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Real Estate News 10.09.2014

1. 5 things to consider before tapping your home for cash
“During the housing bust, many homeowners were cut off from a popular source of funds: their homes.”

2. Drop in jobless claims points to labor market strength
“(Reuters) – The number of Americans filing new claims for unemployment benefits fell last week to nearly its lowest level since before the 2007-09 recession, a sign of growing steam in the U.S. labor market.”

3. Southern California office leasing market boosted by job growth
“Job growth in Southern California finally produced a robust quarter of leasing for office landlords, who were able to fill long-vacant space and push up rents.”

4. Suit asks why U.S. bailout of AIG wasn’t more generous
“The trial pitting a fallen financial titan against an array of former high government luminaries provides a through-the-looking-glass view of the financial credit crisis of 2008 — a view that only makes sense on Wall Street.”

5. U.S. Mortgage Application Volume Up
“The average number of mortgage applications for the week ended Friday rose 3.8% from the week earlier, according to the Mortgage Bankers Association weekly survey.”

6. Why Getting a Mortgage Will Remain Hard for at Least 3 More Years
“NEW YORK (TheStreet) — Americans will likely have to wait at least three more years before it becomes any easier to get a mortgage.”

7. Rebirth of housing market calls for moving past Fannie and Freddie
“This fall marks the seventh anniversary of the federal government’s move to take conservatorship of Fannie Mae and Freddie Mac, and the nation should thank the government-sponsored enterprises (GSEs) for restoring confidence and liquidity in mortgage finance during a time of crisis. Without their intervention and involvement, our nation’s housing system would have fared far worse than what we experienced.”

8. Op-Ed: Loan File Size Increasing at ‘Alarming’ Rate
“Lenders are gathering an unprecedented number of required documents to originate mortgage loans and comply with new regulatory requirements. To be sure, the regulatory environment saps efficiency and profitability at the same time that loan volumes are falling.”

9. Real Estate Investment Up; Led by NYC–Again
“New York remains the world’s largest real estate investment market for the fourth consecutive year. Volumes there rose nearly 11 percent to $55.4 billion–7 percent of global market share–in the 12 months leading up to June. Second-place London, which registered $47.3 billion of investment, closed the gap on New York thanks to a 40.5 percent increase in activity over that year, becoming the largest global market for cross-border investors. With $35.5 billion in investment, Tokyo reclaimed the third position from Los Angeles ($33.1 billion), which dropped to fourth while San Francisco ranked fifth with $23.8 billion invested.”

10. Find out why West beats East in home price appreciation
“It used to be gunfighters would brag about being the fastest gun west of the Mississippi River, and now it’s all about home price growth.”

11. Auction.com launches Auction Finance to spur investor activity
“Seeking to expand on its pool of potential real estate buyers, Auction.com has created a new division to help commercial and residential real estate investors obtain financing.”

12. Freddie Mac: Mortgage rates drop near yearly lows
“Mortgage rates slightly fell back down following the Federal Reserve’s latest tapering announcement, dropping down near their yearly lows, Freddie Mac’s Primary Mortgage Market survey results showed.”

13. Mortgage applications for new homes flat in September
“Mortgage applications for new home purchases remained unchanged relative to the previous month, according to the Mortgage Bankers Association Builder Application Survey data for September 2014.”

14. Debt among youngest, oldest shifted dramatically in past decade
“A new TransUnion study found that the consumer loan wallet – the composition of loans that people typically carry – has materially changed for both the youngest and oldest segments of the population during the last decade.”

15. Freddie Mac Expands Into Small Apartment Mortgages
“Freddie Mac is building a business to originate small apartment loans, between $1 million and $5 million, as part of its mandate to support affordable housing.”

16. If Congress Won’t End GSE Conservatorship Soon, FHFA Can
“Last week, a D.C. District Court Judge struck down a lawsuit brought by shareholders in Fannie Mae and Freddie Mac who had been seeking to stop the government from taking the profits from the two agencies. The suit will be appealed, but setting aside the legal disputes for a moment, the U.S. government still has a big issue to confront: what to do about the two government-sponsored enterprises.”

17. Taper Tantrum Erased With Mortgage Yields at 16-Month Low
“In the market for U.S. mortgage bonds, it’s almost as if the turmoil that became known as the taper tantrum never happened.”

18. REGION: Housing boom targets ‘silver tsunami’
“The Inland region’s newest housing boom is being built on its oldest residents.”

19. REAL ESTATE: Slower gains predicted in 2015 for home sales, prices
“Reset, California.

That could be the theme of a real estate forecast that California Association of Realtors chief economist Leslie Appleton-Young delivered Tuesday for 2015, as the real estate industry takes the shape of a more traditional market.”

20. It’s easy to pay someone else’s property tax
“Anybody can pay anyone else’s property tax, and it’s easier than ever with the recently enhanced online system in San Diego County.”

21. Best College Towns for Buying Rentals, Flipping in 2014
“RealtyTrac has ranked the top 10 college towns for buying rental properties, and the top 10 college towns for flipping in 2014. For these rankings, RealtyTrac looked at public four-year universities with a total 2012 enrollment of 20,000 or more based on data from the National Center for Education Statistics and located in counties with an unemployment rate below the national average of 6.2 percent in June 2014.”

22. Boston Broker Sends Agents to Asia to Promote Local Real Estate
“I was interviewing Boston-area broker Tom Truong for an article spotlighting the Boston market for the August issue of RealtyTrac’s Housing News Report when he made this comment that took me a bit by surprise.”

