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The Norris Group Real Estate News Roundup 7/20/10

Tuesday, July 20th, 2010

Today’s News Synopsis:

The MBA reports independent mortgage bankers and subsidiaries made an average profit of $606 on each loan they originated in the first quarter of 2010. Statistics from the Commerce Department show housing starts fell 5% from May. FHA may soon require borrowers to have at least a 580 FICO score to buy a home with a minimum 3.5 percent down payment. First and second mortgage default rates declined to 3.3% and 2.4%, according to Experian.

In The News:

Mortgage Bankers Association - “MBA Study Shows Mortgage Banker Production Profits Dropped in First Quarter of 2010″ (7-20-10)

“Independent mortgage bankers and subsidiaries made an average profit of $606 on each loan they originated in the first quarter of 2010, down from $890 per loan in the fourth quarter of 2009 and $1,088 in the first quarter of 2009, according to the Mortgage Bankers Association (MBA)’s 1st Quarter 2010 Mortgage Bankers Production Survey released today”

CNN - “New home construction drops, but outlook brightens” (7-20-10)

“New home construction fell to an 8-month low in June, but there were indications of increased activity in coming months, the government said Tuesday. Housing starts fell 5% from May to a seasonally adjusted annual rate of 549,000 last month, the Commerce Department said. That was the lowest rate since October 2009.”

Inman - “FHA raising FICO floor, reducing seller concessions” (7-20-10)

“FHA borrowers will soon need a 580 FICO score in order purchase a home with the minimum 3.5 percent downpayment, and won’t qualify for the program at all if they have a score below 500. Federal housing officials are moving closer to implementing several policy changes announced in January that will also reduce the maximum allowable seller concession on FHA-backed loans from 6 percent to 3 percent and tighten underwriting standards for manually underwritten loans.”

Housing Wire – “First Mortgage Default Rate Plunges 40% from 2009: S&P” (7-20-10)

“First mortgages led an overall decline in credit defaults in June, according to the Standard & Poor’s/Experian indices today. First and second mortgage default rates declined to 3.3% and 2.4%, respectively in June, based on information from Experian’s consumer credit database. First mortgage default rates slipped 5% from May and 45.2% from a year earlier, while second mortgage default rates were down 0.03% from May and 44.54% from a year ago.”

Orange County Register – “O.C. rent cuts triple U.S. declines” (7-20-10)

“For the second quarter, the average Orange County rent that apartment complex owners were ‘asking’ for was $1,506 — and that rent was falling at a 2% annual rate. That’s a drop roughly triple the national rate of decline of 0.7%. Orange County renters are enjoying rent declines that are tied for the 8th largest among 82 U.S. markets tracked. Bigger drops? Las Vegas, 4.2%; L.A., 2.9%; Phoenix, 2.8%; Westchester, N.Y., 2.6%; Oakland, 2.2%; Fairfield, Conn., and San Francisco, 2.1%. We note that Orange County and L.A. near the top of top rent cuts explains how Consumer Price Index data shows the biggest SoCal rent decline by this math since 1940.”

Orange County Register – “South Coast 2nd quarter home sales up 16%” (7-20-10)

“For Q2 (April – June) – DataQuick’s freshest stats — South Coast homebuying patterns showed: 574 homes were bought in the region in the period – +16% vs. a year ago. Sales counts in all Orange County beach towns ran +22% vs. a year ago.”

Looking Back:

One year ago, The Real Estate Roundtable estimated that about $400 billion a year in commercial loans would need to be refinanced over the next decade. A TARP investigator claimed the government bailout totaled $23.7 trillion. Default levels increased to 2,500 per month.

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The Norris Group Real Estate News Roundup 6/28/10

Monday, June 28th, 2010

Today’s News Synopsis:

Statistics from the Federal Reserve show the median borrower who ’strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%. McGraw-Hill Construction reports new construction starts increased 3% in April. According to CoreLogic, more than 11 million borrowers currently owe more on their mortgage than it is worth. Experian statistics show that 19 percent of all defaults in 2009 were strategic.

In The News:

Press Enterprise – “Crash opens market for luxury apartments” (6-26-10)

“While homebuilders are aiming at a more frugal consumer by cutting frills, some apartment developments in San Bernardino and Riverside counties are going upscale with features like granite countertops and hardwood floors and rents comparable to a home mortgage. The Lewis Group of Cos., an Upland-based developer of master-planned communities and apartments, figures that partly because many people have been burned by the housing crash, there is demand from prospective tenants moving out of houses who want and can afford a house-like apartment experience.”

