Are Fannie Mae & Freddie Mac (Government Controlled Lenders) At the “Heart” of the Mortgage Mess?
Posted by BEREL News Team on Thursday, December 23rd 2010
Objective real estate investors have been saying it for years: government-controlled Fannie Mae and Freddie Mac have been involved in questionable practices when it comes to mortgage regulation. And now, there’s significant support for this position in the major press. According to a Washington Post article published this morning, the two GSEs set the precedent for fast, perhaps overly-effective and aggressive foreclosure methods that ultimately led to Foreclosure-Gate and the robo-signing fiascos currently being endured and investigated on multiple fronts throughout the country.
In 2008, Fannie Mae and Freddie Mac “named an exclusive group of law firms that would rapidly carry out…filing legal paperwork to remove homeowners from their homes.” Prior to this time, this type of step was “unprecedented,” the reporting team says. Now, while many lenders followed suit and created their own foreclosure issues, the “heart of federal and state probes over faulty foreclosure practices that now threaten to further undermine the housing market” is squarely located with Fannie and Freddie. According to an anonymous source, the GSEs not only “urged swift foreclosures,” but also green-lighted a firm that had engaged in documented, “legally questionable practices.”
In further efforts to speed the foreclosure process, the GSEs offered incentives and threatened fines on law firms and servicers that took too long to foreclose, while neglecting to implement safeguards for the homeowners themselves. When asked about the existence of these safeguards, Fannie Mae associate general counsel Susan Reid simply stated, “I don’t know of any policies and procedures.”
It seems clear that other lenders and lawyers took their cues from Fannie and Freddie when it came to their foreclosure processes, but that does not change the fact that each individual corporation should have installed some type of protections to insure that foreclosures were valid. Do you think Fannie Mae and Freddie Mac should bear a greater burden of blame than other lenders involved in the robo-signing scandals?
Thursday, December 23, 2010
Wednesday, December 22, 2010
New York Foreclosures Likely to “Choke” in the New Year
New York Foreclosures Likely to “Choke” in the New Year
Posted by BEREL News Team on Tuesday, December 21st 2010
Thanks to requisite “special affirmations” from New York bank attorneys indicating that they know that all bank documents are valid because they have personally checked the paperwork, New York state’s foreclosure process will likely grind to a halt in the New Year as lenders and their lawyers work to develop a process that will allow attorneys to make this type of affirmation[1]. During the development process, foreclosure filings will likely drop to nearly zero since under current standards, there is no time or place in the present foreclosure process for the attorneys to check every document coming out of the lender. In fact, just since October 20, 2010, the date that the order was signed, foreclosures have dropped from 800 to 100 per week.
“Hundreds of foreclosure filings have been withdrawn,” confirmed secretary to Suffolk County Supreme Court Judge Erin Michael Kay, who mentioned that the judge’s caseload was actually down to 250 from a “much higher” load just a week earlier. Other judges opted to dismiss all pending foreclosures coming before them because banks and lenders did not have the newly-required affirmations in order, and some judges have gone so far as to require far more detailed affirmations than those specified by the new law. All of this “custom work” will further slow the foreclosure process and make implementing the changes more complicated for lenders and their attorneys.
The judges agree, however, that they are not trying to stop banks from foreclosing – just that they want to make sure that things are done right in light of the robo-signer fiasco. Wrote one judge’s chief law assistant: “If people can’t afford their home, if they can’t pay their bills, the foreclosure will happen. Homeowners have to have a plan and the ability to pay. The banks are entitled to be paid.”
Do you believe that these delays are simply procedural, and not a delaying tactic to keep homeowners in their delinquent homes?
Posted by BEREL News Team on Tuesday, December 21st 2010
Thanks to requisite “special affirmations” from New York bank attorneys indicating that they know that all bank documents are valid because they have personally checked the paperwork, New York state’s foreclosure process will likely grind to a halt in the New Year as lenders and their lawyers work to develop a process that will allow attorneys to make this type of affirmation[1]. During the development process, foreclosure filings will likely drop to nearly zero since under current standards, there is no time or place in the present foreclosure process for the attorneys to check every document coming out of the lender. In fact, just since October 20, 2010, the date that the order was signed, foreclosures have dropped from 800 to 100 per week.
“Hundreds of foreclosure filings have been withdrawn,” confirmed secretary to Suffolk County Supreme Court Judge Erin Michael Kay, who mentioned that the judge’s caseload was actually down to 250 from a “much higher” load just a week earlier. Other judges opted to dismiss all pending foreclosures coming before them because banks and lenders did not have the newly-required affirmations in order, and some judges have gone so far as to require far more detailed affirmations than those specified by the new law. All of this “custom work” will further slow the foreclosure process and make implementing the changes more complicated for lenders and their attorneys.
The judges agree, however, that they are not trying to stop banks from foreclosing – just that they want to make sure that things are done right in light of the robo-signer fiasco. Wrote one judge’s chief law assistant: “If people can’t afford their home, if they can’t pay their bills, the foreclosure will happen. Homeowners have to have a plan and the ability to pay. The banks are entitled to be paid.”
Do you believe that these delays are simply procedural, and not a delaying tactic to keep homeowners in their delinquent homes?
Wednesday, September 22, 2010
Orlando homes sales increase as affordability hits all-time high
September 10, 2010 – Orlando, FL) Members of the Orlando Regional REALTOR® Association reported completed sales on 2,429 homes in August, which is a 10.91 percent increase over the August 2009 mark of 2,109. To date, Orlando area home sales are up 36.12 percent over this time in 2009.
“As expected, sales have been softer following the expiration of the homebuyer tax credit,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “However, since May, the number of new contracts has continued to climb as consumers take advantage of record-low mortgage rates and historically high housing affordability.”
The number of new contracts filed in August 2010 (3,892) represents an increase of 17.09 percent more than were filed in August 2009 (3,324). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 8.60 percent more homes (8,945) under contract and awaiting closing in August of this year than in August of last year (8,237).
The median price of all existing homes combined sold in August 2010 decreased 21.95 percent to $99,900 from the $128,000 recorded in August 2009. August 2010’s median price is a decrease of 8.10 percent compared to July 2010’s median of $108,700.
“With foreclosures and short sales dominating the market, the median price continues to be lowered,” says Gallagher McIver. “Plus, the rise in popularity of lower-priced condominiums has put additional downward pressure on prices.” Gallagher McIver adds that one in four home sales during the month of August was a condo sale, and the median price for all August condo sales was $44,000.
The median price for “normal” sales is $165,900 (down 5.20 percent from last month’s $175,000). The median price for bank-owned sales is $70,000 (down 2.78 percent from last month’s $72,000), and the median price for short sales is $100,000 (down from last month’s $116,000).
Of the 2,429 sales in August, 691 “normal” sales accounted for 28.45 percent of all sales, while 1,187 bank-owned and 551 short sales made up 71.55 percent.
The Orlando affordability index increased to 270.30 percent in August. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,219 can qualify to purchase one of 9,932 homes in Orange and Seminole counties currently listed in the local multiple listing service for $270,031 or less.
First-time homebuyer affordability in August increased to 192.21 percent. First-time buyers who earn the reported median income of $36,189 can qualify to purchase one of 6,885 homes in Orange and Seminole counties currently listed in the local multiple listing service for $163,219 or less.