23. L.A. and O.C. least affordable rental markets: Rental market is at odds with weak employment growth and weak income figures.
“It should come as no surprise that the L.A. and O.C. housing markets are the least affordable in the entire nation. That is right, even more unaffordable than San Francisco or New York. Why? Because even though New York and San Francisco have higher rental costs, people make more money. Should be common sense but it should be apparent that people in SoCal like stretching their budgets. It might be the Hollywood allure of “acting” rich instead of actually being wealthy. Fake it till you make it. Hence the broke older homeowners with their boomerang adult-children coming to live back home. Rents are paid by net income. There is no extra mortgage leverage that you can squeeze out of a rental payment. You either make the monthly payment or you don’t. And seeing this data simply confirms that many in SoCal would rather act the role of being rich instead of taking steps to being wealthy.”

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Real Estate News 2.21.14

Spotlight on economy: More home sales blues?
“Severely cold weather in January stopped many construction projects from breaking ground and slowed work on existing sites. The cold snap probably kept more house hunters indoors instead of making the rounds at open houses.”

$187B bailout now profitable. Surprised?
“U.S. taxpayers have recouped all of the $187 billion they gave mortgage giants Fannie Mae and Freddie Mac in one of the most expensive bailouts of the financial crisis.”

Housing: Top 10 most affordable small cities
“Latest from the Housing Opportunity Index from the National Association of Home Builders and Wells Fargo.”

Tech workers squeezing out renters in San Francisco, Seattle
“Low- and middle-income residents of San Francisco, Oakland, Seattle and other metro areas, are getting pushed out of their homes as an influx of deep pocketed tech workers drive up rents.”

Regulators fear more bad mortgage practices
“You may have gotten a mortgage through the local branch of one of the megabanks, but did you know there’s a good chance your bank turned around and sold the rights to service your loan to somebody else?”

Wall Street Landlords Buy Bad Loans for Cheaper Homes
“Wall Street-backed landlords are showing a greater appetite for bad mortgages as a source for cheap property as the supply of foreclosed homes declines while housing prices continue to climb.”

MBA CEO David Stevens: CFPB’s Antonakes ‘went just a bit too far’
“Steven Antonakes, deputy director of the Consumer Financial Protection Bureau, walked away from a silent, shocked audience after his speech Wednesday morning at the Mortgage Bankers Association’s National Mortgage Servicing Conference & Expo in Orlando.”

Foreclosure Starts Fall to 2006 Level as Home Prices Rise
“The rate of new foreclosures in the U.S. dropped to the lowest level in eight years as rising property prices erased negative equity and allowed more delinquent homeowners to sell without losing money.”

Another ‘Subprime’ Adventure? Behind Wells Fargo’s Move To Ease Mortgage Lending
“Wells Fargo & Co. announced this month it would reduce minimum credit scores for certain mortgages eligible for government backing, prompting some declarations that subprime mortgages were making a comeback.”

Is Homeownership a Fleeting American Dream?
“Opinion: People of color are also disproportionately impacted by an overly restrictive housing market; between 2007 and 2012, loans to African Americans and Latinos have fallen by 73 percent and 66 percent respectively.”

Leading data signal ‘resilient’ economy in 2014
“WASHINGTON (MarketWatch) — The economy will likely “remain resilient” in the first half of 2014, with underlying conditions improving, the Conference Board said Thursday as it reported monthly growth and stable trends for its gauge of leading economic indicators.”

Apartment Sector Healthy, But Fundamentals Moderate
“The multifamily sector continues to perform well four-plus years after its recovery began, two analysts reported.”

NFIP reformists fire warning shot at Congress
“It may be just a rumor of war they’re hearing, but Taxpayers for Common Sense and SmarterSafer.org are firing a warning shot across the Capitol about plans they say are in the works for yet another vote on the Biggert-Waters Flood Insurance Reform Act of 2012.”

Wingspan CEO: 3 keys to success for servicers
“Dallas-based Wingspan Portfolio Advisors finished this past year with several key profile acquisitions that significantly increased the company’s size and revenue, but that’s not where the storybook ends.”

Asia investors bullish about private real estate
“Private real estate investors headquartered in Asia look set to be very active in the asset class over the next 12 months, according to an investor survey by Preqin, a leading alternative asset data and intelligence analysis firm.”

The real estate 1% and the S&P 500 are secretly connected
“Analyst Sam Khater at CoreLogic (CLGX) walks through a look comparing ultra high-end home sales versus homes sales on the lower end of the pricing segment.”

Apollo charts new course for loan strategy in 2014
“Apollo Residential Mortgage is preparing to provide loans to third parties that are purchasing residential properties with plans to resell the properties, and will then probably finance purchases by next buyers, CEO Michael Commaroto said on a conference call today.”

Student loans pinching home sales? Real Estate Open House
“This is the inaugural Front Porch open house, a weekly roundup of real estate news and information for home buyers and sellers. I’ll be checking the comments throughout the day Friday, so leave your real estate questions or links to real estate news stories I missed.”

How to hunt for the right real estate agent before hunting for a home
“If you’re planning to purchase a home in the Washington area this spring, you may face competition from other buyers for the still-limited inventory in the market.”

Serfdom nation: First time where a six year period of household formation of renters outpaced that of homeowners. Purchase applications back to levels last seen 20 years ago.
“I think it is safe to say that investor activity in the housing market has changed the face of real estate buying.  Back when the crisis hit in 2007, some analysts were cheerleading the hedge fund crowd as a tiny blip in the market.  It is hard to call it a blip when 30 to 40 percent of all purchases are going to investors for close to half a decade.  A recent analysis from RealtyTrac found that the estimated monthly home payment for a regular three bedroom home (costs include mortgage, insurance, taxes, maintenance, and subtracting the income tax benefit) rose an average of 21 percent from a year ago in 325 US counties.  What about household incomes?  That is another story.  So it is no surprise that we are largely becoming a nation of renters.  It is also no shocker that young households are largely unable to begin household formation via buying a home.  Many are living with parents well into “young” adulthood.  For the first time in history, we had a six year stretch where we added more renter households than that of actual homeowners.”