Chicago Tribune – “Moral bankruptcy?” (6-27-10)

“Some have struggled unsuccessfully to keep their homes, and others have just walked away. Phillips decided he wanted revenge and was willing to ruin his credit record for it. When a short sale didn’t work out as planned, the 32-year-old Chicagoan opted for Chapter 7 bankruptcy liquidation, a move that will leave Phillips with little except for the scant possessions in his one-bedroom condo. It also will leave his lender, Chase, with little except for, eventually, a condo that has lost value. Meanwhile, Phillips continues to live there, mortgage-free.”

Los Angeles Times – “Undone by their dreams” (6-26-10)

“In the last four years, according to the San Bernardino County assessor’s office, 373 of the 941 single-family homes in Mission Crest — nearly 40% — have been foreclosed on. Thirty-five have gone through foreclosure more than once. Properties that once sold for nearly $400,000 are worth less than $200,000.”

Mercury News – “Santa Clara County assessor adds Web tools to help homeowners” (6-28-10)

“More than 100,000 residents will be given access to a special website — tracking home sales by neighborhood — where they can see precisely why the assessor’s office decided to assign a particular home its worth.”

Wall Street Journal – “How Far Underwater Do Borrowers Sink Before Walking Away?” (6-28-10)

“At what point do borrowers who owe more than their homes are worth decide to stop paying the mortgage? A new study from economists at the Federal Reserve Board aims to answer that question. The research found that the median borrower who ’strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%.”

Housing Wire – “Monday Morning Cup of Coffee” (6-28-10)

“The House Financial Services Committee issued a statement Sunday urging ‘bold action’ on the Dodd-Frank bill, the reconciled financial reform bill agreed to by a Congressional committee last week and named after Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA). The final bill now travels to separate House and Senate votes and then, upon passage by Congress, to a Presidential signature into law.”

Housing Wire – “Surge in Nonresidential Building Boosts May Construction Starts” (6-28-10)

“New construction starts increased 3% from April to May, according to a monthly survey by McGraw-Hill Construction. The seasonally adjusted annual rate of total construction starts was $406.3bn in May, up 3% from $392,988bn in April. For the first five months of 2010, the unadjusted value of total construction starts was $162bn, down 2% from $165bn during the same period of 2009.”

Housing Wire – “The Slippery Slope of Short Sales” (6-28-10)

“More than 11 million borrowers currently owe more on their mortgage than it is worth, according to CoreLogic (CLGX: 18.11 +0.28%)—and this group of borrowers would love nothing more than to replace their current underwater mortgage with whatever the accepted ’short sale price’ is deemed to be. I don’t know that such a response on the part of borrowers could be deemed irrational, either. Many will ask themselves why they have a mortgage at a higher amount, especially if the bank is willing to sell the house to another buyer for less money.”

Housing Wire – “G20 Applauds Dodd-Frank Bill in Pushing its own Global Financial Reform” (6-28-10)

“The meeting of G20 nations concluded this weekend in Toronto with communiqués reflecting a strong support for the US financial reform, called the Dodd-Frank bill. Indeed, information released from the summit show a mix of ambitious plans for growth, mixed with further calls to reduce spending, especially among countries with higher debt burdens.”

Housing Wire – “Experian Finds 19% of Mortgage Defaults in Q209 are Strategic” (6-28-10)

“Of all mortgage delinquencies in the second quarter of 2009 (Q209), nearly one in five — or 19% — were considered strategic defaults, according to the latest study of default trends by information services firm Experian.”

Bloomberg - “Commercial Mortgages Fail to Pay as Lending Increases” (6-28-10)

“Between 50 percent and 60 percent of loans on skyscrapers, hotels, shopping malls and apartment complexes failed to refinance within a few months of their maturity date this year, Bank of America Merrill Lynch analysts said in a report. That compares with 15 percent to 20 percent in 2008, according to the analysts led by Roger Lehman in New York. About $11 billion in loans, or one-third of the 2010 total, had hit their expected maturity dates through late May.”

Bloomberg - “Fannie Mae, Freddie Mac Should ‘Unwind’ Portfolios, Pimco Says” (6-28-10)

“Fannie Mae and Freddie Mac, the housing-finance companies supported by U.S. taxpayers, should take advantage of demand for government-backed mortgage debt and sell their holdings, according to Pacific Investment Management Co. ‘Since the government’s going to want to unwind them at some point anyway, why not do it at the best levels ever?’ Scott Simon, the mortgage-bond head at Newport Beach, California-based Pimco, manager of the world’s biggest fixed- income fund, said in a telephone interview.”

Inman - “Top 10 states for pending tax credit closings” (6-28-10)

“NAR estimates as many as 180,000 homebuyers who were under contract by April 30 may miss the June 30 closing deadline. To prod lawmakers into find a way to extend the deadline, NAR released a breakdown of how many home purchases are affected in each state.”

Looking Back:

One year ago, Freddie Mac estimated that sales of new and existing homes might increase to an annual pace of 5.1 million in the 3rd quarter. Real Capital Analytics forecasted that $16 billion of office transactions would be completed by the end of 2009. The number of Orange County property owners disputing their taxes jumped 23% near last year’s deadline.