Homes of all types spent an average of 84 days on the market before coming under contract in August 2010, and the average home sold for 95.04 percent of its listing price. In August 2009 those numbers were 94 and 94.44 percent, respectively. The area’s average interest rate decreased in August to 4.61 percent.
Inventory
There are currently 16,535 homes available for purchase through the MLS. Inventory decreased by 28 homes from July 2010, which means that 28 more homes exited the market than entered the market. The August 2010 inventory level is 1.06 percent higher than it was in August 2009 (16,361). The current pace of sales translates into 6.81 months of supply; August 2009 recorded 7.47 months of supply.
There are 12,769 single-family homes currently listed in the MLS, a number that is 859 (7.21 percent) more than in August of last year. Condos currently make up 2,342 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,424.
Condos and Town Homes/Duplexes/Villas
August when compared to August of 2009 and increased by 5.89 percent compared to July of this year. To date, condo sales are up 74.09 percent (4,596 condos sold to date in 2010, compared to 2,640 by this time in 2009).
The most (361) condos in a single price category that changed hands in August were yet again in the $1 - $50,000 price range, which accounted for 57.39 percent of all condo sales.
Orlando homebuyers purchased 208 duplexes, town homes, and villas in August 2010, which is a 1.96 percent increase from August 2009 when 204 of these alternative housing types were purchased.
“As expected, sales have been softer following the expiration of the homebuyer tax credit,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “However, since May, the number of new contracts has continued to climb as consumers take advantage of record-low mortgage rates and historically high housing affordability.”
The number of new contracts filed in August 2010 (3,892) represents an increase of 17.09 percent more than were filed in August 2009 (3,324). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 8.60 percent more homes (8,945) under contract and awaiting closing in August of this year than in August of last year (8,237).
The median price of all existing homes combined sold in August 2010 decreased 21.95 percent to $99,900 from the $128,000 recorded in August 2009. August 2010’s median price is a decrease of 8.10 percent compared to July 2010’s median of $108,700.
“With foreclosures and short sales dominating the market, the median price continues to be lowered,” says Gallagher McIver. “Plus, the rise in popularity of lower-priced condominiums has put additional downward pressure on prices.” Gallagher McIver adds that one in four home sales during the month of August was a condo sale, and the median price for all August condo sales was $44,000.
The median price for “normal” sales is $165,900 (down 5.20 percent from last month’s $175,000). The median price for bank-owned sales is $70,000 (down 2.78 percent from last month’s $72,000), and the median price for short sales is $100,000 (down from last month’s $116,000).
Of the 2,429 sales in August, 691 “normal” sales accounted for 28.45 percent of all sales, while 1,187 bank-owned and 551 short sales made up 71.55 percent.
The Orlando affordability index increased to 270.30 percent in August. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,219 can qualify to purchase one of 9,932 homes in Orange and Seminole counties currently listed in the local multiple listing service for $270,031 or less.
First-time homebuyer affordability in August increased to 192.21 percent. First-time buyers who earn the reported median income of $36,189 can qualify to purchase one of 6,885 homes in Orange and Seminole counties currently listed in the local multiple listing service for $163,219 or less.
Homes of all types spent an average of 84 days on the market before coming under contract in August 2010, and the average home sold for 95.04 percent of its listing price. In August 2009 those numbers were 94 and 94.44 percent, respectively. The area’s average interest rate decreased in August to 4.61 percent.
Inventory
There are currently 16,535 homes available for purchase through the MLS. Inventory decreased by 28 homes from July 2010, which means that 28 more homes exited the market than entered the market. The August 2010 inventory level is 1.06 percent higher than it was in August 2009 (16,361). The current pace of sales translates into 6.81 months of supply; August 2009 recorded 7.47 months of supply.
There are 12,769 single-family homes currently listed in the MLS, a number that is 859 (7.21 percent) more than in August of last year. Condos currently make up 2,342 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,424.
Condos and Town Homes/Duplexes/Villas
August when compared to August of 2009 and increased by 5.89 percent compared to July of this year. To date, condo sales are up 74.09 percent (4,596 condos sold to date in 2010, compared to 2,640 by this time in 2009).
The most (361) condos in a single price category that changed hands in August were yet again in the $1 - $50,000 price range, which accounted for 57.39 percent of all condo sales.
Orlando homebuyers purchased 208 duplexes, town homes, and villas in August 2010, which is a 1.96 percent increase from August 2009 when 204 of these alternative housing types were purchased.
Wednesday, August 4, 2010
Mistake #1 YOUR BUSINESS FOCUSES ON ITSELF, AND NOT ON YOUR PROSPECTS‘ AND CUSTOMERS‘ NEEDS
Does this seem too obvious? Look through your yellow pages. Pick them up right now and glance through. Answer this question: Are most of the ads telling you what benefits you getting if you become a customer? Or, are the ads telling you about the vendors, where they are, how wonderful they are, what they do, how great their quality is, how great their service is, and all about them?
Ninety-five percent of the ads are likely totally focused on the business and not on what the business can do for YOU, the note seller [or the professional referral source such as the Realtor or FSBO]!
Look at the ads in the newspapers, on the TV, and listen to the radio. You‘ll find the same thing happening there, consistently, every day. This type of selfish advertising falls into the terribly wasteful category of institutional advertising.
Institutional advertising generates, at best, delayed results. But, at its worst, this kind of advertising accomplishes no profitable purpose whatsoever. Unless the business has very deep pockets and can afford to wait a long time for the payoff, institutional advertising is a wasteful, ineffective expense.
You know when it‘s institutional advertising because institutional advertising is geared toward telling you just how great a company is, or how venerable and stable they are. Perhaps businesses such as large banks can do this...but it just doesn‘t work for most small and medium sized businesses. Fancy, cutesy and non-compelling frivolity is another sin of much of today‘s advertising, and much of it can be classified as institutional.
Your selfishness is what kills most of your note marketing. From brochures to flyers, and sales letters to advertisements, your marketing message should let your prospects know that you are concerned ONLY WITH WHAT THEY WANT!
Anything about you should always come last. Your note sellers, clients, customers, patrons, patients...whatever you choose to call them, should always come first. Any marketing documents you create should start out by focusing on the prospects‘ wants. Every sentence should show that you understand the prospects‘ wants.
Ninety-five percent of the ads are likely totally focused on the business and not on what the business can do for YOU, the note seller [or the professional referral source such as the Realtor or FSBO]!
Look at the ads in the newspapers, on the TV, and listen to the radio. You‘ll find the same thing happening there, consistently, every day. This type of selfish advertising falls into the terribly wasteful category of institutional advertising.
Institutional advertising generates, at best, delayed results. But, at its worst, this kind of advertising accomplishes no profitable purpose whatsoever. Unless the business has very deep pockets and can afford to wait a long time for the payoff, institutional advertising is a wasteful, ineffective expense.
You know when it‘s institutional advertising because institutional advertising is geared toward telling you just how great a company is, or how venerable and stable they are. Perhaps businesses such as large banks can do this...but it just doesn‘t work for most small and medium sized businesses. Fancy, cutesy and non-compelling frivolity is another sin of much of today‘s advertising, and much of it can be classified as institutional.
Your selfishness is what kills most of your note marketing. From brochures to flyers, and sales letters to advertisements, your marketing message should let your prospects know that you are concerned ONLY WITH WHAT THEY WANT!