Fewer Prospective Homeowners to Clash Over Homes
“Home buying competition rose over the month of January but was down from last January, according to national real estate brokerage Redfin, which took the year-over-year decline as a sign that low inventory and rising prices are thwarting demand in the housing market.”

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Real Estate News 2.19.14

Construction on new homes dives 16% in January
“WASHINGTON (MarketWatch) — Construction on new U.S. homes tumbled 16% in January to a seasonally adjusted annual rate of 880,000, with drops for single-family homes and apartments, according to government data released Wednesday.”

Raising minimum wage would ease poverty but cost some jobs
“Supporters of raising the federal minimum wage to $10.10 an hour say it will increase productivity, lower turnover and increase wages for 28 million workers.”

U.S. mortgage applications fall in latest week: MBA
“(Reuters) – Applications for U.S. home mortgages fell in the latest week, with both purchase and refinancing applications down, an industry group said on Wednesday.”

Mortgage bankers make some history
“Industry’s trade association has never had an Ohioan at the helm, but now two from the state will lead it in back-to-back years”

Make Multifamily the Starting Point for Housing Reform
“Reform of the secondary market for housing finance is a big topic now among think tanks, industry representatives and on Capitol Hill. Most of this discussion has centered on the single-family market, because that is the market that collapsed, helped to precipitate the Great Recession. This recession led to 4 million American families losing their homes, according to RealtyTrac data, and the conservatorship of Fannie Mae and Freddie Mac.”

The hidden catch in the housing recovery
“This year started off with a slight plot twist. After mortgage rates rose most of 2013, 2014 began with a slight drop in rates, although they did not sink back to the levels seen at the beginning of 2013.”

Household Borrowing Rises Most in Six Years in NY Fed Report
“Consumer debt in the U.S. rose last quarter by the most in more than six years as Americans borrowed to buy homes and cars and to pay for education, according to a report by the Federal Reserve Bank of New York.”

Get Ready for a New Onslaught of HMDA Data
“That mammoth spreadsheet of mortgage data from thousands of lenders that you wrestle with every year may get considerably more inclusive.”

Mortgage servicers foreclosing on very different timelines
“A new white paper is highlighting the vast differences in foreclosure timelines at varying mortgage servicers.”

It’s California vs. the Nation in housing affordability
“Although America has 50 states, when you look at housing affordability you can more effectively split the U.S. as California versus everyone else.”

Negative builder news drags on HW 30 for second day
“Stocks were mixed Wednesday at midmorning with several construction and home builders suffering after a down report from the National Association of Home Builders and weak construction numbers for January.”

5 essential rules of real estate
“Spring signals the start of two hallowed seasons: homebuying and baseball.”

Crowdfunding Comes to Real Estate as Websites Seek Small Investors’ Cash
“MANHATTAN — A crop of new real estate startups is turning to crowdfunding as a way to get buildings off the ground.”

Real Estate Matters | How to save money and lower mortgage insurance
“I’m 28-years-old. My wife and I have owned our home for 2.5 years now. When we purchased it, I did not put down 20 percent, so I’m paying roughly $165 per month for mortgage insurance (PMI). If it helps, we do not plan on living in this house forever, but likely for the next five to 10 years. I have a low interest rate on our mortgage of 4.25 percent on a standard 30-year fixed FHA loan. I have a payment schedule set up with Wells Fargo for weekly mortgage payments, with an extra $30 per week to be applied to the principal.”

Real Estate Deals from Prison
“You can buy real estate while you are in prison…you just cannot live at your new property at that time.”

Loan Complaints by Homeowners Rise Once More
“A growing number of homeowners trying to avert foreclosure are confronting problems on a new front as the mortgage industry undergoes a seismic shift.”

Foreclosures, default notices tick up in SD
“Foreclosures and default notices in San Diego County edged up in January, but are still hovering around post Great Recession lows.”

Do banks sense a change in the California housing market? California foreclosure starts up 57 percent last month. Typical California foreclosure process lasts nearly one year and the misconception of middle class.
“It is common knowledge that banks have metered troubled real estate inventory out into the market in a slow drip fashion.  This practice over the years has caused an artificially low supply to be present in the market.  Add into the mix a low rate environment and years of investors buying up properties and you get our current stalemate of a market.  Virtually no one in the press with a voice is even expressing a possibility that prices may sway lower.  The only options making the rounds involve a couple of scenarios where prices will go up slowly in 2014 or prices will move sideways.  No option for a decrease.  This lack of perspective is odd given the resurgence of interest only loans and the fact that a well known bank is dipping back into the subprime market.  One surprising statistic that I did see was the resurgence of foreclosure starts in California.”

Zillow Marks Upward Trend in Mortgage Rates
“Zilllow Mortgage Marketplace, a lending marketplace operated by the home listing website Zillow, announced new mortgage rates Tuesday. Currently, the mortgage rate for a 30-year fixed mortgage is 4.18 percent, according to the release.”

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Real Estate News 2.11.14

91 million Americans aren’t looking for jobs
“The unemployment rate isn’t always the best measure of the job market, because it only includes people who have actively searched for work within the last four weeks. Many Americans just aren’t looking for jobs.”

Hurdles shrink for jumbo loan shoppers
“You’ll pay more for a big home nowadays, but a big mortgage should be less of a reach.”

Public interest group sues Justice Dept. over JPMorgan settlement
“WASHINGTON — A public interest group on Monday sued the Justice Department over last year’s record $13-billion settlement with JPMorgan Chase & Co., arguing the deal to resolve investigations into faulty mortgage investments was unconstitutional because courts did not review it.”

Mortgage servicer shenanigans keep consumer watchdog busy
“Many of the complaints filed with the federal Consumer Financial Protection Bureau involved servicing, loan modification and foreclosure activities by home-loan servicers.”