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 6/3/10

Thursday, June 3rd, 2010

Today’s News Synopsis:

Stats from Freddie Mac show the average rate for 30-year FRMs increased to 4.79 percent. Moody’s Investor Service reports commercial property values are down 42% from the peak in 2007. According to Trulia, many areas in the United States are now becoming cheaper to rent than own in. The US Department of Labor (DOL) received 10,000 fewer initial unemployment claims in the week ending May 29 than the previous week.

In The News:

Time - “The ‘Free Rent’ Approach: When Homeowners Just Stop Paying their Mortgages” (6-1-10)

“The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics”

Los Angeles Times – “A foreclosure fix” (6-2-10)

“Banks foreclosed on almost 200,000 homes in California last year, and this year’s toll is expected to be even higher. State lawmakers have tried to encourage banks to do more loan modifications that help both sides, keeping borrowers in their homes while cutting lenders’ losses. Yet homeowner advocates say a serious problem remains. Overwhelmed and disorganized, lenders continue to foreclose on borrowers who are in the process of negotiating new loan terms. At a time when the market is flooded with repossessed properties, that’s just inexcusable.”

Mortgage Bankers Association – “Mortgage Refinance Applications Increase Slightly, Purchase Applications Decline Further in Latest MBA Weekly Survey” (6-2-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 28, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 0.3 percent compared with the previous week.”

NAR - “Pending Home Sales Surge Continuing” (6-2-10)

“The Pending Home Sales Index,* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.”

Orange County Register – “O.C. buyers grab 56% more new homes” (6-2-10)

“Buyers signed contracts to purchase 523 new homes in Orange County during this year’s winter quarter. That’s the highest number of sales contracts for any quarter since the spring of 2008.”

Orange County Register – “Realtors fight to expand loan protections” (6-2-10)

“At issue is a proposal that would forbid lenders from seeking unpaid portions of a refinanced mortgage after a home goes through foreclosure. Currently lenders can’t do that if the loan was issued at the time the home was purchased. In a law dating to the 1930s, the homeowner’s liability is limited to the amount the lender recovers from the property at a foreclosure sale — even if that’s less than the amount owed.”

Orange County Register – “Really? Problem banks list grows to 775″ (6-2-10)

“BAD DEBT: The FDIC’s confidential list of ‘problem’ banks grew to 775 in the first quarter, with U.S. banks collapsing amid losses on residential and commercial real estate loans. EXTEND AND PRETEND: At least 25% of commercial real estate loans are doomed to foreclosure, experts in Arizona say. Another 50% could go either way.”

Mercury News – “Mortgage rates up from yearly lows, Freddie Mac says” (6-3-10)

“Rates on 30-year fixed mortgages ticked up this week from the lowest level of the year. Freddie Mac said Thursday that the average rate rose to 4.79 percent, up from 4.78 percent last week. A year ago, the rate averaged 5.29 percent.”

Wall Street Journal – “Looking for Lending” (6-3-10)

“Compared to peak prices in October 2007, commercial property values are down 42%, according to Moody’s Investors Service Inc. Price index reports compiled by Moody’s and Real Capital Analytics Inc. show that as of March 2010, the cost of industrial and office space fell 32% in the last two years. Retail space also plummeted 28%.”

Housing Wire – “REIT Activity Picks Up in 2010 After Five Year Doldrum” (6-3-10)

“In 2005, publicly traded US REITs completed 6,351 acquisitions and 2,812 dispositions, compared to 360 acquisitions and 994 dispositions in 2009. The largest decrease in acquisitions was in the retail/other sector, which declined from 1,720 in 2005 to 65 in 2009, a decrease of 96.2%. The healthcare also saw a deep decline. In that sector, there were 103 acquisitions in 2009, compared to 402 in 2005, a drop of 74.4%.”

Housing Wire – “In Some Cities, Trulia Finds It’s Now Cheaper to Rent than Own” (6-3-10)

“The top areas where house prices worked out to be more expensive than renting were New York, Seattle, Portland, and San Francisco. Omaha, Neb., Oklahoma City, Okla., and Kansas City, Mo. also cracked the top-10 list.”

Housing Wire – “Jobless Claims Ease Ahead of May Unemployment Data” (6-3-10)

“The US Department of Labor (DOL) received 10,000 fewer initial unemployment claims in the week ending May 29 than the previous week, on a seasonally adjusted basis. The news of fewer initial claims arrives a day ahead of officially updated unemployment rate figures. Economists anticipate the fragile recovery added 55,000 jobs to private sector employment and 700,000 to total non-farm payrolls in May.”