Anything about you should always come last. Your note sellers, clients, customers, patrons, patients...whatever you choose to call them, should always come first. Any marketing documents you create should start out by focusing on the prospects‘ wants. Every sentence should show that you understand the prospects‘ wants.
Wednesday, July 28, 2010
Ryland Shares Weaken With Builders Before Earnings
BOSTON -- Shares of Ryland Group Inc. were down 3% Wednesday morning ahead of the builder's second-quarter earnings report, which is expected to cross after the closing bell. "While most builders should post a fairly strong income statement this quarter, we believe Ryland will be usefully less robust, particularly on the cost side as gross margins remain quite subdued," wrote Ticonderoga Securities analyst Stephen East in an earnings preview this week. "Last quarter Ryland suffered from order declines and poor absorption rates, two trends that we believe could be virtually impossible to turn around in the second quarter given the tax credit expiration." The SPDR S&P Homebuilders ETF was down more than 1% at last check Wednesday.
Copyright © 2010 MarketWatch, Inc.
Copyright © 2010 MarketWatch, Inc.
Monday, July 26, 2010
Pace of Orlando home sales remains strong in June
(July 12, 2010 – Orlando, FL) Strong homebuyer demand continued in June, elevating the level of home sales and increasing the area’s month-over-month median sales price for the sixth consecutive month. Members of the Orlando Regional REALTOR® Association reported completed sales on 2,834 homes in June, which is a 27.66 percent increase over the June 2009 mark of 2,220.
The number of new contracts filed in June 2010 (3,736) represents an increase of 1.36 percent more than were filed in June 2009 (3,686). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 33.13 percent more homes (9,625) under contract and awaiting closing in June of this year than in June of last year (7,230).
And finally, the median price of all existing homes combined sold in June 2010 increased 0.87 percent to $116,000 from the $115,000 recorded in May 2010. June 2010’s median price is, however, a decrease of 11.57 percent compared to June 2009’s median of $131,175.
“Sales in June got a boost from the homebuyer tax credit, as buyers raced to close by the original deadline. The extended deadline of September 30, 2010 for closing tax credit eligible transactions will continue to increase sales in the next few months,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “Even with the expiration of the homebuyer tax credit, buying conditions remain favorable. Affordability, historically low interest rates, and a great selection of homes make this an excellent time to buy a home in Orlando.”
June’s $116,000 median price encompasses all types of sales situations and home types. The median price for “normal” sales is $175,000 (up 9.38 percent from last month’s $160,000). The median price for bank-owned sales is $77,500 (down 4.32 percent from last month’s $81,000), and the median price for short sales is $115,526 (up 4.78 percent from last month’s $110,000).
Of the 2,834 sales in June, 911 “normal” sales accounted for 32.15 percent of all sales, while 1,211 bank-owned and 712 short sales made up 67.85 percent.
The Orlando affordability index decreased to 226.29 percent in June. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,105 can qualify to purchase one of 12,178 homes in Orange and Seminole counties currently listed in the local multiple listing service for $262,496 or less.
First-time homebuyer affordability in June decreased to 160.92 percent. First-time buyers who earn the reported median income of $36,111 can qualify to purchase one of 8,204 homes in Orange and Seminole counties currently listed in the local multiple listing service for $158,664 or less.
Homes of all types spent an average of 85 days on the market before coming under contract in June 2010, and the average home sold for 95.33 percent of its listing price. In June 2009 those numbers were 104 and 93.83 percent, respectively. The area’s average interest rate decreased in June to 4.84 percent.
Inventory
There are currently 16,304 homes available for purchase through the MLS. Inventory increased by 341 homes from May 2010, which means that 341 more homes entered the market than left the market. The June 2010 inventory level is 8.56 percent lower than it was in June 2009 (17,831). The current pace of sales translates into 5.75 months of supply; June 2009 recorded 8.03 months of supply.
There are 12,353 single-family homes currently listed in the MLS, a number that is 509 (3.96 percent) less than in June of last year. Condos currently make up 2,568 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,383.
Condos and Town Homes/Duplexes/Villas
The sales of condos in the Orlando area increased by 48.54 percent in June when compared to June of 2009 and decreased by 4.99 percent compared to May of this year. To date, condo sales are up 85.20 percent (3,328 condos sold to date in 2010, compared to 1,797 by this time in 2009).
The most (326) condos in a single price category that changed hands in June were yet again in the $1 - $50,000 price range, which accounted for 53.53 percent of all condo sales.
Orlando homebuyers purchased 291 duplexes, town homes, and villas in June 2010, which is a 59.02 percent increase from June 2009 when 183 of these alternative housing types were purchased. Fifty duplexes, town homes, and villas sold in June 2010 fell into the $100,000 - $120,000 price categories.
The number of new contracts filed in June 2010 (3,736) represents an increase of 1.36 percent more than were filed in June 2009 (3,686). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 33.13 percent more homes (9,625) under contract and awaiting closing in June of this year than in June of last year (7,230).
And finally, the median price of all existing homes combined sold in June 2010 increased 0.87 percent to $116,000 from the $115,000 recorded in May 2010. June 2010’s median price is, however, a decrease of 11.57 percent compared to June 2009’s median of $131,175.
“Sales in June got a boost from the homebuyer tax credit, as buyers raced to close by the original deadline. The extended deadline of September 30, 2010 for closing tax credit eligible transactions will continue to increase sales in the next few months,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “Even with the expiration of the homebuyer tax credit, buying conditions remain favorable. Affordability, historically low interest rates, and a great selection of homes make this an excellent time to buy a home in Orlando.”
June’s $116,000 median price encompasses all types of sales situations and home types. The median price for “normal” sales is $175,000 (up 9.38 percent from last month’s $160,000). The median price for bank-owned sales is $77,500 (down 4.32 percent from last month’s $81,000), and the median price for short sales is $115,526 (up 4.78 percent from last month’s $110,000).
Of the 2,834 sales in June, 911 “normal” sales accounted for 32.15 percent of all sales, while 1,211 bank-owned and 712 short sales made up 67.85 percent.
The Orlando affordability index decreased to 226.29 percent in June. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,105 can qualify to purchase one of 12,178 homes in Orange and Seminole counties currently listed in the local multiple listing service for $262,496 or less.
First-time homebuyer affordability in June decreased to 160.92 percent. First-time buyers who earn the reported median income of $36,111 can qualify to purchase one of 8,204 homes in Orange and Seminole counties currently listed in the local multiple listing service for $158,664 or less.
Homes of all types spent an average of 85 days on the market before coming under contract in June 2010, and the average home sold for 95.33 percent of its listing price. In June 2009 those numbers were 104 and 93.83 percent, respectively. The area’s average interest rate decreased in June to 4.84 percent.
Inventory
There are currently 16,304 homes available for purchase through the MLS. Inventory increased by 341 homes from May 2010, which means that 341 more homes entered the market than left the market. The June 2010 inventory level is 8.56 percent lower than it was in June 2009 (17,831). The current pace of sales translates into 5.75 months of supply; June 2009 recorded 8.03 months of supply.
There are 12,353 single-family homes currently listed in the MLS, a number that is 509 (3.96 percent) less than in June of last year. Condos currently make up 2,568 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,383.
