NYC Three Day Short Sale Success Summit

Three Day Real Estate Conference in NYC
Presented by Real Estate Scholar
Sponsored by State Farm

Educate yourself — Invest in your Future
Gain Insight…Get Motivated…Achieve your Goals…

What if you were given the golden opportunity to spend three days behind closed doors with some of the nation’s foremost real estate investing experts and pick their brains? Would you hop on the first plane, train, or automobile and get to NYC as fast as possible?!?!?! Of course you would! Click this link to register right now!
Starting on October 21 – a special day for women only!
Women in Real Estate One Day Conference – Thursday October 21, 2010
Hear from these amazing Power Brokers as they share their stories and teach you proven strategies on becoming successful in the real estate game. This special ONE TIME event is for women only! For the first time, an all female panel will teach an all female audience exactly how to be successful as a real estate investor.

• Savannah Ross
• Marilyn Kane
• Sabrina Kizzie
• Caroline Zebb

October 22 and 23, 2010 the boys join us for an amazing series on short sale investing with special guest speakers including:

• Jeff Watson
• Jerami King
• Greg Clement
• Duane Ortega
• Mr. L

Real estate investing is a tough business right now, and a lot of people are really struggling. Sabrina has put together a power team that will get you geared up for a great fourth quarter! Don’t let the naysayers drive you out of the marketplace when the deals are really getting good.

Thursday October 21, 2010 – Saturday October 21,2010
Doubletree Metropolitan Hotel New York City
569 Lexington Avenue
at 51st Street
New York, NY 10022

And as very special offer, you can buy your three-day pass here and receive a $70 discount!

Tax Credit Repayment & Other Market News of the Week

The biggest news in the real estate market over the past week is that more than half of the 1.8million homebuyers who claimed their tax credit on their 2009 tax returns may have to pay it back.

Roughly 950,000 of the 1.8million homebuyers who claimed the tax credit in their 2009 tax returns will have to pay it back, according to a report released by the Inspector General for Tax Administration. The homeowners who used the tax credit in their purchase were eligible for one of two different types of credits, and whether or not they have to pay their credit back depends on when they bought their home.

Those buyers who purchased their homes in 2008 will have to return their credit. When the tax credit was originally presented in that year, home buyers were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The money came in the form of a no-interest loan that had to be repaid within 15 years.

But when Congress extended the tax credit for 2009 (and into 2010), the credit was made in the form of a refund instead of a loan.

Now this may not seem as groundbreaking news for homebuyers (at least those who read the fine print), but the issue is that the IRS is having trouble separating some of the buyers who purchased in ’08 and ’09.

 According to the report, over 4% of the 1.8million tax credit homebuyers have wrong purchase dates recorded by the IRS. Furthermore, and more concerning, nearly 60,000 buyers were listed as purchasing their homes in 2008 (meaning they had to repay the credit) or had no purchase dates at all, rather than their correct 2009 purchase dates, which would free them of the obligation to pay it back.

In other market news of the week, it is revealed that banks are handing out almost twice as many loan modifications and the Obama administration’s Home Affordable Modification Program (HAMP) – be weary of this information, however. Many of these bank modifications do not offer the same benefits as the HAMP program. Banks have merely been waking up that foreclosure isn’t in their own interest (let’s hope the same emphasize is put into short sales!).

Finally, here is an interesting proposal by Keith Gumbinger, a leading mortgage expert, which I am just addressing as the “value gap coverage” plan. This housing market plan is actually to award those good homeowners, the ones who have kept up with mortgage payments even as their mortgage now is most likely worth more than the house they are paying. You can read about it here.

Short Sales & Loan Modifications: Simple Advice

Lenders are offering loan modifications in a number of ways — lowering the interest rate, extending the term, or maybe both. Some will add up all the missed payments and tack that amount back on to the principal of an extended loan. Others will waive all those missed interest payments. Even at a higher balance, the payments for a 35- or 40-year mortgage are often less than a lower amount amortized over 30 years. However, always look at the month-to-month payments: it makes no sense to require someone to make a payment that’s larger than the amount he or she can’t afford in the first place.