Housing Wire – “May House Prices Show Highest Increase Since 2006″ (6-3-10)

“House prices climbed 6.8% in May 2010 from last year, the largest yearly increase since July 2006, according to a report from real estate data provider Clear Capital. In June 2009, Clear Capital reported a 19.3% drop in May house prices, a ‘far cry’ from the increase shown in this report a year later, said Alex Villacorta, senior statistician at Clear Capital. The rolling quarter-over-quarter number, which measures houses prices against those three months ago showed a 1.8% decline, an improvement from the 5% drop in April.”

Housing Wire – “Delayed Mortgage Liquidation Hikes Risk of RMBS Write-Downs” (6-3-10)

“The back-loading of defaults draws out liquidation timelines, impacting the expected losses to senior tranches of residential mortgage-backed securities (RMBS), according to Toronto-based credit rating agency DBRS. And in some cases, this raises the occurrence of write-downs by one-third, or 33%. Distressed loans move from 30 to 60 to 90-days delinquent and then follow the foreclosure timeline set forth in the appropriate state before entering REO status. Following this process, loans are liquidated from the RMBS trust.”

Housing Wire – “California Set to Vote on Foreclosure Mediation Bill” (6-3-10)

“Assembly Bill 1639 was introduced by a trio of Democratic members of the assemby — Pedro Nava (Santa Barbra), Ted Lieu (Torrance) and speaker emeritus Karen Bass (Los Angeles). If passed, the bill would establish the Facilitated Mortgage Workout (FMW) program. Through it, lenders are required to meet with borrowers to develop a modification plan before foreclosure. The loan must have originated before Jan. 1, 2009, and the home must be occupied by the borrower as a principal residence. The principal balance on the mortgage cannot exceed $729,750.”

Looking Back:

One year ago, MBA statistics showed that mortgage application volume decreased by 16 percent within one week. J.P. Morgan Chase, Goldman Sachs and American Express owed the government $38.4 billion. The FHA loan limit was raised to nearly $730,000 in Orange County, and was accepting 3.5% down on purchases.

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 4/30/10

Friday, April 30th, 2010

Today’s News Synopsis:

MetLife is expecting a comeback in the commercial real estate market. According to LPS, More than 7.3m mortgages in the US are non-current or in REO status this month. Orange County apartment rent rates fell 5 percent during the first quarter of 2010. President Obama nominated Janet Yellen, Peter Diamond and Sarah Bloom Raskin for the Federal Reserve Board of Governors to the US Senate.

In The News:

Bloomberg - “D.R. Horton Gains After Quarterly Profit Tops Analyst Estimates” (4-30-10)

“D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, climbed the most in three months after reporting its second straight quarterly profit on increased demand for houses. Net income was $11.4 million, or 4 cents a share, for the quarter ended March 31, compared with a loss of $108.6 million, or 34 cents, a year earlier, the Fort Worth, Texas-based company said today in a statement. The results beat the average of 11 estimates in a Bloomberg survey that showed analysts predicted the company would roughly break even.”

Bloomberg - “MetLife Expects Commercial Real Estate to Rebound” (4-30-10)

“MetLife Inc., the largest U.S. life insurer, said there are signs of a recovery in the commercial real estate market after property values dropped about 40 percent from their peak. The company gained the most in seven weeks in New York trading.”

Housing Wire – “Obama Nominates Three to Federal Reserve Board of Governors” (4-30-10)

“President Barack Obama on Thursday sent three nominations for the Federal Reserve Board of Governors to the US Senate. His nominees include Janet Yellen, president of the Federal Reserve Bank of San Francisco; Peter Diamond, an institute professor at the Massachusetts Institute of Technology (MIT); and Sarah Bloom Raskin, commissioner of financial regulation for the State of Maryland.”

Housing Wire – “Geithner Threatens Crack-Down on HAMP Servicers” (4-30-10)

“‘I want to be clear that we do not believe servicers are doing enough to help homeowners, not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure,’ he said in prepared remarks.”

Housing Wire - “Non-Current Mortgages, REO Reach 7.3m in March: LPS” (4-30-10)

“More than 7.3m mortgages in the US are non-current or in REO status through March 2010, according to the Lender Processing Services (LPS) (LPS: 38.065 -0.41%) Mortgage Monitor report. Data and analytics firm LPS reported the modest improvements in the amount of loans becoming current has been overshadowed by this large pool of non-current assets, which represent more than 12% of all active loans in the country. The volume of distressed mortgages is up 19.3% from a year ago.”

Orange County Register – “O.C. apartment rent down 5%” (4-30-10)

“The average rent for a unit in a large Orange County apartment complex fell 4.8 percent during the first quarter of the year, down to $1,475 a month, according to RealFacts. However, the average asking rent pulled out of its nose dive, rising $2 a month from the previous quarter. Rents had fallen steadily for the previous 15 months.”