Condos and Town Homes/Duplexes/Villas
The sales of condos in the Orlando area increased by 48.54 percent in June when compared to June of 2009 and decreased by 4.99 percent compared to May of this year. To date, condo sales are up 85.20 percent (3,328 condos sold to date in 2010, compared to 1,797 by this time in 2009).
The most (326) condos in a single price category that changed hands in June were yet again in the $1 - $50,000 price range, which accounted for 53.53 percent of all condo sales.
Orlando homebuyers purchased 291 duplexes, town homes, and villas in June 2010, which is a 59.02 percent increase from June 2009 when 183 of these alternative housing types were purchased. Fifty duplexes, town homes, and villas sold in June 2010 fell into the $100,000 - $120,000 price categories.
Tuesday, July 6, 2010
Homebuyer Traffic Tumbled in May as First-Time Homebuyer Shopping Stalled
Homebuyer traffic nationwide tumbled in May, according to the latest
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions. Most of the decline was attributable to first-time homebuyers who
sharply reduced their home shopping last month.
The survey's first-time homebuyer traffic index, which measures home shopping activity on a scale of 1 to 100, registered an anemic 35.1 in May. This was down from an index of 63.5 in April. Since September 2009, the index had never been below 50, which represents a flat, or neutral, condition in home purchase activity.
“The decline of first-time homebuyer traffic is undoubtedly related to the expiration of the federal homebuyer tax credit,” stated Thomas Popik, research
director for Campbell Surveys. “Homebuyers had until April 30 to sign a purchase and sale agreement and receive the credit. Once we entered the month of May, the government stimulus disappeared.”
Thanks to its own tax break, California fared better than the country overall in
terms of first-time homebuyer activity, the survey found. The California index for first-time homebuyer traffic jumped to 63.1 in April, but still managed to stay relatively flat in May at 49.4, California enacted its own $10,000 credit for first-time homebuyers on May 1, the day after expiration of the federal tax credit.
Real estate agents responding to the survey commented on the decrease in homebuyer traffic in May, which ultimately will produce fewer closed transactions later in the summer. “The expiration of the tax credit caused a significant decline in buyer activity in May, with buyers who didn't get a suitable house in time for the tax credit opting to wait and see what happens to prices without the vailability of thell/Inside Mortgage tax credit. I expect to see a significant decrease in July's closed transactions,” commented an agent in Arizona.
“We have noticed a substantial decrease in activity since April 30th. There are a lot less Purchase and Sales Agreements being typed and other agents are complaining it's slow again,” stated an agent in Massachusetts. “I got no signed purchase agreements in May. I think the number of closed transactions in July will be very low,” added an agent in Indiana.
Traffic among current homeowners seeking to upsize or downsize also softened in the month of May, but to a lesser degree, the latest survey found. The nationwide index for current homebuyer traffic registered 45.5 in May, down from 55.2 in April. Expiration of the homebuyer tax credit for current homeowners was less of a factor because the tax credit dollar incentive was lower, both on an absolute basis and on a percent of transaction basis.
Interestingly, the proportion of closed transactions for first-time homebuyers also declined in May, furthering a trend first observed in April. In March, first-time homebuyers accounted for 48.2% of home purchases; by April their proportion had declined to 43.4%.
The trend continued in May, with first-time homebuyers accounting for 42.0% of home purchases. This decline is surprising since first-time homebuyers have until the end of June to close transactions and receive the federal tax credit.
A significant number of agents responding to the survey believe that transactions will rebound as homebuyers waiting out the end of the tax credit come back into a housing market that has fewer people bidding up the price of properties. “We saw a drop in activity for 3-4 weeks and now it is back to a more normal summer market. I anticipate that it will continue to increase and pick up after school gets out,” stated an agent in Minnesota.
“The first-time homebuyer tax credit, originally due to expire last November and then extended through the first half of 2010, appears to have depleted the pool of willing buyers earlier than expected,” commented Popik. “Whether this depletion is temporary or whether the market will rebound won’t be known until we measure traffic in June and July.”
Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market
Conditions. Most of the decline was attributable to first-time homebuyers who
sharply reduced their home shopping last month.
The survey's first-time homebuyer traffic index, which measures home shopping activity on a scale of 1 to 100, registered an anemic 35.1 in May. This was down from an index of 63.5 in April. Since September 2009, the index had never been below 50, which represents a flat, or neutral, condition in home purchase activity.
“The decline of first-time homebuyer traffic is undoubtedly related to the expiration of the federal homebuyer tax credit,” stated Thomas Popik, research
director for Campbell Surveys. “Homebuyers had until April 30 to sign a purchase and sale agreement and receive the credit. Once we entered the month of May, the government stimulus disappeared.”
Thanks to its own tax break, California fared better than the country overall in
terms of first-time homebuyer activity, the survey found. The California index for first-time homebuyer traffic jumped to 63.1 in April, but still managed to stay relatively flat in May at 49.4, California enacted its own $10,000 credit for first-time homebuyers on May 1, the day after expiration of the federal tax credit.
Real estate agents responding to the survey commented on the decrease in homebuyer traffic in May, which ultimately will produce fewer closed transactions later in the summer. “The expiration of the tax credit caused a significant decline in buyer activity in May, with buyers who didn't get a suitable house in time for the tax credit opting to wait and see what happens to prices without the vailability of thell/Inside Mortgage tax credit. I expect to see a significant decrease in July's closed transactions,” commented an agent in Arizona.
“We have noticed a substantial decrease in activity since April 30th. There are a lot less Purchase and Sales Agreements being typed and other agents are complaining it's slow again,” stated an agent in Massachusetts. “I got no signed purchase agreements in May. I think the number of closed transactions in July will be very low,” added an agent in Indiana.
Traffic among current homeowners seeking to upsize or downsize also softened in the month of May, but to a lesser degree, the latest survey found. The nationwide index for current homebuyer traffic registered 45.5 in May, down from 55.2 in April. Expiration of the homebuyer tax credit for current homeowners was less of a factor because the tax credit dollar incentive was lower, both on an absolute basis and on a percent of transaction basis.
Interestingly, the proportion of closed transactions for first-time homebuyers also declined in May, furthering a trend first observed in April. In March, first-time homebuyers accounted for 48.2% of home purchases; by April their proportion had declined to 43.4%.
The trend continued in May, with first-time homebuyers accounting for 42.0% of home purchases. This decline is surprising since first-time homebuyers have until the end of June to close transactions and receive the federal tax credit.
A significant number of agents responding to the survey believe that transactions will rebound as homebuyers waiting out the end of the tax credit come back into a housing market that has fewer people bidding up the price of properties. “We saw a drop in activity for 3-4 weeks and now it is back to a more normal summer market. I anticipate that it will continue to increase and pick up after school gets out,” stated an agent in Minnesota.
“The first-time homebuyer tax credit, originally due to expire last November and then extended through the first half of 2010, appears to have depleted the pool of willing buyers earlier than expected,” commented Popik. “Whether this depletion is temporary or whether the market will rebound won’t be known until we measure traffic in June and July.”
Friday, June 25, 2010
Orlando Homes Sales, stalling in Congress, What effect in Housing Indicators
Homebuyer tax credit creates a ripple effect in housing indicators
(June 11, 2010 – Orlando, FL) Across-the-board increases in sales, new contracts, and pending sales together reflect the broad impact that the homebuyer tax credit and favorable affordability conditions are having on the Orlando housing market. In addition, the area’s month-over-month median sales price has increased for the fifth consecutive month.