Idea floated of Milwaukee selling foreclosed homes in bulk
“With nearly 1,300 properties in its inventory because of tax foreclosures, the City of Milwaukee is entertaining ideas to whittle the list down, perhaps through private-equity investment.”

Seniors overspend on mortgage, credit cards
“Remember that your spending and spending behavior are among the few things you can really control.”

How confident are Americans in getting a mortgage?
“More Americans surveyed now believe it would be easy for them to get a mortgage, according to Fannie Mae’s January 2014 national survey of consumer attitudes in housing.”

Zillow: How to sell a home, despite winter wonderland
“Inch upon inch of snow is piling up, and the desire to stay home curled up by the fire is becoming harder to turn away from: welcome to winter.”

Housing Scorecard: America still healing from Great Recession
“Despite positive trends in the housing market, officials caution that the economy is still healing from the Great Recession, the Obama Administration said in the November housing scorecard.”

D.R. Horton to return mineral rights to Florida homeowners
“The attorney general of Florida, Pam Bondi, announced that homebuilder D.R. Horton (DHI) is sending letters to around 18,000 Florida homeowners to give them the option to receive their mineral rights.”

U.S. Home Sellers Return for Spring as Buyers Get Relief
“Suzanne Baker and her siblings bought a foreclosed home in Atlanta two years ago, added a fourth bathroom, then waited for values to rebound before considering a sale. Now, she says, they’re ready to cash in.”

REAL ESTATE: Lewis Group of Companies poised for the next wave of building
“Step into Lewis Operating Corp.’s headquarters, and the history of a family business that Ralph and Goldy began in 1955 is clearly defined.”

In Chaos of Brooklyn Housing Market, Giving Buyers an Advantage
“In Jonah Landman’s Brooklyn, or at least on his blog, house hunting is ferocious and fast.”

New Pennsylvania law will affect many real estate transactions
“Under a new Pennsylvania law that will affect many real estate transactions, property owners who get behind on their taxes on one property will have a lien slapped against all their other properties in that county.”

Real estate rebound prompts home construction
“LAS VEGAS (FOX5) -Home sellers hoping to recoup value lost during the recession are dealing with a glut of new properties on the market.”

8 Solutions to San Francisco’s Housing Problems
“On one of the first rainy days that drought-stricken California has had in months, San Francisco Mayor Ed Lee stood out of the rain in an unfinished retail space on the city’s gentrifying Market Street. Exposed pipes ran past naked plaster and cold concrete floors, but the drab backdrop had shining significance: above the retail space were nearly two dozen brand new, below-market rate apartments, the kind of housing the land-constrained, soaringly expensive city desperately needs—and that the mayor has vowed to provide.”

Broke, young, and unable to afford a home: The crisis for young American home buyers and household formation.
“Making homes unaffordable to younger Americans is more problematic than simply altering the living habits of upcoming generations.  Housing formation in the United States is entering uncharted territory based on demographic shifts and also the new reality that younger Americans will be less affluent than their parents.  This is why we have millions of younger Americans living at home with parents.  Some may not view this as an issue but in the past, construction was a big part of GDP and you will have a hard time justifying new housing construction if people are simply living at home or are only able to afford a rental.  The student debt crisis goes hand and hand with the unaffordable nature of housing for young Americans.  It also doesn’t help that Wall Street is crowding out regular buyers in the market.  With a growing population and investors eating up the low supply of housing, many young Americans are essentially in the position to move back home or to rent.  Buying is a remote possibility for many Americans and this has put a clamp on new housing formation.”

The big money club and interest only loans: Housing bubble favorite of interest only loans back in the market for wealthy households.
“There is little doubt that growing wealth and income inequality is a reality in the United States.  Even in California we can see this microcosm unfold dramatically.  You have people being pushed inland from coastal areas and those near employment hubs have seen housing values reach near peak levels.  What we are also seeing is that access to debt is the key measure of success in this economy.  For example, the bubble favorite of interest only loans is back but with a different flavor.  Banks like Wells Fargo, Bank of America, and Union Bank are back at it underwriting interest only loans to wealthier clients.  The big difference is that you need to have money to play in this current market.  Banks are holding onto these loans in their own portfolios.  Not a bad way to earn money in a low rate environment.  So this hits at the heart of the issue where Fed policy has largely aided those least needing it in a modern day feudal banking network.  For example, you can buy a $1,000,000 home today with a 3 year interest only mortgage and carry a principal and interest payment of $1,562 per month.  Impossible?  Welcome to the modern banking system where low rates are accessible to those who least need it.”

Consumers Positive About Access to Mortgage Credit; Views Toward Economy Improving
“WASHINGTON, DC – More Americans now believe it would be easy for them to get a mortgage, according to Fannie Mae’s January 2014 National Housing Survey results. Consumer attitudes regarding the ease of getting a mortgage climbed 2 percentage points to an all-time survey high of 52 percent, while those who think it would be difficult dropped 3 points to 45 percent. This indicates that consumers perceive that mortgage credit is more accessible. Even though this month’s survey shows a more moderate expectation for home price gains within the next 12 months, the view that mortgage credit is more available may allow for continued but measured improvement in the housing recovery.”

FHFA Announces HARP Milestone
“In a report released Monday, the Federal Housing Finance Agency (FHFA) announced Fannie Mae and Freddie Mac have reached the milestone of three million refinances under the Home Affordable Refinance Program (HARP).”

Freddie Mac Announces Third Risk-Sharing Deal
“Freddie Mac announced the pricing of its first Structured Agency Credit Risk (STACR) transaction of the year: a $1 billion offering of debt notes whose buyers will share in the risk.”

Housing Outlook – A Bear Market?
“Since 2011, home prices have gained in the double digits, making a price plateau inevitable. But are we really entering a bear housing market? Not if we look at long-term fundamentals.”

How an energy-efficient mortgage can save you money
“The crippling cold, coupled with a growing desire for energy efficiency, has both prospective and existing homeowners considering the merits of a “green” mortgage. These energy-efficient mortgages are a way to finance home improvements, but they can result in higher monthly mortgage payments.”

