necessarily trying to mimic other materials anymore. Instead, homeowners are embracing laminate’s own unique high-tech look.”

Looking Back:

One year ago, the median price paid for a home in the nine-county Bay Area region rose to $341,500. The Federal Reserve’s total amount of commercial/residential mortgage debt decreased by $33 million from 2008 to 2009. Economists from Chapman University claimed that an economic recovery would begin during the second half of 2009. The average 30-year FRM rate dropped to 5.38 percent.

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 5/21/10

Friday, May 21st, 2010

Today’s News Synopsis:

The Employment Development Department reports California unemployment remained at 12.6 percent from March. According to MDA DataQuick, 37,481 new and resale houses and condos were sold statewide last month. Nearly 75 percent of the 1.2 million homeowners who started the loan modification program in March 2009 have dropped out. The Senate voted 59-39 to pass the financial services bill formerly known as S. 3217, the Restoring American Financial Stability Act.

In The News:

Los Angeles Times – “California employers keep adding jobs” (5-21-10)

“California’s unemployment rate remained unchanged from March, at 12.6%, although that’s because more workers – about 68,000 — rejoined the labor force to look for work in April. The Employment Development Department said Friday that the state has added jobs for four straight months, although February’s job figures were revised from a 20,400 job loss to a 2,800 job gain.”

DQNews - “California Statewide April Home Sales” (5-21-10)

“An estimated 37,481 new and resale houses and condos were sold statewide last month. That was up 0.5 percent from 37,295 in March, and down 1.3 percent from 37,967 for April 2009. California sales for the month of April have varied from a low of 27,625 in 1995 to a peak of 71,638 in 2004, while the average is 44,758. MDA DataQuick’s statistics go back to 1988.”

CAR - “C.A.R. calls for swift passage of SB 1178″ (5-20-10)

“The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is calling on California state senators to vote ‘yes’ and approve SB 1178 (D-Corbett), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure. C.A.R. is the sponsor of the legislation.”

The Press Enterprise – “Loan-modification dropouts rise” (5-20-10)

“The Treasury Department’s report Monday was the latest evidence of problems in the administration’s $75 billion program. While officials insist the program is helping the housing market turn around, critics say it is merely delaying an inevitable surge in foreclosures. More than 299,000 homeowners had received permanent loan modifications as of last month, Treasury said. That’s about 25 percent of the 1.2 million who started the program since its March 2009 launch. They are paying, on average, $516 less each month.”

Mortgage Bankers Association – “MBA Reacts to Passage of Financial Regulatory Reform” (5-21-10)

“MBA has long supported a more efficient regulatory regime for the financial services industry, and passage of the bill is another important milestone.   However, the bill, as we view it, still has flaws that will negatively impact borrowers and the real estate markets. The next step will be to reconcile the differences between the House bill and the Senate bill.  While there are a couple of ways this could happen, MBA believes the American people would be best served by Congress convening a formal conference committee. Of particular importance to us is ensuring that the final language on risk retention does not discourage prudent, responsible lending.  If not, we risk doing long-term damage to our single-family, multifamily and commercial real estate markets.”

Associated Press – “Fitch finds Calif. at both extremes in mortgages” (5-12-10)

“California has the best-performing U.S. region in mortgage performance as well as some of the worst, according to a study by Fitch Ratings. Results of the ratings agency’s study of all securitized non-agency California mortgage loans were released Wednesday. Among the findings, it said the Bay Area region of San Francisco, San Mateo and Redwood City has a 60-day mortgage delinquency rate of just 4 percent. That was No. 1 among the 382 metropolitan statistical areas tracked by Fitch.”

National Underwriter – “S. 3217 Becomes H.R. 4173, Passes In Senate” (5-21-10)

“Members of the Senate have voted 59-39 to pass the financial services bill formerly known as S. 3217, the Restoring American Financial Stability Act. The bill, now known as H.R. 4173, the Wall Street Reform and Consumer Protection Act — the same name and bill number given to the financial services bill that the House passed in December 2009 — needed to attract a majority of the votes cast to pass.”

Housing Wire – “Treasury Reduces TARP Cost by $11.4bn” (5-21-10)

“The Treasury Department cut the projected cost of the Troubled Asset Relief Program (TARP) by $11.4bn to a total of $105.4bn. Congress authorized TARP under the Emergency Economic Stabilization Act of 2008 to provide some stability to the ailing financial industry. Last August, the Obama Administration estimated the cost of TARP to be $341bn. The Making Home Affordable (MHA) program, which includes the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives (HAFA) program operates under TARP. In March 2010, the Treasury told Congress the cost of HAMP would be $22bn compared to the $75bn initially planned.”

Housing Wire – “Increase in Architectural Billings Sets Stage for Increased Construction” (5-21-10)

“The American Institute of Architects (AIA) reported that its April Architectural Billings Index (ABI) rating increased 5.2% to 48.5, up from 46.1 in March. While the results means more firms saw billings decrease than increase, the rate of firms that saw decreases lessened in April.”

Housing Wire – “Shadow Inventory Could Reach 5.5m by 2011: Report” (5-21-10)

“There are 2.5m households going through the foreclosure process right now and the number of homes with at least one missed mortgage payment sits at 5.4m, according to Capital Economics. And even though the economic recovery is gaining momentum, more households are still falling behind on their mortgage. By the end of 2011, an additional 3m homes will be in the foreclosure process, making the shadow inventory of potential REO properties at 5.5m. Some of these homes will inevitably avoid a foreclosure. But for many, the foreclosure process may be the only option and, eventually, those homes will get sold in the REO process.”

Housing Wire – “Special Servicers Take On $82bn in CMBS Loans through Q110: Fitch” (5-21-10)

“The amount of loans in commercial mortgage-backed securities (CMBS) in need of special servicing totaled $81.7bn in Q110, up from $74bn at the end of 2009, according to Fitch Ratings. Special servicers have unique processes in place for unusual loans, usually ones on the verge of default. According to Fitch, these companies are still adding staff to meet the increasing demand. The analytics firm, Trepp, found the delinquency rate in CMBS reached 8% in April – a new record.”

Looking Back:

One year ago, Bay Area home sales posted a year-over-year gain for the eighth consecutive months. Freddie Mac reported the average rate for a 30-year loan fell to 4.82 percent. MDA DataQuick reported 2.5% of Orange County home purchases financed in April had variable-rate mortgages of some sort. Forty percent of potential homeowners said they would expect to pay at least 50 percent less for a foreclosed home.

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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