When addressing a short sale, lenders are slow to approve short sales for several reasons. One, they want to make sure that the sales price is not so far below the market for the area in question that the new buyer can’t turn right around and sell the place at a big profit.  If that’s the case, lenders want the money to go into their pockets, not those of some flip artist (be weary of this tactic if you are a short sale investor).  The banks also want to make sure the short sale is an arm’s length transaction as opposed to one in which the buyer is, for instance, a homeowner’s brother-in-law who could wind up getting a sweet deal at the bank’s expense.

At the end of the day, the lender’s decision is based on cold, hard mathematics. If it can make more by foreclosing on the borrower and putting the house back on the market than it can by allowing a short sale and getting back only a portion of what it originally lent, the choice is an easy one, at least for the lender. And just because an appraisal shows properties in that area only sell for, 200k lets say, doesn’t mean the bank will settle at that amount on a 350k loan. Whether it is foolishness or greed, many will, whether in a short sale or at foreclosure auction, tack on more to the appraised value in order to save their losses (even on a bad loan). This results in many bank-owned REO properties.

As Foreclosures Burden, Prevention Program is Losing Ground – New Government Program on the Way

Foreclosure notices rose again in July, up 3.6% (350,000 filings) from the month before. However, this number is down 9.7% from the same time last year.  According to RealtyTrac, this is the 17^th consecutive month with over 300,000 filings.

On the other side of the coin, bank repossessions (homes that did not sell at foreclosure auction) was at a near record number of 92,858, second only to May in which 93,777 homes were repossessed. Repossessions have posted gains (when compared to the same month last year) for 8 straight months now.

Reflecting the first half of the year, foreclosures are in an overall decline. Zillow.com reported that in the third quarter only 21.5% of all home loans are underwater, down 23.3% from the previous quarter.

While this number has dropped overall, over foreclosure filings climbed in over 75% nations metropolitan areas in the first half of this year. This number is more of a reflection now of unemployment rates as opposed to toxic mortgages (the previous number one cause), according to RealtyTrac spokesman Rick Sharga.

Home sales continue to decline following the end of the government’s homebuyer’s credit. The overall market has been shrinking for 9 months consecutively now.

Adding into the market freefall frenzy, the Obama administration’s Home Affordable Modification Program (HAMP), designed to make monthly mortgage payments more affordable by reducing eligible troubled homeowners’ monthly payments to no more than 31% of their pre-tax income. Nearly 52,000 delinquent borrowers were giving assistance by HAMP last month, but as of now nearly 13,000 have already dropped out of the program, with only 272 of them having paid off their mortgages. Analysts at Barclay’s Capital said last month said 60% of homeowners may ultimately re-default. HAMP has been criticized for being slow out of the gates and ultimately being too limited to help enough homeowners.

Next month, beginning September 7^th, homeowners can start applying for the FHA Short Refinance option. The program allows borrowers who owe more than their homes are worth to refinance into a Federal Housing Administration-backed loan, provided that they are current on their mortgages and their lender agrees to write off at least 10% of their principal balance. The initiative is open to those who do not currently have an FHA loan and who have a credit score of 500 or more. Considering many lenders might not be willing to just write of 10% of a mortgage loan principle, the long-term success of this program may not seem likely.

The Obama administration has done many things to help the housing market, through a variety of programs and incentives to keep interest rates low and the first-time homebuyer’s tax credit. But with unemployment rates on the rise, these are not proving to be enough to keep the housing market from collapsing.

Fed plans disclosure rules on mortgage payments & Treasury Department talks of leaving Fannie and Freddie (sort of)

Yesterday, the Federal Reserve issued a set of proposals for mortgages, including a measure that would require lenders to disclose to borrowers about what changes can occur to their mortgage payments over time.

The measure, which is an interim provision that would take effect on Jan. 30, 2011, hopes to make that borrowers are alerted to the risks of mortgage payment increases before they take out loans with variable rates or payments, such as adjustable-rate mortgages.