Why some homes have a secret ‘For Sale’ sign
“One of the worst things a home seller can do when listing a home is price it too high.”

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Real Estate News 1.28.2014

Plan to downsize your home? Don’t wait
“Moving to a smaller home in later life is a lot like starting a diet: It sounds like a good idea – but one that can always wait until tomorrow. In most cases, though, retirees can benefit from downsizing sooner rather than later.”

New-home sales fade in December after best year in five
“WASHINGTON (MarketWatch) — Sales of new single-family homes fell in December, but the whole of 2013 saw the highest sales level in five years, the government reported Monday.”

How spending has fallen under Obama
“It’s unlikely that President Obama will ever shake his reputation among Republicans as a big spender. But a key fact counters that rap.”

African-Americans squeezed out of the housing market
“More African-Americans are being squeezed out of the housing market.”

Will Real Estate Investing Slow In 2014?
“There’s little doubt that the real estate marketplace is in the midst of change. The huge price run-up seen during the past year or so is plainly cooling, interest rates have risen from the record lows seen in 2012 and higher prices may be causing some institutional investors to slow their purchases.”

Will Mortgage Tax Relief Die In 2014?
“An important law which has eased the financial fall-out from the mortgage crisis has ended. The Mortgage Forgiveness Tax Relief Act expired on New Year’s Eve and unless the legislation is extended large numbers of troubled borrowers will suddenly face huge new taxes.”

Rental house owners can profit from a professional manager
“It’s one thing to manage a rental house when it’s nearby. But it’s another process entirely when the rental is in a distant vacation retreat. Unfortunately, many second-home buyers find that out the hard way.”

Home prices show signs of topping out
“Home prices are showing signs of topping out: The S&P/Case-Shiller index posted its first month-over-month decline in 10 months on Tuesday.”

Home prices: Your local forecast
“After 2013’s big gains, home prices are expected to moderate this year. CoreLogic Case-Shiller expects prices to increase by the mid-single digit percentages for the 12 months through September. See how your market is expected to fare.”

Many renters just say no to buying homes
“(Reuters) – With a wife and a 10-year-old daughter, Matthew Amster-Burton appears to be one of the likelier people to buy a house, but the Seattle food writer says he has no interest in doing so.”

What business expects in the State of the Union
“President Barack Obama will likely talk about improving the broad U.S. economy as well as bolstering specific sectors when he gives his State of the Union speech on Tuesday night. Trade groups around Washington are hoping for a coveted mention, and some are confident the president will talk about working with their industry.”

Yellen Faces Test Bernanke Failed: Ease Bubbles
“Janet Yellen probably will confront a test during her tenure as Federal Reserve chairman that both of her predecessors flunked: defusing asset bubbles without doing damage to the economy.”

Wall Street Bond Dealers Predict Plunging Treasury Sales
“The U.S. will borrow less money this year than at any time since 2008, validating the nation’s decision to go deeper into debt to combat the financial crisis as faster growth shrinks the deficit, Wall Street’s biggest bond dealers say.”

Banks ‘Chase’ Mortgage Loans With Mobile Apps for Home Buyers
“Not long ago, a financial institution couldn’t easily target consumers who were shopping for a new home. But with new online and mobile tools available today, banks and credit unions can be on the front edge of the mortgage application process.”

How QM fails to deliver
“Although the Qualified Mortgage and ability-to-repay rules are designed to halt excessively risky lending, the new guidelines are likely to fall short on risk restraint when comparing their reality to the expectations of the Consumer Financial Protection Bureau, said Ed Pinto, resident fellow and co-director of the American Enterprise Institute’s International Center on Housing Risk.”

FHA Turns to Residual Income Test to Qualify Borrowers
“The Federal Housing Administration has elected to use the Department of Veterans Affairs’ residual income test as a new compensating factor to qualify borrowers with high debt-to-income ratios.”

New home sales fall, but private sector expands
“(Reuters) – Sales of new U.S. single-family homes fell more than expected in December, but lean inventories and steady price gains suggested the housing market recovery remained intact.”

Is this what’s holding back the RMBS market?
“What is the state of the residential mortgage-backed securities market going into 2014?”

Fixed-rate mortgages tumble in popularity
“Adjustable-rate mortgages are gaining in popularity with interest rates on 30-year, fixed-rate mortgages trending higher these days.”

We couldn’t believe which states have the most late mortgages
“Black Knight Financial Services says December was a good month for foreclosures in its latest report.”

JPMorgan reportedly selling $373M prime new issue RMBS
“JPMorgan Chase (JPM) told HousingWire.com the bank will decline comment on a Bloomberg news item suggesting the lender is about to sell $373 million prime new issue residential mortgage-backed securities.”

This Detroit Neighborhood Is So Bad That $1 Homes Could Be A Rip-Off
“Downtown Detroit is seeing a revitalization of sorts sparked by Dan Gilbert’s $1 billion investment in the area. Since 2010, Gilbert’s investment has created an estimated 6,500 jobs in downtown, and, as a result, it’s nearly impossible to find a vacant apartment as residential occupancy rates reached as high as 99.4% for the downtown area.”

Latest Real Estate Numbers Give Reason to Hope
“Housing price data for November, fresh out of the oven, shows dazzling year-over-year gains but a slowing in month-to-month prices. The S&P/Case-Shiller Housing Price Index that’s a composite of 20 metro areas jumped 13.7% year-over-year, beating even the past two month’s 13.3% and 13.6%. The continued march upward will certainly hearten housing bulls, as prices are currently only 20% off their bubble peaks of Spring/Summer 2006. Separately, last week the National Association of Realtors reported that volume was good, with 5.09 million homes sold in all of 2013. In addition to crossing the psychological barrier of the 5 million mark, that’s a 9.1% jump from the year before.”