Orange County Register – “County seeks fee for property tax appeals” (4-30-10)

“An Orange County administrator wants to impose a $30 per parcel fee on property tax appeals this summer to help offset the costs of administering the hearings and to discourage fraudulent and frivolous actions. The proposal was made by Darlene Bloom, clerk of the Board of Supervisors, whose office administers appeals of property tax assessments.”

Realty Times – “Seniors Looking to Downsize, Seek Opportunities to Socialize in Urban Living Areas” (4-30-10)

“there’s a changing mindset emerging. ‘Senior citizens no longer want to be in an isolated place.’ Many are selling their homes and looking for a community connection in the location where they plan to purchase their next home. ‘Like the rest of America, there was this movement going out toward suburbia. Now, there’s a movement going back toward more urban areas and towns are starting to be challenged,’ says Matthews.”

Looking Back:

One year ago, foreclosure filings increased dramatically during March. The U.S. Senate rejected legislation letting U.S. bankruptcy judges cut mortgage terms to help borrowers avoid foreclosure. The average rate of a 30-year mortgage dropped to 4.78 percent.

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The Norris Group Real Estate News Roundup 4/21/10

Wednesday, April 21st, 2010

Today’s News Synopsis:

A scammer in Orange County was recently caught renting out houses which he did not own. The Business Forecasting Center predicts California unemployment will stay above 12 percent for the remainder of 2010. According to the MBA, mortgage loan application volume increased to 13.6 percent from last week. Trulia reports that 20 percent of homes in the U.S. received a deduction in asking asking price from April 2009 to April 2010.

In The News:

MSN - “Forecast: Recession over, but recovery slow” (4-21-10)

“The Great Recession may be over, but the great recovery will likely take several years in Northern California, according to a report released Wednesday. California’s jobless rate – already at a modern-day record – will remain above 12 percent for the remainder of the year, and double-digit territory through 2011. The jobless rate should dip below 10 percent in 2012, according to the Business Forecasting Center at the University of the Pacific.”

Mortgage Bankers Association – “Mortgage Applications Increase in Latest MBA Weekly Survey” (4-21-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending April 16, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 13.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 13.9 percent compared with the previous week.”

Wall Street Journal – “Land Prices Jump as Home Builders Move In” (4-21-10)

“Nationally, finished-lot prices, which saw low-single digit increases in the first quarter, are up nearly 20% from the trough, largely considered early 2009, according to a land survey released this week by housing-research firm Zelman & Associates. Lot prices in Phoenix and Southern California’s Inland Empire have soared more than 60%. Sacramento, Orlando and Los Angeles are up between 30% and 40%.”

Housing Wire – “Trulia Sees 26% Decline in Number of Listings with Price Reductions” (4-21-10)

“The rate of house listings where the seller made at least one reduction in asking price declined 26% in April 2010 compared to the same month one year ago, according to research by Trulia.com. Trulia said 20% of asking prices for current home listings were reduced at least once, compared to 27% of asking prices in April 2009. Las Vegas experienced a 54% decrease in listings with at least one price reduction, from 28% in April 2009 to 13% in April 2010. San Diego experienced a similar decrease at 52%. San Francisco and New York both experienced a 45% year-over-year decline and Los Angeles experienced a 40% drop.”

Housing Wire – “CMBS Defaults to Pass 11% by 2011: Fitch” (4-21-10)

“Commercial mortgage loan defaults look likely to rise through the end of the year, with another 4.4% likely in 2010 and the overall default rate expected to pass 11% among securities rated by Fitch Ratings, the credit-rating agency said today. New CMBS defaults increased more than five-fold last year, totaling 1,464 loans worth $17.75bn, Fitch said.”

Housing Wire – “Freddie Urges 12-Month Forbearance in Flood Areas” (4-21-10)

“Government-sponsored enterprise (GSE) Freddie Mac (FRE: 1.48 -0.67%) said today it is extending mortgage relief to borrowers whose houses were affected by recent floods in Massachusetts, New Jersey, Rhode Island and West Virginia. Freddie is giving its servicers discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie-owned mortgages, although each case must be individually assessed to determine the appropriate alternative.”

Bloomberg - “Mortgage Servicer Profits May Threaten Obama Housing Programs” (4-21-10)

“Mortgage servicers may have to take a pay cut to participate in President Barack Obama’s programs to modify home loans and advance the sale of properties in default. Starting this month, the Treasury Department is paying companies that collect mortgage payments and examine pleas for assistance a $1,500 stipend for approving the sale of homes for less than the loan balance, known as a short sale. The servicers also get $1,000 for each completion under the government’s year- old mortgage modification program, and additional stipends over three years if borrowers stay current on their payments.”

