Is the Commercial Market At Bottom Yet?

Posted on September 3, 2010 in commercial real estate, economy with no comments

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Moody’s reports that commercial prices are bumping up and down along the bottom right now.  Some months prices are up a bit, and others they are down.  In June prices dropped 4% is what Moody’s called a “choppy drop.” The prices are still higher than they were at the height of the recession in October 2009.  Overall commercial prices are 41.4% below their peak recorded in October 2007.

Moody’s believes that in the commercial market buyers and sellers are beginning to agree on prices that will sell and that should bode well for increasing transaction volume, even if prices bounce around a bit near the bottom in the coming months.

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Financial Asset Services is Door Knocking for Short Sales

Posted on September 3, 2010 in REO, economy, foreclosures, short sales with no comments

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In an effort to motivate homeowners who have lost hope as their mortgage fall more and more behind, Financial Asset Services, Inc. is employing licensed REO and Short Sale Agents around the country to knock on doors in order to communicate options directly to homeowners in distress.

If they are able to engage the homeowner in a dialogue they outline options for Short Sale and Deed-in-Lieu of Foreclosure available through the mortgage lender.  Since they are representing the Lender, they must stay compliant with all regulations in the Fair Debt Collection Act.

FAS is finding that door knocking is an effective way of getting to those homeowners who have stopped responding to mail and phone calls about their delinquent mortgage.

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A Total of 975,000 Loan Modifications are Completed

Posted on September 3, 2010 in HAMP, loan modifications with no comments

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Only 331,000 of the 975,000 loan modifications that have been completed to date have been written under the federal government Home Affordable Modification Program (HAMP); the rest are the result of proprietary loan modifications from servicers and lenders.

What happens to borrowers when their modifications are turned down by HAMP?  In 45% of the cases the Lenders work out a proprietary modification.  Another 2.4% end up selling their homes through a Short Sale.  About 3% file for bankruptcy, thus delaying any final resolution on the home.  Another 10% end up losing the home to foreclosure.

The Treasury Department report on the program notes that there are wide discrepancies between servicers on what happens to those who request a modification.  To a large extent, it is the luck of the draw as to whether a loan modification will be successfully completed.  The loan modification process has, on the whole, slowed the progress of foreclosures.

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Trulia Finds American Homeownership Dream is Fading

Posted on September 3, 2010 in housing news with no comments

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A new study by Trulia finds that the dream of owning a home is fading into the background for more and more Americans.  The study reveals that one in four renters never plan on buying a home.  Additionally 68% of the other renters believe that home ownership is at least two years away. Many of these people expressed that uncertainty about the economy is affecting when they will begin to look for a home to buy.

Since absorption of the current glut of homes on the market is critical to recovery, this trend away from renters expecting to jump into the market is expected to drag out the housing slump well into the future.  As the housing market goes, so goes the economy.

Trulia’s CEO, Pete Flint, believes it is critical for the government to turn its attention to job creation and retention, as well as to the drive to stem foreclosure.

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Jobs Outlook Going from Bad to Worse

Posted on September 3, 2010 in economy with no comments

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Employers are continuing to do more with less, and the outlook for adding back employees is rapidly fading.  It appears that if the economy is going to recover, it will do so without the participation of the job market.

Two weeks ago unemployment claims pierced a psychological barrier of 500,000 claims.  The high unemployment figure comes despite evidence that private business is beginning to add jobs.  Economists have been confused by the conflicting evidence of private gains and overall losses.

From a policy perspective, one of the most difficult concerns is what the government should do about the long term unemployed.  The Emergency Unemployment Claim Program was established in June 2008 to deal with those who are still unemployed at the end of the 24 week compensation period.  That EUC fund was recently extended to Nov. 30 as the numbers as of July 31 surged to over 4.7 million.

This morning the national unemployment rate rose to 9.6%.

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Chase Adds Staff to Expedite Loan Modifications

Posted on September 2, 2010 in HAMP, economy, short sales with no comments

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JP Morgan Chase has added 8,000 loan officers and other staff to help process loan modifications more quickly with the intention of significantly reducing the number of its loans that go into foreclosure.

In the most heavily impacted areas Chase has loan officers on the ground to conduct face to face counseling sessions with clients.  It has met with 140,000 mortgage holders since it opened its centers in 2009 and has modified 900,000 loans using a combination of HAMP and its own proprietary system.  Of these total modification applications, 214,529 mortgages have been modified permanently.

The teams that handle Short Sales and Deed-in-Lieu programs have also been enlarged so that those who do not qualify for a modification, or fall out of the program can be considered for these strategies as the next step in the process toward stopping foreclosure.

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Thrifts are Recovering from Housing Crisis

Posted on September 2, 2010 in economy with no comments

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Despite being heavily hit by mortgage defaults the saving and loan industry is again making a profit.  For the fourth consecutive quarter the industry reported profits.  In the 2nd quarter of 2010 those profits were $1.49 billion. The profit balance is up from a $94 billion loss in the 2nd quarter of 2009.

Community banks by law must reserve 65% of its lending for mortgages and consumer loans.  This has made the role of the thrift institutions very precarious during the housing crisis.  The Office of Thrift Supervision considers 16 thrift institutions to be less than adequately capitalized right now.

Still, with the steady stream of profitable quarters the industry as a whole appears to be on the mend.  Troubled assets are falling and are now down to 3.21% of all assets, down from 3.28% the previous quarter.