Tax Geek Tuesday: Why You Should Never Hold Real Estate In A Corporation?
“Sometimes in life, when faced with a given situation, we say things simply as a matter of reflex. For example:”

Sold! The 2013 real estate year in review
“Historically low interest rates and limited inventory in 2013 fueled some of the greatest housing appreciation in San Diego County since the early 2000s.”

Living at home generation: a modern day feudalism awaits young Americans as the prospect of homeownership falls out of grasp.
“The prospect of homeownership for many young Americans seems so far out of reach that many are resigned to be renters for the rest of their lives.  In places like San Francisco and New York even those with decent paying jobs will find it hard to own a piece of real estate.  Obviously many investors with easy money from the Fed realized this end-game and dove into the landlord business with all the gusto in the world.  Wages are weak for the children of baby boomers.  Many in fact are back living at home.  Homeownership seems like a massive pipedream when many don’t even have the income to support a rental.  Of course in California, you have odd inter-family dynamics where some kids are just waiting until the parents keel over so they can inherit the Prop 13 protected World War II built property.  What more do people expect from a narrow focus on the present while ignoring the challenges facing a new generation of Americans?  This structural change has also created a big hit on new home sales.  Unfortunately for many a modern day system of debt serfdom awaits.  For those that have the chance to buy, it may require a massive leap into debt on top of the student debt many already carry.”

Delinquencies Down Nearly 10% in 2013
“Delinquencies picked up slightly in December, according to early data released by Black Knight Financial Services (BKFS)—but overall trends indicate 2013 was a year of improvement.”

FDIC Marks Second Bank Collapse of 2014
“FDIC announced the closure of an Oklahoma bank over the weekend, marking the first insured collapse in the Sooner State in more than a year and a half.”

Federal To Taper Stimulus Again
“The Federal Reserve is scheduled to announce the second cut in its bond-buying program in six weeks as a lackluster December jobs report failed to diminish the central bank’s expectations for solid U.S. economic growth, according to The Wall Street Journal.”

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Real Estate News 1.15.2014

Bill Seeks to Extend Federal Tax Exemption for Forgiven Mortgage Debt
“Congressman Bill Foster (D-Illinois) introduced the Homeowners Debt Relief Extension Act (H.R. 3856) on Tuesday. The bill would extend the mortgage debt tax exemption that’s been in place since 2007 for another two years.”

Early Earnings Reports Reveal Effects of Declining Mortgage Volume
“This season’s bank releases kicked off Tuesday with dual quarterly earnings reports from JPMorgan Chase and Wells Fargo—and as projected, weakened origination figures took their toll.”

Florida Law Firm Rebrands and Expands Service to Puerto Rico
“The veteran-, minority-, and woman-owned default law firm founded by Marisol Morales, Esq., announced its expansion into Puerto Rico and a name change from Morales Law Group, PA, to Millennium Partners.”

New Fed Survey Assesses Consumer Expectations
“A recently launched survey from New York’s Federal Reserve Bank shows consumer expectations for the next year remaining fairly flat in December.”

Which Hidden Gems Make Cut as Year’s Hottest Neighborhoods?
“Redfin on Tuesday came out with its annual list of the country’s “hottest” neighborhoods. The company ranked 105 neighborhoods across 21 major markets that have grown the most in popularity during the four months leading into 2014.”

Bank of America profit impresses Wall Street
“Bank of America impressed Wall Street Wednesday with better-than-expected earnings and revenue for the fourth quarter, continuing a trend of solid results from the nation’s largest banks.”

Fannie, Freddie watchdog in probe of alleged Wall Street front running
“(Reuters) – A U.S. government watchdog is involved in an investigation of whether bank traders manipulated markets and engaged in front running of orders from Fannie Mae and Freddie Mac in the interest-rate swaps market, according to an FBI intelligence bulletin reviewed by Reuters.”

The end of the mortgage party? Home lending plummets at Wells Fargo, J.P. Morgan Chase
“The mortgage party is officially over.”

Trade group expects less mortgage loan activity this year
“Mortgage loan activity this year will be less than expected because of higher interest rates and fewer applications, the Mortgage Bankers Association said Tuesday.”

QM storm could hit in weeks
“The Consumer Financial Protection Board’s Qualified Mortgage (QM) rule is going to constrict access to mortgage credit and possibly stall housing, and members of Congress and mortgage industry leaders want a lot more flexibility in dealing with the CFPB’s regulations that went into effect Jan. 10.”

December Gain in Retail Sales Gives U.S. a Lift: Economy
“Retail sales (RSTAXAGM) rose in December as frigid temperatures prodded Americans to buy discounted winter clothing and shop online for the holidays, capping what may have been the strongest quarter for consumer spending in three years.”

Volcker Rule Curbs on Banks Owning CDOs Eased in U.S.
“U.S. regulators granted banks an exemption from Volcker Rule limits for collateralized debt obligations composed mostly of small-bank securities, according to a statement from regulators.”

House Republicans voice support for $1.1 trillion spending bill
“(Reuters) – Republicans in the House of Representatives voiced tentative support on Tuesday for a $1.1 trillion spending bill, signaling likely passage and removing one source of potential drama ahead of the 2014 elections.”

3 key takeaways from JPMorgan earnings call
“JPMorgan Chase (JPM) released its fourth-quarter earnings this morning, and it fared pretty well considering the never-ending series of legal settlements it had to overcome.”

Mortgage apps up 11.9%
“Mortgage applications increased 11.9% from a week ago, according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey for the week ending Jan. 10, 2014.”

Fed’s Fisher says QE is ‘beer goggles’ for investors
“Dallas Federal Reserve Bank President Richard Fisher, always one for colorful speeches, said he is confident and certain that it’s time to come down from the $1 trillion a year money printing and bond buying.”