Members of the Orlando Regional REALTOR® Association reported completed sales on 2,605 homes in May, which is a 38.42 percent increase over the May 2009 mark of 1,882.
The number of new contracts filed in May 2010 (3,669) represents an increase of 6.19 percent more than were filed in May 2009 (3,455). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 56.76 percent more homes (10,351) under contract and awaiting closing in May of this year than in May of last year (6,603).
And finally, the median price of all existing homes combined sold in May 2010 increased 0.33 percent to $115,380 from the $115,000 recorded in April 2010. May 2010’s median price is, however, a decrease of 11.25 percent compared to May 2009’s median of $130,000.
“The upswing in May housing sales was expected because of the tax credit,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “No doubt there will be some fallback in new contracts in the months to come due to its expiration, but other factors are also affecting the market.”
“Nationwide, the homebuyer tax credit brought close to 1 million additional buyers into the market,” says Gallagher. In Orlando, those new buyers have helped stimulate the trade-up market and have significantly improved Orlando’s inventory,” says Gallagher
May’s $115,380 median price encompasses all types of sales situations and home types. The median price for “normal” sales is $160,000. The median price for bank-owned sales is $81,800 (up 12.52 percent from last month’s $72,700), and the median price for short sales is $110,000 (down 4.35 percent from last month’s $115,000).
Of the 2,605 sales in May, 921 “normal” sales accounted for 35.36 percent of all sales, while 1,091 bank-owned and 593 short sales made up 64.64 percent.
The Orlando affordability index increased to 225.86 percent in May. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,048 can qualify to purchase one of 11,767 homes in Orange and Seminole counties currently listed in the local multiple listing service for $260,594 or less.
First-time homebuyer affordability in May increased to 160.61 percent. First-time buyers who earn the reported median income of $36,073 can qualify to purchase one of 7,762 homes in Orange and Seminole counties currently listed in the local multiple listing service for $157,515 or less.
Homes of all types spent an average of 85 days on the market before coming under contract in May 2010, and the average home sold for 94.58 percent of its listing price. In May 2009 those numbers were 103 and 94.26 percent, respectively. The area’s average interest rate decreased in May to 4.89 percent.
Inventory
There are currently 15,963 homes available for purchase through the MLS. Inventory increased by 197 homes from April 2010, which means that 197 more homes entered the market than left the market. The May 2010 inventory level is 16.52 percent lower than it was in May 2009 (19,123). The current pace of sales translates into 6.13 months of supply; May 2009 recorded 10.16 months of supply.
There are 11,992 single-family homes currently listed in the MLS, a number that is 1,742 (12.68 percent) less than in May of last year. Condos currently make up 2,635 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,336.
Condos and Town Homes/Duplexes/Villas
May when compared to May of 2009 and decreased by 1.00 percent compared to April of this year. To date, condo sales are up 92.50 percent (2,670 condos sold to date in 2010, compared to 1,387 by this time in 2009).
The most (325) condos in a single price category that changed hands in May were yet again in the $1 - $50,000 price range, which accounted for 54.90 percent of all condo sales.
Orlando homebuyers purchased 230 duplexes, town homes, and villas in May 2010, which is a 40.24 percent increase from May 2009 when 164 of these alternative housing types were purchased. Forty-seven duplexes, town homes, and villas sold in May 2010 fell into the $100,000 - $120,000 price categories.
MSA Numbers
Sales of existing homes within the entire Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in May were up by 26.61 percent when compared to May of 2009. Throughout the MSA, 3,145 homes were sold in May 2010 compared with 2,484 in May 2009.
To date, sales throughout the MSA are 41.26 percent above this time in 2009 with 14,252 homes exchanging hands compared to 10,089. Each individual county’s year-to-date sales comparisons are as follows:
Lake: 30.18 percent above 2009 (1,898 homes sold to date in 2010 compared to 1,458 in 2009);
Orange: 44.14 percent above 2009 (7,713 homes sold to date in 2010 compared to 5,351 in 2009);
Osceola: 26.26 percent above 2009 (2,428 homes sold to date in 2010 compared to 1,923 in 2009); and
Seminole: 63.08 percent above 2009 (2,213 sold to date in 2010 compared to 1,357 in 2009).
For detailed statistical reports, please visit www.orlrealtor.com and click on “Housing Statistics” on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association or its Multiple Listing Service (MLS). Neither the association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.
ORRA REALTOR® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.
Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any Realtor® association, not just members of ORRA.
(June 11, 2010 – Orlando, FL) Across-the-board increases in sales, new contracts, and pending sales together reflect the broad impact that the homebuyer tax credit and favorable affordability conditions are having on the Orlando housing market. In addition, the area’s month-over-month median sales price has increased for the fifth consecutive month.
Members of the Orlando Regional REALTOR® Association reported completed sales on 2,605 homes in May, which is a 38.42 percent increase over the May 2009 mark of 1,882.
The number of new contracts filed in May 2010 (3,669) represents an increase of 6.19 percent more than were filed in May 2009 (3,455). The area’s pending sales statistic — also an indicator of future sales activity – is likewise remaining at a record high with 56.76 percent more homes (10,351) under contract and awaiting closing in May of this year than in May of last year (6,603).
And finally, the median price of all existing homes combined sold in May 2010 increased 0.33 percent to $115,380 from the $115,000 recorded in April 2010. May 2010’s median price is, however, a decrease of 11.25 percent compared to May 2009’s median of $130,000.
“The upswing in May housing sales was expected because of the tax credit,” explains ORRA Chairman of the Board Kathleen Gallagher McIver, RE/MAX Town & Country Realty. “No doubt there will be some fallback in new contracts in the months to come due to its expiration, but other factors are also affecting the market.”
“Nationwide, the homebuyer tax credit brought close to 1 million additional buyers into the market,” says Gallagher. In Orlando, those new buyers have helped stimulate the trade-up market and have significantly improved Orlando’s inventory,” says Gallagher
May’s $115,380 median price encompasses all types of sales situations and home types. The median price for “normal” sales is $160,000. The median price for bank-owned sales is $81,800 (up 12.52 percent from last month’s $72,700), and the median price for short sales is $110,000 (down 4.35 percent from last month’s $115,000).
Of the 2,605 sales in May, 921 “normal” sales accounted for 35.36 percent of all sales, while 1,091 bank-owned and 593 short sales made up 64.64 percent.
The Orlando affordability index increased to 225.86 percent in May. (An affordability index of 99 percent means that buyers earning the state-reported median income are 1 percent short of the income necessary to purchase a median-priced home. Conversely, an affordability index that is over 100 means that median-income earners make more than is necessary to qualify for a median-priced home.) Buyers who earn the reported median income of $53,048 can qualify to purchase one of 11,767 homes in Orange and Seminole counties currently listed in the local multiple listing service for $260,594 or less.
First-time homebuyer affordability in May increased to 160.61 percent. First-time buyers who earn the reported median income of $36,073 can qualify to purchase one of 7,762 homes in Orange and Seminole counties currently listed in the local multiple listing service for $157,515 or less.