Lenders would be required to provide details to borrowers about what the maximum interest rate and payment would be during the first five years of their adjustable-rate mortgage, as well as a “worst case” example showing what the maximum rate and payment they could be required to pay. The lenders would also have to explain to potential borrowers that they cannot avoid these increases by refinancing their mortgage loans.

The Federal Reserve also proposed new consumer-protection regulations make sure that consumers receive new disclosures when they agree with their lender to modify key terms of a closed-end mortgage or in a reverse mortgage. This new proposal would ensure that homebuyers have time to review their loan disclosures before they pay any fees. Lenders would be required to refund the fees if they then decided to withdraw the application within three days of receiving disclosures.

Another rule seeking was present to protect mortgage borrowers from deceptive lending practices. For example, the rule prohibits a loan originator that receives compensation from the buyer to also receive compensation from the lender or another group involved. The Fed also has adopted final rules to ensure that borrowers receive a notice when their mortgage loan has been sold or transferred to another lender. This requirement has actually been effective since May 2009, when the Fed published interim rules based on the Helping Families Save Their Homes Act.

The new Federal Reserve measures come as the Obama administration prepares to address changes to the U.S. housing-finance system, with lawmakers on Capitol Hill arguing with each other and lobbyists over the future of mortgage-finance giants Fannie Mae and Freddie Mac. The idea is to scale down the government’s involvement with the mortgage market. Today these issues were addressed at a Treasury Department conference, but an exit strategy will not be presented until early next year.

The conference  is the first of many steps toward restructuring the mortgage market worth nearly $11 trillion. Mortgage giants Fannie Mae and Freddie Mac have cost the government more than $148 billion and rising so far. The mortgage giants profited billions during the housing market boom, only to burden the taxpayers with losses through bailouts when the housing market collapsed.

“We will not support a return to the system where private gains are subsidized by taxpayer losses,” Treasury Secretary Timothy Geithner said in a statement prepared for the conference.

Executives and mortgage experts are telling the Obama administration that that the government must stay in the business of backing U.S. mortgages even if Fannie and Freddie disappear someday.

“At the end of the day, the government will still have a very large role to play,” said Mark Zandi, chief economist at Moody’s Analytics and a panelist at the event. Others include mortgage executives from Bank of America Corp. and Wells Fargo & Co, plus Bill Gross, managing director of bond giant Pimco and Lewis Ranieri, one of the creators of mortgage bonds.

“A government guarantee is both a desirable and necessary component of the country’s housing finance system,” John Gibbons, a Wells Fargo & Co. executive vice president, wrote in a letter last month to the Treasury Department.

The new system could have Fannie and Freddie returned to private ownership or phased out completely. Them or their replacements would pay the government to insure their loans. So far, they have ensured that millions of Americans can get home loans even after the housing market collapse. Combined with the Federal Housing Administration and the Veterans Administration, they have backed about 90 percent of the loans made in the first half of this year, according to Inside Mortgage Finance magazine.

The concern is that for years these companies operated on their own, making billions in the housing market, although also while backing faulty loans. When the market collapsed, the taxpayers bailed them out. If they are saying they cannot survive on their own without the government providing the investors who have mortgage-back securities a guarantee to receive their money even if the borrowers default on their loans. It would appear that the desire by the bankers at this conference want the government to continue to coddle them well into the future.

The verbage may change, but the story remains the same: Fannie and Freddie backed by taxpayer’s dollars.

U.S. Housing Market Update: Worse than You Think

The economy is receding, the housing market isn’t moving and more distressed properties are appearing. Read on if you dare.

Altos Research, a California-based real estate data provider, has made a poor outlook of the housing market.  The company states that growlingly present inventory of distressed properties hanging over the housing market will keep home prices in a downwards trajectory for the remainder of this year. The company goes as far as to state that property values beginning in 2011 will be even lower than they were in 2009.

Altos Research followed market trends showing that inventory levels are indeed moving higher (meaning that houses are not moving off the market as fast as they are being put on) and the influx of “shadow inventory” (distressed properties) is beginning to show in the market. Scott Sambucci, Altos’ VP of data analytics, described the noticeable shift in a Webinar earlier this week, in what he called “a sign of market weakness.”