Congress takes a bite out of housing agency budgets
“A proposed $1 trillion congressional spending bill means less money for key housing agencies, analysts claim.”

JPMorgan With Wells Fargo Lose Share to Small Rivals: Mortgages
“The two largest U.S. home lenders are feeling the bite of competition from smaller firms as mortgage originations tumble at the fastest rate since 2011.”

REAL ESTATE: Up again, December home prices – by 28 percent
“Home sale prices across Southern California were poker-hot in December, the latest real estate information report from San Diego-based DataQuick suggests.”

The Market Is Rethinking That Disastrous Jobs Report
“Markets are already acting as if the bad jobs numbers released Friday may have been just noise, and that the economy is still doing fine. Already we’re seeing interest rates rise again, and other markets continue to bet that the Fed will move toward tightening.”

Do Real Estate Agents Practice What They Preach?
“Trulia’s Chief Economist Jed Kolko dives into Census data to reveal whether real estate agents walk the walk, or if they are all talk. Turns out, they do: their homeownership rate is high even after taking demographics into account. The same goes for appraisers, architects, and construction workers.”

Real Estate Matters | How to get your finances in home-buying shape
“Money makes the world go around. And every year we make resolutions to save more of it, invest it more profitably and spend more wisely.”

County new home prices hit record high
“The median price for newly built single-family homes and condos in San Diego County shot up to a record high in December, while the number of new homes sold hit a record low for a December.”

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Today’s Real Estate News 11.26.2013

GSEs Update Short Sale Policies

“Fannie Mae and Freddie Mac announced changes to their Servicing Guides Monday aimed at helping more borrowers avoid foreclosure through short sales and deeds-in-lieu of foreclosure (DILs).”

Report: October Cool Down in Temperature Only

“Cooler temperatures didn’t necessarily mean a cool down in October activity, according to recent data. Despite a seasonal slowdown in activity, the housing market continued to post some positive metrics in October, reports the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, which aggregates approximately 2,000 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.”

Negative Equity: A New Way of Life in the Recovery

“Fast-paced price increases have helped bring many underwater homeowners afloat. In the third quarter, 1.4 million homeowners rose to the surface as their home values once again outranked their equity, according to the Zillow Negative Equity Report released Thursday.”

Pending Sales Slip to Lowest Reading in Nearly a Year

“Pending home sales slipped a bit further in October, reflecting an overall declining trend amid mixed regional numbers.”

Top 25 Hipster Zips for Returns on Rental Properties

“While the precise definition of hipsters is elusive — which is likely just how they want it — there’s no doubt the culture surrounding the hipster lifestyle has a major impact on local real estate markets, and mostly in a positive way.”

Signs Point to Economic Volatility in the Near Term

“WASHINGTON, DC – The temporary government shutdown and debt ceiling negotiations dealt a blow to consumers in October, and foreshadows likely continued market volatility during the next few months, according to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research Group. In line with previous forecasts, the Group expects modest economic growth of approximately 2.0 percent for 2013 as a number of unresolved fiscal and monetary policy decisions weigh on consumer confidence. Factors including the appointment of a new Federal Reserve chair in January and the budget and debt ceiling issues that will remain until the first few months of next year are expected to suppress consumer spending – a key driver of economic growth. However, growth still is expected to pick up to 2.5 percent for 2014 once the fiscal drags wane and as labor market conditions improve further.”

Freddie Mac Multifamily Prices 19th Securities Offering This Year, K-035

“MCLEAN, VA–(Marketwired – Nov 25, 2013) – Freddie Mac (OTCQB: FMCC) recently priced a new offering of Structured Pass-Through Certificates (“K Certificates”), which are multifamily mortgage-backed securities. The approximately $1.3 billion issuance of K Certificates (“K-035 Certificates”) is expected to settle on or about December 5, 2013.”

Home prices rise 11%

“Home prices continued to climb in third quarter, rising 11% from a year earlier.”

Realtors® Applaud DeMarco for Heeding Warnings, Leaving GSE Loan Limits As Is

“WASHINGTON (November 26, 2013) – The following is a statement by National Association of Realtors® President Steve Brown: “Realtors® welcome today’s announcement from the Federal Housing Finance Agency that the current limits on conforming loans will remain in effect until further notice. As the leading voice for homeownership, NAR opposes lowering the ceiling on loans eligible for backing by the government-sponsored enterprises. Lower loan limits would increase costs for consumers and reduce their access to conventional mortgages.”

Insight: A new wave of U.S. mortgage trouble threatens

“(Reuters) – U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country’s biggest banks.”

U.S. residential building permits reach 1 million, a 5-year high

“The number of U.S. residential building permits issued in October surpassed 1 million, the highest level in five years, the Commerce Department reported Tuesday.”

FDIC reports positive trend in loan balances, failed banks

“The bad news about banks in the third quarter is that their net income declined 3.9% from the same quarter last year, according to the latest Quarterly Banking Profile released today from the Federal Deposit Insurance Corporation (FDIC).”

Colony American Homes to launch rental securitization

“Securitization deals backed by rental income continue to attract market interest as more families turn to rentals over homeownership amid tighter lending standards.”

FHA mortgage loans no longer best option after rule change

“The most popular type of mortgage for buyers with low down payments keeps getting pricier and less appealing as more buyers question whether it’s still worth getting an FHA loan.”

Wells Fargo’s Lofrano Was ‘Critical’ to Fraud, U.S. Says

“Wells Fargo & Co. (WFC) Vice President Kurt Lofrano played a “critical role” in helping the bank hide fraudulent home loans that cost the U.S. $189 million, the U.S. government claimed in a filing in Manhattan federal court.”

Some call on city to explore eminent domain to combat blight

“A California city’s controversial plan to use eminent domain to help its residents burdened with mortgages worth more than their homes has caught the eye of some Baltimore leaders, who say the city might benefit from the program.”