Homes of all types spent an average of 85 days on the market before coming under contract in May 2010, and the average home sold for 94.58 percent of its listing price. In May 2009 those numbers were 103 and 94.26 percent, respectively. The area’s average interest rate decreased in May to 4.89 percent.
Inventory
There are currently 15,963 homes available for purchase through the MLS. Inventory increased by 197 homes from April 2010, which means that 197 more homes entered the market than left the market. The May 2010 inventory level is 16.52 percent lower than it was in May 2009 (19,123). The current pace of sales translates into 6.13 months of supply; May 2009 recorded 10.16 months of supply.
There are 11,992 single-family homes currently listed in the MLS, a number that is 1,742 (12.68 percent) less than in May of last year. Condos currently make up 2,635 offerings in the MLS, while duplexes/town homes/villas make up the remaining 1,336.
Condos and Town Homes/Duplexes/Villas
May when compared to May of 2009 and decreased by 1.00 percent compared to April of this year. To date, condo sales are up 92.50 percent (2,670 condos sold to date in 2010, compared to 1,387 by this time in 2009).
The most (325) condos in a single price category that changed hands in May were yet again in the $1 - $50,000 price range, which accounted for 54.90 percent of all condo sales.
Orlando homebuyers purchased 230 duplexes, town homes, and villas in May 2010, which is a 40.24 percent increase from May 2009 when 164 of these alternative housing types were purchased. Forty-seven duplexes, town homes, and villas sold in May 2010 fell into the $100,000 - $120,000 price categories.
MSA Numbers
Sales of existing homes within the entire Orlando MSA (Lake, Orange, Osceola, and Seminole counties) in May were up by 26.61 percent when compared to May of 2009. Throughout the MSA, 3,145 homes were sold in May 2010 compared with 2,484 in May 2009.
To date, sales throughout the MSA are 41.26 percent above this time in 2009 with 14,252 homes exchanging hands compared to 10,089. Each individual county’s year-to-date sales comparisons are as follows:
Lake: 30.18 percent above 2009 (1,898 homes sold to date in 2010 compared to 1,458 in 2009);
Orange: 44.14 percent above 2009 (7,713 homes sold to date in 2010 compared to 5,351 in 2009);
Osceola: 26.26 percent above 2009 (2,428 homes sold to date in 2010 compared to 1,923 in 2009); and
Seminole: 63.08 percent above 2009 (2,213 sold to date in 2010 compared to 1,357 in 2009).
For detailed statistical reports, please visit www.orlrealtor.com and click on “Housing Statistics” on the top menu bar. This representation is based in whole or in part on data supplied by the Orlando Regional REALTOR® Association or its Multiple Listing Service (MLS). Neither the association nor its MLS guarantees or is in any way responsible for its accuracy. Data maintained by the association or its MLS may not reflect all real estate activity in the market. Due to late closings, an adjustment is necessary to record those closings posted after our reporting date.
ORRA REALTOR® sales, referred to as the core market, represent all sales by members of the Orlando Regional REALTOR® Association, not necessarily those sales strictly in Orange and Seminole counties. Note that statistics released each month may be revised in the future as new data is received.
Orlando MSA numbers reflect sales of homes located in Orange, Seminole, Osceola, and Lake counties by members of any Realtor® association, not just members of ORRA.
Think the Gulf Spill Is Bad? Wait Until the Next Disaster
by Robert Kiyosaki
Tuesday, June 22, 2010
The world knows BP is a disaster, a monster of a disaster. Every time a TV news station shows oil gushing from a broken pipe -- one mile below the ocean’s surface -- the audience feels sick. Scenes of oil-soaked pelicans struggling for life angers and saddens us. The financial losses endured by small businesses and fishermen cannot be imagined, let alone conveyed by the media interviews alone. BP is a disaster whose scope is beyond comprehension.
I was in England this month when President Barack Obama blamed and criticized BP for this tragedy. His criticism sparked the anger of the English. Politicians wanted him to tone it down, to be more careful in his choice of words. English Prime Minister David Cameron told Obama “not to go after BP for the sake of it.” Richard Branson said he was “kicking a company when it was on their knees.” Their concern was not for the environment or those suffering the ravages of this disaster. Their concern was for the pensioners who are counting on BP for a secure retirement
On June 17, the UK’s Daily Mail ran a headline screaming, “Bullied Into a £13 Cave-In." Brits are angry with Obama for pressuring BP to suspend dividend payments and set aside $20 billion for the clean up. Obama’s strong-arm position has affected British pensioners, who own 40% of BP, as well as American pension funds that own 39%. In other words, the economic damage of BP goes far beyond the Gulf. The damage is spreading to pensions, pensioners, and portfolios all around the world.
Ground Zero for the Next Disaster
While in London, I decided to go to dinner at London’s Canary Wharf, ground zero for the next BP. Only a few years ago, Canary Wharf was one of the centers of the financial universe. Condo prices were sky high, offices were packed, and high-paid bankers filled Canary Wharf with wealth and excitement. Today Canary Wharf seems to be dying. It has lost its vibrancy. Many restaurants and offices were nearly empty and there were few lights to be seen in those once high-priced condos.
Canary Wharf will be the next BP, and its BP stands for Bomb Production. Canary Wharf is much like AIG, a factory for exotic financial products known as derivatives. The problem is that most people do not know what these murky and mysterious products are -- and that includes the people who make or buy them. It’s why Warren Buffett has called derivatives “weapons of mass financial destruction.” That is how powerful they are.
Back in 1966, when I was a student training to be a ship’s officer, my ship carried bombs from California to Vietnam. During World War II, a ship exploded while loading bombs at Port Chicago, California, the port where the bombs were loaded onto ships. The explosion flattened everything for miles. It is said that the ship’s anchor, which weighed tons, was found more than 60 miles away. Derivatives -- financial bombs -- have the same power if they accidently detonate inside a bank’s balance sheet.
Financial Bombs
The subprime disaster was a result of financial bombs -- derivatives -- exploding in financial institutions such as AIG and Lehman Brothers, as well as banks and financial institution throughout the world. After the bombs AIG manufactured exploded, AIG received $181 billion in taxpayer funding and immediately sent $11.9 billion to France’s Societe Generale, $11.8 to Deutsche Bank, and $8.5 billion to Barclays Bank of Britain. U.S. taxpayer money was going to bail out banks around the world. During the last three months of 2008, AIG was losing more than $27 million an hour. That is how powerful these derivatives can be. The problem I see is this: There are many more such bombs still sitting in balance sheets all over the world.
Military bombs are classified by weight such as 500, 750, and 1,000 pounds, while financial bombs have interesting labels such as CDO (collateralized debt obligations), ABS (asset backed securities), and CDS (credit default swaps). While they sound exotic and sophisticated, when put in everyday language, a CDO is simply debt sold as an asset. And CDS, or swaps, are simply a form of insurance. Since the insurance industry is strictly regulated and the bomb factories producing CDS did not want to comply with insurance industry regulations, they simply called them “swaps,” rather than insurance.
To make matters worse, rating agencies such as Moody’s and S&P (and even Fed Chairman Alan Greenspan) blessed these financial bombs as safe, sound, and good for you. It was almost as good as the pope blessing these products. In 2007 the subprime boom busted, and we know what happened from there.
The problem is that approximately $700 trillion of these financial time bombs are still in the system. While people watch the BP disaster in the Gulf, few people are aware of the other BP -- the financial bomb production -- that is still going on. If this derivative market begins to collapse, we will see another disaster.
