Top News Stories of the Week

by on September 24, 2011

Foreclosures – going up or down? What’s up with Gold this week (or should I say down?) Housing sales had an uptick in August but down in September. Prices remain flat…. Ugh! (See my commentary at the end.)

Here’s a handful of interesting stories from this past week….


Smart Real Estate News & Commentary by Chris McLaughlin

MBA – commercial/multifamily outstanding debt increased

The level of commercial/multifamily mortgage debt outstanding increased by 0.1% in the second quarter of 2011, the first quarterly increase since the third quarter of 2009, according to the Mortgage Bankers Association (MBA).  The $2.4 trillion in commercial/multifamily mortgage debt outstanding was $3.5 billion higher than the first quarter 2011 figure. Multifamily mortgage debt outstanding rose to $802 billion, an increase of $3.9 billion or 0.5% from the first quarter.  “For the first time in a year-and-a-half, new commercial and multifamily mortgage originations outpaced the paying off and paying down of existing loans,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. ”Increases in the balance of mortgages held and insured by life insurance companies, Fannie Mae, Freddie Mac and FHA outpaced declines among banks and thrifts and CMBS issues.”

Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $792 billion, or 33% of the total.  Commercial mortgage-backed securities (CMBS),  collateralized debt obligations (CDOs),and other asset backed securities (ABS) issues are the second largest holders of commercial/multifamily mortgages, holding $617 billion, or 26% of the total. Agency and GSE portfolios and MBS hold $332 billion, or 14% of the total, and life insurance companies hold $304 billion, or 13% of the total. Many life insurance companies, banks and the GSEs purchase and hold CMBS, CDO and other ABS issues. These loans appear in the CMBS, CDO and other ABS categories.  The $4 billion increase in multifamily mortgage debt outstanding between the first quarter and second quarter of 2011 represents a 0.5% increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt, an increase of $4 billion, or 1%.  Commercial banks increased their holdings of multifamily mortgage debt by $1 billion, or 0.6%. Life insurance companies increased by $701 million, or 1.5%. CMBS, CDO, and other ABS issues saw the biggest decrease in their holdings of multifamily mortgage debt, by $1.6 billion, or 1.6%.

Gold down

Gold slid to a six-and-a-half-week low on Friday, setting the stage for its sharpest weekly drop since March 2009, hit by a sell-off in the commodities complex and with some traders citing selling in the precious metal to cover losses in other asset classes.  Spot gold fell to $1,705.89 a troy ounce, having earlier hit a fresh session low at $1,698.54—its lowest level since Aug. 8, as commodities came under heavy pressure in the wake of a rebound in the dollar.  A stronger dollar puts pressure on gold as it makes commodities priced in the US unit more expensive for holders of other currencies.  Traders blamed gold’s fall on distress selling by investors who have grown increasingly uncomfortable with the turmoil on the credit market and were looking to cover losses from other asset classes such as equities.

Millions shut out of Refis

About 2.3 million homeowners could have refinanced their mortgages last year if they didn’t owe more than their homes were worth or if lending standards weren’t so strict, according to a Federal Reserve study released yesterday.  Long-term mortgage rates are near record lows and have been below 5% for all but two weeks this year. The average rate on a 30-year fixed loan is now 4.09%.  But lenders typically require homeowners to have equity in their homes to refinance. And many lenders are approving only borrowers with high credit scores.  Roughly 22.5% of homeowners, or about 11 million, are “underwater” — they owe more than their homes are worth — according to CoreLogic, a real estate data research firm.  The figures don’t show how many of the homeowners obtained loans during the housing boom, when lending standards were often lax. Many lenders offered loans to people with poor credit, no employment checks and little or no money down.  The Fed said about 4.5 million refinancing applications were approved last year. In a healthy housing market, that figure would be nearly 34% higher, it said.

The Federal Housing Finance Agency has said it’s reviewing a program it launched two years ago to see if it might be expanded to let more homeowners qualify. The program, called Home Affordable Refinance Program, or HARP, lets people whose homes are underwater by up to 20 % refinance at lower rates.  But to be approved for the program, homeowners must be current on their mortgages, which must date from 2009 or later.  As of July, about 838,000 homeowners had refinanced through the program. Officials had hoped at least 4 million Americans would take advantage.  The Fed’s study reviewed information from more than 7,900 lenders. The number of approved mortgages fell from nearly 9 million in 2009 to fewer than 8 million in 2010. The peak was 15.6 million in 2005.