What Have Mortgage Settlements Done For Homeowners Lately?

“This week, JPMorgan Chase agreed to a $13 billion settlement with the Justice Department over the sale of faulty mortgage securities that led to the financial crisis. It’s the largest settlement with a single company in U.S. history.”

Chinese buying up California housing

“At a brand new housing development in Irvine, Calif., some of America’s largest home builders are back at work after a crippling housing crash. Lennar, Pulte, K Hovnanian, Ryland to name a few. It’s a rebirth for U.S. construction, while the customers are largely Chinese.”

3 Mortgage Stocks to Buy Now

“This week, three mortgage stocks are improving their overall rating on Portfolio Grader. Each of these rates an “A” (“strong buy”) or “B” overall (“buy”).”

Housing inventory disappears in California for the fall: Number of homes for sale reverses steady increase from February lows. Where did the housing inventory go?

“For most of the year, housing inventory was steadily increasing across the nation. In California, it appeared that inventory hit a bottom in February of this year. At that point, there were 109,000 homes available for sale. The latest figures going out to October showed 127,000 homes available for sale and this was down from 134,000 reached in August. There has also been a steady decline of homes available for rent. The cash investor crowd is still out buying in large numbers. The drop in inventory is typical for the fall and winter selling seasons in normal markets. However this drop in inventory is likely being brought on by other factors including the jump in interest rates and also, the perception that the market may be softening. The number of listings with price cuts was 17 percent earlier this year. Today it is up to 28 percent. Where did the inventory go?”

Troubled hedge fund sitting on real estate gold

“Hedge fund manager Steve Cohen has at least one easy way to make up some of the $1.2 billion he recently agreed to pay the government: Cash in on SAC Capital Advisors’ sprawling real estate holdings that stretch across three continents.”

Chinese real estate influence extends to the Big Apple

“Chinese buyers are fast becoming players in the cutthroat world of Manhattan real estate, and that keeps high-end real estate broker Dolly Lenz busy.”

What Homebuyers Can Be Thankful for in 2013

“Homebuyers have had it tough lately, suddenly finding themselves in a sellers market as summer came along. And mortgages suddenly cost more too — when you could even get one. But of course Thanksgiving isn’t about looking at negatives. So, if you can, look past that elephant-in-the-room that is the credit crunch and take stock of what’s now on the table for those homebuyers with the capital.”

Why Is High-End Real Estate So Hot Right Now? (VIDEO)

“Nov. 25 (Bloomberg) — Ziel Feldman, founder of HFZ Capital Group, and Kevin Maloney, co-founder of Property Markets Group, discuss luxury property market trends with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)”

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Soliciting private money for flipping vs. buy & holding

Question:

Hi Tony…and thanks a million for this invaluable forum!

Got one for you about private lenders. I’ve started talking it up. I’m going to focus primarily on flipping in the beginning but I want to hold some as well once I get rollin. When I explain the dual focus some are asking the rate difference. I explain that the rate to retail is higher than holding on rentals. I’d like a better answer.

What should the difference be? If retail is say 9% what would long term be?

(if that was answered in your course…plz forgive me!)

Last one…should the Note provide the ability for the lender to convert if they like? It seems prudent to craft that in with friendly language along the lines of “we have the right to convert” so people know it’s possible from the outset and so I don’t have to go back and explain it once things are in motion.

One person said straight out…”I like the rate and security but aren’t crazy about it being short term.” I’m guessing that on occasion I’ll need to finance out retail money with different lenders who would be happy with less for a longer term. But it would be nice to convert people if I choose and/or if I need to because the property isn’t selling for one reason or another.

Did I say thanks?

Many, many, MANY thanks Tony.

-M.

Answer:

Okay, out of the gate let me just make one point very clear. When you’re trying to solicit money from people that have it, they’re motivation for lending it is as varied and different from one to the other as are grains of sand in the ocean.

You’re job is to attract the money based on the probability of a successful outcome. The two things that anyone lending money is typically focused on is:

1. The return ON their investment
2. And the return OF their investment
(the latter being the most important).

How you structure the notes (conversion) or the interest rates is solely up to you. What they will accept, you’ll soon find out, is solely up to them. I have found that what buys me the most leverage when wanting to skew those negotiations or numbers in my direction, typically have to do more with how good my deals are and how good I am at making them reach a happy and profitable conclusion.

I cannot, in good conscience, give you specific advice on what interest rate you should offer between short-term and long-term money, as I honestly believe this is a moot issue. Industry standards on this topic are clear and available for anyone who cares to look for them. Most investors know they can easily place their money with professional, respected hard money lenders like The Norris Group and earn an easy, effortless 12% on short-term and 9% on eight year financing.

I have found that the more geographically local the investor lender to my specific Target Market, the more familiar they are with my individual properties, my level of knowledge and experience, and successful track record, the more motivated they are to jump on my wagon and the stronger position I hold for negotiating. This typically becomes a “their money is chasing my deals” rather than the other way around.

I hope this helps.

Your friend always,
The Big Cheese
Tony
;D

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Hard Money vs. Private Money

Question:

What’s the difference between a hard money lender and a private investor and does using one have an advantage over the other?

Answer:

Hard money lender – higher costs/fees, higher interest rate, tougher qualifying.

Private investor – Individual, typically no fees, better rates; longer term.

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What is a “wrap” transaction?

Question:

What exactly is a “wrap” transaction?

-Student

Answer:

A wrap transaction means you’re buying a property that typically has an existing first loan. The seller carries a second loan and you wrap both of them to make one payment. That is a simplistic explanation of a wrap. Wrap around loans are used in many different creative way. Creative financing is a world unto itself. Back in the 80’s it was just about the only way we could get deals done. I suggest if you ever have a chance to listen to Bill Tan, Shawn Watkins or Aaron Mazzrillo, this is exactly what they attempt to do every day.