Most of us know there is not enough money in the world to fully clean up the Gulf. The same is true with the $700 trillion derivatives market. If just 1% of the $700 trillion derivatives market goes bust, that is a $7 trillion disaster. The entire U.S. economy is only $14 trillion annually. A 10% failure, equating to $70 trillion, would probably bring down the world economy. As with the BP Gulf disaster, there is not enough money in the world to clean up the next disaster.
Could It Happen?
Could such a financial disaster happen? The answer is “Yes.” In fact, just as President Obama pressured BP into doing the “right thing,” so is he pressuring the financial markets to do the right thing. The president and our congressional leaders are pushing through financial reform legislation. My concern is that, if not handled delicately, it is this financial reform that will set off the derivative time bomb -- the next BP.
Currently, derivatives are traded over-the-counter. This mean derivatives are uncontrolled, unregulated, and unsupervised. Proposed financial reform legislation is pushing to have derivatives traded through an exchange. This will bring in greater transparency and controls. My concern is, when this happens, the change to an exchange system will reveal fraud and failures we do not yet know about today. It will be like turning on the light and watching the cockroaches (bankers) run for cover.
While it is commendable that President Obama hold the rich and powerful accountable, I wonder what the price will be? And how many BPs can we afford?
Tuesday, June 22, 2010
The world knows BP is a disaster, a monster of a disaster. Every time a TV news station shows oil gushing from a broken pipe -- one mile below the ocean’s surface -- the audience feels sick. Scenes of oil-soaked pelicans struggling for life angers and saddens us. The financial losses endured by small businesses and fishermen cannot be imagined, let alone conveyed by the media interviews alone. BP is a disaster whose scope is beyond comprehension.
I was in England this month when President Barack Obama blamed and criticized BP for this tragedy. His criticism sparked the anger of the English. Politicians wanted him to tone it down, to be more careful in his choice of words. English Prime Minister David Cameron told Obama “not to go after BP for the sake of it.” Richard Branson said he was “kicking a company when it was on their knees.” Their concern was not for the environment or those suffering the ravages of this disaster. Their concern was for the pensioners who are counting on BP for a secure retirement
On June 17, the UK’s Daily Mail ran a headline screaming, “Bullied Into a £13 Cave-In." Brits are angry with Obama for pressuring BP to suspend dividend payments and set aside $20 billion for the clean up. Obama’s strong-arm position has affected British pensioners, who own 40% of BP, as well as American pension funds that own 39%. In other words, the economic damage of BP goes far beyond the Gulf. The damage is spreading to pensions, pensioners, and portfolios all around the world.
Ground Zero for the Next Disaster
While in London, I decided to go to dinner at London’s Canary Wharf, ground zero for the next BP. Only a few years ago, Canary Wharf was one of the centers of the financial universe. Condo prices were sky high, offices were packed, and high-paid bankers filled Canary Wharf with wealth and excitement. Today Canary Wharf seems to be dying. It has lost its vibrancy. Many restaurants and offices were nearly empty and there were few lights to be seen in those once high-priced condos.
Canary Wharf will be the next BP, and its BP stands for Bomb Production. Canary Wharf is much like AIG, a factory for exotic financial products known as derivatives. The problem is that most people do not know what these murky and mysterious products are -- and that includes the people who make or buy them. It’s why Warren Buffett has called derivatives “weapons of mass financial destruction.” That is how powerful they are.
Back in 1966, when I was a student training to be a ship’s officer, my ship carried bombs from California to Vietnam. During World War II, a ship exploded while loading bombs at Port Chicago, California, the port where the bombs were loaded onto ships. The explosion flattened everything for miles. It is said that the ship’s anchor, which weighed tons, was found more than 60 miles away. Derivatives -- financial bombs -- have the same power if they accidently detonate inside a bank’s balance sheet.
Financial Bombs
The subprime disaster was a result of financial bombs -- derivatives -- exploding in financial institutions such as AIG and Lehman Brothers, as well as banks and financial institution throughout the world. After the bombs AIG manufactured exploded, AIG received $181 billion in taxpayer funding and immediately sent $11.9 billion to France’s Societe Generale, $11.8 to Deutsche Bank, and $8.5 billion to Barclays Bank of Britain. U.S. taxpayer money was going to bail out banks around the world. During the last three months of 2008, AIG was losing more than $27 million an hour. That is how powerful these derivatives can be. The problem I see is this: There are many more such bombs still sitting in balance sheets all over the world.
Military bombs are classified by weight such as 500, 750, and 1,000 pounds, while financial bombs have interesting labels such as CDO (collateralized debt obligations), ABS (asset backed securities), and CDS (credit default swaps). While they sound exotic and sophisticated, when put in everyday language, a CDO is simply debt sold as an asset. And CDS, or swaps, are simply a form of insurance. Since the insurance industry is strictly regulated and the bomb factories producing CDS did not want to comply with insurance industry regulations, they simply called them “swaps,” rather than insurance.
To make matters worse, rating agencies such as Moody’s and S&P (and even Fed Chairman Alan Greenspan) blessed these financial bombs as safe, sound, and good for you. It was almost as good as the pope blessing these products. In 2007 the subprime boom busted, and we know what happened from there.
The problem is that approximately $700 trillion of these financial time bombs are still in the system. While people watch the BP disaster in the Gulf, few people are aware of the other BP -- the financial bomb production -- that is still going on. If this derivative market begins to collapse, we will see another disaster.
Most of us know there is not enough money in the world to fully clean up the Gulf. The same is true with the $700 trillion derivatives market. If just 1% of the $700 trillion derivatives market goes bust, that is a $7 trillion disaster. The entire U.S. economy is only $14 trillion annually. A 10% failure, equating to $70 trillion, would probably bring down the world economy. As with the BP Gulf disaster, there is not enough money in the world to clean up the next disaster.
Could It Happen?
Could such a financial disaster happen? The answer is “Yes.” In fact, just as President Obama pressured BP into doing the “right thing,” so is he pressuring the financial markets to do the right thing. The president and our congressional leaders are pushing through financial reform legislation. My concern is that, if not handled delicately, it is this financial reform that will set off the derivative time bomb -- the next BP.
Currently, derivatives are traded over-the-counter. This mean derivatives are uncontrolled, unregulated, and unsupervised. Proposed financial reform legislation is pushing to have derivatives traded through an exchange. This will bring in greater transparency and controls. My concern is, when this happens, the change to an exchange system will reveal fraud and failures we do not yet know about today. It will be like turning on the light and watching the cockroaches (bankers) run for cover.
While it is commendable that President Obama hold the rich and powerful accountable, I wonder what the price will be? And how many BPs can we afford?
Tuesday, January 26, 2010
Gaining More From Short Sale
The Process on real estate short-selling varies from one State to the other. However, the purpose of purchasing and short sale for agents or Investors does not. The reason that agents and investors play the real estate game is for the potential of gain. The chance to invest in a market on their own. Like a stock broker to stock, the average man can become the next real estate guru
The real estate business can be a lucrative investment for anybody. Knowing the ins and outs of the business will enable a higher rate of success and greater amount of financial gains. This can be a big disappointment for most people who involve themselves in this business without much research on the proper and legal proceedings that are involved in the real estate business. Even with the complicated process on short sales in real estate, it is still known to be among the very good ways of gaining real estate wealth. With the profitability of getting involved in the short sale business, secrets have been discovered and practiced by experts in the real estate's short sale sector.