Data provided by Altos which was released as recently as January pointed to a steady decline in housing inventories over the previous 16 months, in both national and local markets. But Sambucci says that all changed after the first month of this year, and particularly post-tax credit stimulus. Since then, Altos has tracked a rapid divergence in inventory numbers vs. listings sold and absorbed. This means more properties are being place to be sold faster than they are being bought.

The result, he says, is going to be an extreme overhang of properties on the market going into 2011. Add to that the fact that the number of buyers is shrinking – whether due to tight credit, the declining homeownership rate, and more and more consumers being locked out of the market after a foreclosure, Altos’ projection is looking like an accurate picture of the coming future.

Altos Research provided its assessment to what they consider to be the most stable and unstable housing markets.  The San Francisco metro area topped the stable list, along with Las Vegas and D.C.  Unstable metros included Minneapolis , Denver , Chicago , and Phoenix .

Meanwhile, Fiserv Inc., a Wisconsin-based information technology firm is forecasting home prices to fall by nearly 5 percent more over the next 12 months. According to the Fiserv Case-Shiller Indexes, which covers trend data in 384 U.S. markets, they expect home prices nationally to fall by another 4.9 percent in the year ahead, as unemployment remains high, mortgage rates rise, and markets such as Florida , Arizona , and Nevada add even more distressed properties to the market.

“The stabilization of residential real estate markets will take many years as buyers and sellers try to find price levels that clear large inventories of vacant homes from the market,” – Fiserv’s chief economist David Stiff.

The AP’s studies aren’t showing anything to argue good for our housing market and economy. More than two-thirds of the nation’s 3,141 counties, and 37 of 50 states, endured more hardship in June than in May, the AP’s Economic Stress Index shows. The AP’s index calculates a score for each county and state from 1 to 100 based on unemployment, foreclosure and bankruptcy rates. A higher score indicates more economic stress. A county is considered stressed when its score is above 11. The AP’s index found the average county’s stress score in June was 10.5, up from 10.3 in May. About 42 percent of the nation’s counties were found to be stressed, also up 2% from the month prior.

The reversal of improvement reflects a distressed housing market and slowing economy.

Property Investment – Best Investment

Those that think security lies in the safe hands of retirement and social security benefits are in for a rude awakening. When thinking of investment the first thing that comes to mind is money: stocks, cds, etc. However, with the economy still recuperating from the recession, those investments wouldn’t be considered the smartest choices right now.

Real estate investment has remained, for those that are current with mortgages and able to invest, the most profitable investment through the recession. With the unfortunate increase of job loss through these last years in this economic struggle, foreclosure has escalated at a frightening and almost irreversible height. For homeowners in a position where they are laid off or are struck with an econimic crisis, payments may seem overwhelming to the point where continuing to own the property is hurting rather than helping their investment. However, the opportunity for those that are able to invest in property, become a landlord or rehabber, or invest in short sales as I have over the years, and particularly in a time where costs are so low, is NOW!

The best part of real estate investment  is as long as the home and residential area continue to improve the asset will not decrease, regardless of the real estate market. Preserving and renovating, yes costs money, however the pay off in the end will be much greater, when your property is ready to sell, and well over the market value.

As previously mentioned, becoming a landlord can help further your investment. Rent can be used as an extra source of income towards mortgage, property taxes, and maintenance/renovation of the property. Being selective, such as requesting no pets or non smokers can also make or break your property.

If a person is able to maintain the payments on a mortgage, property investment can also serve as a credit build up. Making payments on time help to build equity making it easier to get future loans.

Investing in real estate is all about making the right choices: location, maintenance and bona fide tenants. These are all factors that will play a role in appreciating rather than depreciating the value of your property, whether it be your home, somebody else’s home, or commercial property.

Sometimes making the right choice may need a bit of guidance, so be sure to be thorough in your research. Check out the property and make sure to always have an inspector approve it before any purchase is made.

Tips To Help Sell Your Wholesale Deal

I found some helpful tips while browsing Biggerpockets.com to help sell your wholesale deal, when selling almost feels impossible.