Orange County Register – “Anaheim businessman collects rent on vacant homes he does not own” (4-21-10)

“California’s foreclosure crisis has spawned an unusual operation by a bankrupt Orange County businessman who takes control of vacant homes and rents them out, according to police, property records and neighbors. From an office at an Anaheim massage clinic, Blair Hanloh has recorded deeds on at least 12 vacant houses in Southern California that he does not own. Property records show no evidence that the owners deeded interest to him—and five owners interviewed by The Orange County Register said that they had not.”

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The Norris Group Real Estate News Roundup 4/20/10

Tuesday, April 20th, 2010

Today’s News Synopsis:

According to MDA DataQuick, 81,054 Notices of Default  were recorded at county recorder offices during the January-to-March period in California . Marcus & Millichap Real Estate Investment Services claims that the gap between monthly rents and mortgage payments is at its lowest level in almost 20 years, making it easier to rent. Cushman & Wakefield estimates the commercial real estate market will take the longest to recover. HAMP completed 230,000 permanent modifications over 12 months.

In The News:

DQNews - “California Foreclosure Activity Declines Again” (4-20-10)

“A total of 81,054 Notices of Default (”NODs”) were recorded at county recorder offices during the January-to-March period. That was down 4.2 percent from 84,568 for the prior quarter, and down 40.2 percent from 135,431 in first-quarter 2009, according to San Diego-based MDA DataQuick.”

Mercury News – “New Obama mortgage plan at risk from fraud, report says” (4-20-10)

“Recent changes to the Obama administration’s mortgage assistance program may make it more vulnerable to fraud, a government watchdog says. The changes, announced last month, are intended to make it easier for struggling homeowners to avoid foreclosure. But the administration hasn’t done enough to warn the public about fraud and hasn’t included sufficient safeguards to prevent abuse, said the special inspector general for the Troubled Asset Relief Program, or TARP.”

Daily News – “Should you buy or rent a home? Cost gap narrows” (4-20-10)

“Thinking of buying a home? Consider this: The gap between monthly rents and mortgage payments is at its lowest level in almost 20 years. In some markets, the difference can be less than $100, according to a national study conducted for The Associated Press by Marcus & Millichap Real Estate Investment Services.”

Housing Wire – “Regulators Say Lehman Failure Makes Case for Financial Reform” (4-20-10)

“Driven to bankruptcy by massive downgrades of its failed subprime mortgage-related assets, now-defunct Lehman Brothers presents several lessons for lawmakers writing the policy response to ongoing financial fallout, expert witnesses told the House Financial Services Committee today. Sen. Ed Perlmutter (D-Colo.) cited a recent report on the causes of the Lehman bankruptcy, which found regulators supposedly knew of accounting gimmicks that allowed the firm the liquidity freedom to take on increasingly risky investments, but did not enforce corrective action.”

Housing Wire – “C&W: Commercial Real Estate Recovery Uneven Across US” (4-20-10)

“The national real estate market is in better shape than analysts anticipated given the largest employment declines in more than 70 years, but regional markets with the highest job losses, and the related overabundance of commercial properties vacant as businesses fail, will take longer to dig out of the recession, according to a report from Cushman & Wakefield (C&W). C&W, a real estate advising firm, said in its Economic Pulse report, that the recession did not hit all real estate markets equally.”

Housing Wire – “Financial Services Authority Begins Investigation of Goldman Sachs” (4-20-10)

“The Financial Services Authority (FSA), the market watchdog in the UK, will begin a formal enforcement investigation into Goldman Sachs (GS: 159.98 -2.05%) in the wake of the recent action by the Securities and Exchange Commission (SEC). Last week, the SEC charged Goldman for allegedly defrauding investors in a financial product tied to subprime mortgages. The SEC alleges Goldman and Fabrice Tourre, a vice president in the firm, misled and even omitted key facts about a synthetic collateralized debt obligation (CDO), ABACUS 2007-AC1.”

Housing Wire – “TARP Watchdog Says HAMP Changes Could Impede Modifications” (4-20-10)

“While foreclosures and bank repossessions rose in Q110 above year-ago levels — 16% and 35%, respectively — HAMP results in ‘very little progress’ so far, SIGTARP said, with only 230,000 permanent modifications completed over 12 months of operation (illustrated below). This represents only 8.2% of the foreclosures initiated in 2009, and fewer than only the most recent quarter’s bank repossessions.”

Bloomberg - “U.S. REITs May Raise More Than $25 Billion in 2010, NAREIT Says” (4-20-10)

“Real estate investment trusts in the U.S. may exceed the $25 billion they raised last year in share sales as an economic recovery boosts investor confidence, according to the industry’s main lobbying group. The money raised in the stock market last year principally went toward improving balance sheets after companies became too highly leveraged, said Michael Grupe, executive vice president of research at the National Association of Real Estate Investment Trusts. REITs will seek funds to acquire properties this year, he said.”