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Underwater Mortgages Decline for Second Consecutive Quarter

Posted on September 2, 2010 in economy, foreclosures, housing news, mortgage news with no comments

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The tide appears to be turning on the number of mortgages that exceed value.  CoreLogic has calculated that 11 million homes have loans outstanding that are more than the value of the home, or 23% of all outstanding loans on residential properties.  That’s the good news.

The bad news is that almost all of the change occurred because of foreclosures that have sent values back to earth, not because of appreciable gains in market value.

When loans that have only 5% or less of equity are added in, the total of underwater loans is around 28%.  Interestingly, in markets where few homes are underwater, values rose .5 to 1%, while in markets where underwater mortgages are very prevalent, values actually fell across the board.

The negative equity problem is concentrated in five states: Nevada (68% negative equity in the second quarter); Arizona (50% negative equity); Florida (46% negative equity); Michigan (38% negative equity); California (33% homes under water).

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Delinquencies Going Up for 2nd Mortgages–Down for Firsts

Posted on September 2, 2010 in economy, mortgage news with no comments

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Delinquencies on first mortgages declined slightly between July and June, down from 3.3% of all 1st mortgages to 3.2%, according to Standard & Poor’s and Experian’s combined index.  The bad news is during the same months delinquencies on 2nd mortgages rose from 2.4% to 2.8% of all mortgage 2nd loans.

It is too soon to tell if this is a momentary aberration or a new trend.

A larger study of delinquencies, the Mortgage Bankers Association quarterly survey, came out this past week and the more complete picture looks like this: Foreclosure starts have gone down for the first quarter since 2006.  Loans 90 days or more late have also decreased.

The aberration noted by the MBA is that 30 and 60 day lates are again surging, and it is feared that this may portend another round of higher foreclosure levels in the future.

At the end of the 2nd quarter 13.97% of all home mortgages were at least one payment overdue or in foreclosure.  That’s $963 billion in troubled home mortgage assets.  The percentage drop from the 1st quarter was .04%.  The MBA reports that foreclosure starts have dropped for all types of loans, and fell quite substantially, down .12% from last quarter and .25% from the same quarter of 2009.

Forty three states saw an improvement in the foreclosure picture, with the largest drops in California, Florida and Nevada.  Eleven states saw an increase over last year, with the largest increase coming in Illinois, South Dakota and New Mexico.

The 30 day delinquencies are very closely tied to claims for unemployment insurance. When unemployment claims go up, the delinquencies rise; when the claims go down so do the mortgage delinquencies.  Since unemployment claims have begun to rise again it is not unusual that we are also seeing a rise in delinquencies.  The one factor that will bring down delinquencies and ultimately foreclosures will be a substantial drop in the unemployment rates.

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3 Mistakes Investors Make in Scaling Up their Businesses

Posted on August 31, 2010 in advice, investor tips with no comments

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It’s relatively easy to complete two or three Short Sales per year.  All it takes is convincing one or two good Agents in your area to work with you on Short Sales and a good negotiation service.  It’s another ball game entirely to keep deals flowing constantly in the pipeline.  Here are the most common mistakes that Investors make in scaling up business to that next level:

1.  Failure to systematize.  A pre-foreclosure business that is bringing in a closing or more a month can no longer efficiently be run out of a back bedroom with paper files, a bunch of post-its and a cell phone.  A system organizes all steps in the process and all records into an integrated process that saves steps and can be delegated to members of a team. Usually technology is used to systematize a process.  A home office is fine (many people prefer it), but it must be run as a real business if you want to succeed in the long term.

Aspects of technology that you need to grow your business include integrated systems that help you complete, organize and send off paperwork fast and accurately for Short Sale negotiation, and keep your contact files online (for more information about this, give us a call at 706-485-0162 and ask about The Short Sale Engine).  Your communication system should include either an automated voicemail system with phone extensions for others who are working for you, or a live system that steps prospective buyers and sellers through a series of questions with a live attendant to help you sort out the genuine deals fast.

2.  Failure to delegate.  Many entrepreneurs think they can do it all themselves.  If you look at a flowchart of all the functions required to run a pre-foreclosure business there are at least 75 or 80 different tasks and activities from lining up Agents and sending out letters to homeowners, to marketing for end Buyers, to receiving a check at closing.  How many of those tasks do you really need to do yourself?  The answer to that question will be based partly on your time, skills and interests, and partly on which are the most critical tasks to making money.  Personally do those things most important to making money: setting the vision and the goals for the company; finding Agent partners; finding private money; approving deals; cashing the checks; analyzing the system and making it better; hiring and retaining staff and consultants.  Then take on the things that you really enjoy doing and actually have the time for.  Virtually everything else can and should be done by someone else.

3.  Failure to keep a deal flow going.  Many new Investors will get a few deals under their belts and then rest on their laurels.  If deals from an established connection peter out, business dies because the Investor fails to constantly make new connections. After running one pre-NOD list they fail to send out more than one notice to that list, or to follow up with new lists every month.  They fail to explore new markets—new neighborhoods within one city, new cities, or even new states where the pre-foreclosure market may be more promising. You need to be constantly expanding your reach to build an ever-expanding network of Buyers, Sellers, Private Lenders, Agents, etc.  You’re either expanding or you are dying.

Now go out and sell some houses!

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