According to Stephani Davis:

• Price Too High: While this might seem obvious to some, it is a factor that is overlooked by many new wholesalers. While I’ll admit that I’ve seen some properties that I don’t think I could move even if I was giving them away, in most instances you can get rid of a property quickly by simply lowering the price. How far you will need to lower it will depend on what the active investors in your market are willing to pay, and this is something that should be learned before you start putting properties under contract.

• Marketing Your Deal:

If your property is priced right and it’s not selling, chances are, you haven’t done a good job of getting the word out about it. Once you get a deal under contract, your job as a wholesaler is to market the living crap out of it! If you’re serious about getting it sold, you should be doing everything on the following list (at the minimum) to find an end buyer:

*Send the deal to your buyers list (if you have one)
*Put ads up on the online classified sites every day
*Place signs around the property
*Pass out flyers at any REIA meetings in your area
*Contact other wholesalers about the deal to see if they will help you market it
*Call every For Rent sign in the area and see if the landlords would be interested in your deal

If after doing all of the above you still haven’t found an end buyer, chances are that it’s priced too high!

• Location, Location, Location: If your deal is located on a busy street, across from the neighborhood liquor store, or right next door to a cemetery or the railroad tracks, chances are you’re going to have a much harder time getting rid of it. This is something that you need to take into consideration when you’re running your numbers and formulating your offer. While it may seem like a great deal on paper, if the property is in a crappy location it’s going to decrease your chances of finding an end buyer for it.

• Major Repairs: While there are some rehabbers who have no problem tackling major projects, keep in mind that your pool of buyers will be much smaller if the rehab needed for your deal is an enormous undertaking. Just to give you an example- in my market (Tampa, FL), sinkholes are a common occurrence, and even though you can score some huge discounts on sinkhole properties, the number of investors who are willing to take on that type of project is very small.

• Funky or chopped up floor plans: Unfortunately, not every homeowner has the sense to hire a competent professional to do their remodeling for them, and instead elect to take matters into their own hands. The results, while often comical, can result in major problems when it comes time to resell the property. If, for example, you have to walk through four bedrooms to get to the one bathroom in the house, or if the kitchen has been relocated to the master bedroom (I’ve actually witnessed this), you’re going to have a much more difficult time finding an end buyer to take down the deal.

All of the points Stephani bringst up are very important to consider when selling any property, and should be considered before making any deals, but also keeping in mind that buyers are out seeking property in all kinds of markets. This information is extremely helpful and I believe is important to share with my fellow Wholesalers.

Leading Analyst Says Home Buying Conditions Are Best In 30 Years

According to real estate analyst John Burns, the best time to purchase property is NOW! While affordability has been consistently increasing in the last two years, it is now at the highest it’s been in the last 30 years. Burns believes the housing market is in the beginning stages of recovery and downside risk is very low. Burns also believes the market is approaching its next up cycle.

As mentioned in Nuwire.com: Three factors needed for such a transition include demand, supply and investment. With job demand strengthening, slowly but surely, so are renters acknowledging the benefits in buying, and although new home construction is at an all-time low, so are the mortgage rates and home prices making this a perfect time to invest in property.

As of July 2010, “only boxes that can be checked…are low mortgage rates and affordable homes,” the firm said today, adding that job growth is key to pushing recovery in the housing market forward.

Senate Approves Home Tax Credit Extension

Wednesday June 16th, the Senate approved the proposal to give homebuyers a 3 month extension to finish qualifying for tax incentives that boosted homesales this spring.

According to the Associated Press: The move by Senate Majority Leader Harry Reid would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Most in favor of the proposal (60-37) will only allow homebuyers that have already signed contracts to finish at the later date.

The Realtors group has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month. Many potential borrowers are unlikely to make the deadline.

“If Congress fails to act promptly, then prospective homebuyers might not get the benefit of the homebuyer tax credit, even though they have completed contracts,” the Realtors said a a letter to lawmakers.

The bill (HR 4213) still has to be voted on by the Senate and House, then signed by the President into law.

This is great news to me and a lot of the homebuyers I am currently working with, so make sure to check with your tax advisors for qualification.