Orange County Register – “Laguna Beach homes taking 32% less time to sell” (4-20-10)

“The community’s share of its new deals in escrow involving distressed properties — foreclosures or short sales — is 8% or -21.95 percentage points vs. countrywide share. Note that this community has 1.2% of all the deals in escrow countywide — and 1.1% of all distressed deals in the works. Meanwhile, the city of Laguna Beach has 4.0% of the entire supply of resale residences that are listed for sale in Orange County.”

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The Norris Group Real Estate News Roundup 4/6/10

Tuesday, April 6th, 2010

Today’s News Synopsis:

A recent Fannie Mae survey shows that approximately two-thirds of Americans would still prefer to own a home. Independent mortgage bankers and subsidiaries made an average profit of $890 on each loan they originated in the fourth quarter of 2009. The National Bankruptcy Research Center claims that bankruptcies could total over 1.5 million this year. According to Reis Inc, rent prices declined by 1.6 percent from last year.

In The News:

CBIA - “Road to Recovery” (4-6-10)

“The economic downturn has put California in a critical position, but homebuilders could play a major role in helping with the state’s recovery. CBIA has focused on six pieces of legislation this session that could help lead the state on that road. None is more important than an extended homebuyer tax credit, but all six are vital to helping the state, and the building industry, move forward.”

CNN - “With caution, Americans still want a house” (4-6-10)

“Nearly two-thirds of Americans would still prefer to own a home, although the recent housing market turmoil and uncertain economy have made them a little more cautious about how and when, according to a survey released Tuesday. A nationwide survey conducted by mortgage lender Fannie Mae found 65% of the homeowners and renters believe there is still value in owning a home.”

Mortgage Bankers Association – “Production Profits Held Steady in 4th Quarter 2009, According to MBA Study of Independent Mortgage Bankers and Subsidiaries” (4-6-10)

“Independent mortgage bankers and subsidiaries made an average profit of $890 on each loan they originated in the fourth quarter of 2009, down from $902 per loan in the third quarter of 2009, but up from $296 in the fourth quarter of 2008, according to the Mortgage Bankers Association (MBA).”

Sacramento Bee – “California expected to cancel tax on forgiven mortgage debts” (4-6-10)

“Relief appears imminent for thousands of Sacramento homeowners hit with state tax bills for mortgage debts forgiven in 2009. State lawmakers said Monday they plan to cancel the state tax obligations with a vote Thursday.”

Inman - “Bankruptcies could exceed 1.5M this year” (4-6-10)

“More consumers filed for bankruptcy in March than in any other month after Congress overhauled federal bankruptcy laws in 2005, according to a release by the American Bankruptcy Institute. Monthly filings for March reached 149,268, a 34 percent increase from the month before when filings totaled 111,693, and a 23 percent year-over-year increase when consumers submitted 121,413 filings, the institute said. The findings are based on data from the National Bankruptcy Research Center.”

Housing Wire – “Lenders Look to Prevent Mortgage Fraud Before Origination With New Software” (4-6-10)

“Wells Fargo (WFC: 32.10 +1.87%) recently implemented mortgage fraud detection software, called LoanSafe Fraud Manager and developed by First American CoreLogic. At least 10 other lenders are following Wells’ lead and testing out the software to see how well it works against their current systems.”

Bloomberg - “U.S. Apartment Rents Decline as Vacancies at Record, Reis Says” (4-6-10)

“U.S. apartment rents dropped in the first quarter and the vacancy rate remained at a record as unemployment near a 26-year high limited tenant demand. Actual rents paid by tenants, known as effective rents, declined 1.5 percent from a year earlier, Reis Inc. said in a report today. Asking rents fell 1.6 percent, according to the New York-based property research firm. Vacancies were unchanged at 8 percent, the highest level since 1980, when Reis began tracking the number, said Victor Calanog, director of research.”

Looking Back:

One year ago, General Growth announced that its bankruptcy would not occur quickly. Altera Real Estate reported a total of 4,092 distressed properties in Orange County. One-third of California’s 267,000 foreclosure sales in 2008 were rental units

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109-TNG Radio – Mike Cantu 2-14-09

Friday, February 13th, 2009

Mike-Cantu

Mike Cantu

Expert California Investor

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Bruce Norris is joined once again this week by California investor and property manager expert, Mike Cantu.

Bruce asks about how Mike feels about the use of leverage in this market. Mike says leverage when buying at the right price is fine. Finding the long term leverage is the issue. It’s a challenge because banks want fully qualified and documented loans and stated income is out for investors. Bruce thinks this will change because they’ll have no choice but to open up to investors. It getting over the issue of investors being considered the “speculator” and everyone realizes we’re part of the solution.