Since the competition is huge in this very promising business, most of these secrets are hidden and not often shared openly to other agents. For a rookie, seeing all the frustration and headache the pre-foreclosure and short sale process brings can be intimidating. You may reach the brink of giving up on and admitting to failure and raising the white flag in real estate selling. However, you may be giving up a future of pleasure and financial enjoyment. This does not need to be the case; we have developed tools for you for your continuous venture in real estate.
You have vested a lot already, from the education, licensing and financial investments from the buying, to the legal process and renovations. This is not a great time for you to give up. We do not want you to give up, either. There are people like us that are not selfish on the information, we also want you to be successful and learn the expert way of the trade.
Inflated initial investment and expensive renovations and repair of the procured pre-foreclosed property will mean that you will end with a lower profit. Mis-management of the essential parts of buying and selling real estate in this market can be any real estate investor’s downfall. Not having an exit strategy in place prior to buying the home is another downfall of the real estate agent or investor. However having a system in place, financing with Creative Alternative Options is one of the many keys to the gates of wisdom.
The real estate business can be a lucrative investment for anybody. Knowing the ins and outs of the business will enable a higher rate of success and greater amount of financial gains. This can be a big disappointment for most people who involve themselves in this business without much research on the proper and legal proceedings that are involved in the real estate business. Even with the complicated process on short sales in real estate, it is still known to be among the very good ways of gaining real estate wealth. With the profitability of getting involved in the short sale business, secrets have been discovered and practiced by experts in the real estate's short sale sector.
Since the competition is huge in this very promising business, most of these secrets are hidden and not often shared openly to other agents. For a rookie, seeing all the frustration and headache the pre-foreclosure and short sale process brings can be intimidating. You may reach the brink of giving up on and admitting to failure and raising the white flag in real estate selling. However, you may be giving up a future of pleasure and financial enjoyment. This does not need to be the case; we have developed tools for you for your continuous venture in real estate.
You have vested a lot already, from the education, licensing and financial investments from the buying, to the legal process and renovations. This is not a great time for you to give up. We do not want you to give up, either. There are people like us that are not selfish on the information, we also want you to be successful and learn the expert way of the trade.
Inflated initial investment and expensive renovations and repair of the procured pre-foreclosed property will mean that you will end with a lower profit. Mis-management of the essential parts of buying and selling real estate in this market can be any real estate investor’s downfall. Not having an exit strategy in place prior to buying the home is another downfall of the real estate agent or investor. However having a system in place, financing with Creative Alternative Options is one of the many keys to the gates of wisdom.
Friday, January 8, 2010
Providing Help to Homowners by Handling Short Sales of Properties
Providing Help to Homeowners by Handling Short Sales of Properties
A home seller who owes any lender a huge amount of money that may be more than their property's value has no choice other than to negotiate a "Short Sale" with their lender. Why would a bank accept a "Short Sale"? Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.
When a "Short Sale" is negotiated with the lender, it means that original homeowner allows the property to be sold at or below market value. With the approval of the lender, the proceeds of the sale will be accepted as payment in full of the mortgage, even if the sales price is lower than existing mortgage. However, on the lender's part they are not allowed to negotiate payoffs that are discounted.
The Realty Factor, Inc. has 19 years of experience, education, and a full understanding of the real estate market. To learn and be aware of the procedure in this kind of real estate transaction, not only are the mortgagee, real estate broker educated in the area, but the homeowner themselves should understand the process.
As a "Short Sale" specialist in the Orlando market: The seller will need to prepare a financial package for submission to the short sale bank/lender. Each lender has its own guidelines but -- the basic procedure is similar from bank to bank. The seller's short sale package will most likely consist of:
•Letter of authorization, which lets The Realty Factor, Inc. negotiate with the bank direct.
•HUD-1 or preliminary net sheet
•Completed financial statement
•Seller's hardship letter
•2 years of tax returns
•2 years of W-2s
•Recent payroll stubs
•Last 2 months of bank statements
•Comparative market analysis or list of recent comparable sales, prepared by us (The Realty Factor, Inc.)
As a "Short Sale" Specialist in the real estate business I will help to sell your home and save your credit. To offer anything else would be an injustice in light of your financial crisis.
Loan Modification are nice “IF” you can get the right deal, however, think of this: If your house is worth 50% of the value of the home next door (ex: owe $250,000 house now worth $150,000) is it worth paying on and waiting 20 years to have your value come back, or is it better to divest yourself of this upside down situation, go across the street and buy that house at 50%?
Troy S. Blanchard
Realtor/Consultant
The Realty Factor, Inc.
www.Orlando-Today.com
FREE 30 Minute Consultation on Wealth Creation through Real Estate Investments.
Private Funding, Self Directed IRA’s, Equity Redistribution,
1031 Exchanges, Business Development and Sales, Investor Representation, Equity Partnerships, Asset Protection, Note Broker, Investor
Serving Florida
Since 1990
407-466-7335
A home seller who owes any lender a huge amount of money that may be more than their property's value has no choice other than to negotiate a "Short Sale" with their lender. Why would a bank accept a "Short Sale"? Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.
When a "Short Sale" is negotiated with the lender, it means that original homeowner allows the property to be sold at or below market value. With the approval of the lender, the proceeds of the sale will be accepted as payment in full of the mortgage, even if the sales price is lower than existing mortgage. However, on the lender's part they are not allowed to negotiate payoffs that are discounted.
The Realty Factor, Inc. has 19 years of experience, education, and a full understanding of the real estate market. To learn and be aware of the procedure in this kind of real estate transaction, not only are the mortgagee, real estate broker educated in the area, but the homeowner themselves should understand the process.
As a "Short Sale" specialist in the Orlando market: The seller will need to prepare a financial package for submission to the short sale bank/lender. Each lender has its own guidelines but -- the basic procedure is similar from bank to bank. The seller's short sale package will most likely consist of:
•Letter of authorization, which lets The Realty Factor, Inc. negotiate with the bank direct.
•HUD-1 or preliminary net sheet
•Completed financial statement
•Seller's hardship letter
•2 years of tax returns
•2 years of W-2s
•Recent payroll stubs
•Last 2 months of bank statements
•Comparative market analysis or list of recent comparable sales, prepared by us (The Realty Factor, Inc.)
As a "Short Sale" Specialist in the real estate business I will help to sell your home and save your credit. To offer anything else would be an injustice in light of your financial crisis.
Loan Modification are nice “IF” you can get the right deal, however, think of this: If your house is worth 50% of the value of the home next door (ex: owe $250,000 house now worth $150,000) is it worth paying on and waiting 20 years to have your value come back, or is it better to divest yourself of this upside down situation, go across the street and buy that house at 50%?
Troy S. Blanchard
Realtor/Consultant
The Realty Factor, Inc.
www.Orlando-Today.com
FREE 30 Minute Consultation on Wealth Creation through Real Estate Investments.
Private Funding, Self Directed IRA’s, Equity Redistribution,
1031 Exchanges, Business Development and Sales, Investor Representation, Equity Partnerships, Asset Protection, Note Broker, Investor
Serving Florida
Since 1990
407-466-7335
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