Bruce asks Mike what his long term rental would look like. Mike goes into details exactly what he looks for in long term holds including structure and neighborhood. Mike and Bruce also talks about paying a little more for property that is premium. Both talk about neighborhoods and why he likes certain types.

Mike goes into a little more detail about renters and what he looks for when considering renting to a consumer. Mike goes over his job description concept. It’s truly unusual for the renters to hear what Mike has as expectations. Mike says a few people get offended by his direct questions but he ends up with some of the lowest turnover in the business.

If he and the renter make it to signing the rental agreement, he hopes that the renter forgets what he looks like because he never has to hear from them and visa versa. He rarely sees many of his tenants because of correct tenant selection.

Mike talks about liking to rent to blue collar workers. He loves tenants that fix things along the way and then sends him a receipt. Better to solve problems as they come up instead of letting them turn into big problems.

Bruce talks about questions Mike asks that are legal on the first meeting. He says humor and personality are important. Mike talks about things you can’t talk about as outlined in the Fair Housing Guidelines. You can’t not rent to people because of moral issues so be careful and understand what you’re getting into.

Bruce asks what the biggest surprise was that a renter ever gave Mike. Mike talks about a few good surprises and some bad experiences.

Bruce asks Mike about Section 8. Mike says he has mixed feelings about Section 8. Mike likes to be a little more independent. He has seen good and bad. The biggest issue comes with inspections. In his experience, houses don’t break themselves. People break houses and inspectors expect you to fix what renters break.

Bruce asks about rents and if he expects them to go down. Mike has seen his rental market get stronger as people move back to his area that had once gone to the high desert but have now foreclosed. He had a few vacancies but once they were fixed they were rented within 30 days. He says he’s even done a round of rent raises this year and no one has moved.

The biggest mistakes are buying the wrong house and overestimating rent. You can’t be way over on rent. Investors have to do their homework on the tenant and accepting a person check for deposit and first months rent is a huge mistake.

Bruce asks about who handles evictions. He’s been very unhappy with services and luckily he doesn’t have very many. He’s seriously thinking about taking them on himself again.

Mike does not use a property manager and he urges people to learn what it is that an investor is about to pay somebody else to do.

Mike talks to Bruce about the time it takes from an REO purchase to rehab to rental. Mike would like people to start doing houses one at a time and not try too many at once.

Mike is teaching his “Rental Properties and Management” seminar live for the first time February 21st in Riverside. This course is being presented by The Norris Group. Visit thenorrisgroup.com for more information. Next week, Ward Hanigan!

Mike Cantu is undoubtedly one of Southern California’s best real estate investors and a long-time friend of The Norris Group.

Mike Cantu has been a full time real estate investor for over 25 years. This is round three of a down market for Mike. He runs a buy/sell operation, wholesales, and manages a rental property portfolio.

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58-TNG Radio – Nicholas Manfredi 3-8-08

Friday, March 7th, 2008

Nicholas-Manfredi

Nicholas Manfredi

President & CEO, The Short Sale Processor LLC

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Bruce Norris is joined by short sales expert and President of the Short Sale Processor, Nicholas Manfredi. Bruce and Nick discuss how hard prices have been hit in the Inland Empire, different ways to evaluate homes, why Nick likes Corona as an investment area, what areas of the housing market are safe, inflation and interest rates and their effect on investment decisions, percentage of homes in Corona in a negative equity position, what conversations are like with current sellers, the journey of someone facing potential foreclosure and the option of a short sale, California and a possible depression, rent drops in the Inland Empire, the choices for someone in default, what some home owners have been spending per month on a home payment, the willingness for lenders to really help people to save their home, misconceptions on short sales, Realtors and the misunderstanding of taxation and debt relief, the Debt Relief Act of 2008, if you need to be licensed to do short sales, retail value and short sales, working with a Realtor who understands the process, reasons why lenders decline short sales, the MERS system, lenders position on borrower being behind before short sale consideration, how to attract people to short sales if not through mailers, how the Short Sale Processor works, the money to be made by helping sellers and lenders, how brokers can make just as much money with short sales as they can with a regular transaction, and finally, theshortsaleprocessor.com.

Nick Manfredi is a real estate investor, speaker and corporate business owner. He has been featured in Fortune Magazine and The LA Times, and contributed to articles in the news media including CNN Money Magazine, The Press Enterprise, and RISmedia.

In 2002 Nick established one of Southern California’s most respected real estate investment club’s The Inland Empire Investors Forum. Focused on volume, he continues to wholesale 80% of his acquisitions.

Eager to capitalize on California’s changing market Nick co-founded The Short Sale Processor LLC. As CEO of Forum Real Estate Investments Inc

Nick continues buy residential & commercial property in California and Texas. Nick resides in Southern California with his wife Susan and 3 boys Gabriel, Nathan and Jacob.

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