House passes spending bill at the 11th hour

By a largely party-line vote of 219 to 203, the Republican-controlled House in an after-midnight vote approved a bill that would keep the government running through Nov. 18 and provide $3.65 billion for disaster relief in one of the most extreme years for weather in US history.  Republican leaders managed to minimize defections from lawmakers aligned with the conservative Tea Party movement, who had helped defeat a nearly identical version of the bill a day earlier.  The revived bill included one tweak: it zeroed out a $100 million dollar loan for Solyndra, the failed solar-panel maker that has drawn scrutiny for its ties to the Obama administration. That would have little practical effect, as the company has already declared bankruptcy and the loan program is set to expire next week.  Democrats overwhelmingly voted against the bill on the grounds that disaster aid was inadequate. They said a $1.5 billion cut to an electric-vehicle program, included to partially offset the increased disaster aid, would hurt the economy.

Naturally, the Senate’s top Democrat vowed to defeat the bill.  “It fails to provide the relief that our fellow Americans need as they struggle to rebuild their lives in the wake of floods, wildfires and hurricanes, and it will be rejected by the Senate,” Senate Democratic leader Harry Reid said.  The No. 2 House Republican, Eric Cantor, brushed off Reid’s threat and said the House intended to adjourn for a week-long break on Friday.  “I guess Harry Reid will have to bear the burden of denying the disaster victims the money that they need,” Cantor told reporters.

Housing sales slow

Mid-sized housing markets saw home price decreases in 13 of 20 markets studied by Altos Research with an indication that further cooling is on the way.  Prices flattened and are trending downward, the analytics firm said. The median price was $255,093 in mid-September, down less than 1% from $256,021 in mid-August. The biggest three-month price increases were in Durham, N.C. (5.69%); Boulder, Colo. (4.40%); and Reno, N.V. (2.93%). Durham had the largest one-month increase in median price, with a 1.68% increase to $280,313.  Eleven markets saw prices decline at the three-month level. The three biggest decreases were Naples, Fla. (-3.15%); Pittsburgh, Pa. (- 2.76%); and Charleston, S.C. (-1.20%).  The leaders in the three-month price increases are Durham (5.69%), Boulder (4.40%), and Reno (2.93%). Durham had the largest one-month increase in median price, with a 1.68% increase to $280,313.  Inventory in mid-sized cities studied by Altos was down in 18 of the 20 markets, Altos said in its mid-cities 20-city composite report that suggests a loss of momentum from earlier summer activity. Inventory was down 1.79% decrease over last month. Over a three-month period, inventory has decreased 2.08%.

Credit card debt up

Americans added $18.4 billion to their debt load in the second quarter, a 66% increase from the debt they accumulated in the same quarter last year and 368% more than they tacked on in 2009, according to credit card research firm  In fact, the last time consumers charged up this much debt during this time period was in 2008 — several months after the recession officially began and when credit card balances climbed by $25.2 billion.  Despite the recent spending spree, the total amount of credit card debt consumers have accumulated is still significantly lower than in previous years. Total outstanding credit card debt as of July was $792 billion, down 18% from the September 2008 peak of $972 billion, according to data from the Federal Reserve.  If current trends continue, however, consumers could find themselves even deeper in the hole. CardHub, which analyzed the consumer debt data from the Federal Reserve, estimates that consumers will run up about $54 billion more in credit card debt by the end of 2011 than they did in 2010.

Home prices flat

Home prices remained relatively unchanged in July across the 25 markets surveyed by Radar Logic. The research and analytics company’s monthly housing report also showed real estate-owned inventories are expected to grow in the coming months as more foreclosures make it through the pipeline.  The average home price in July in the 25 markets surveyed inched up 0.9% to $187.24 per square foot from June and is 4.7% below a year earlier, according to Radar Logic.  Still, there remains a fundamental issue with supply rapidly outpacing demand, and “if nothing is done to prevent it, the problem is going to get worse in coming months,” the company said.  The supply of homes for sale could grow in coming months if recent increases in foreclosure filings become a lasting trend.  Foreclosure filings, including default notices, scheduled auctions and bank repossessions, increased 33% from July to August, according to recent data released byRealtyTrac.  The company cites statistics from economist Tom Lawler who said there were about 548,000 REO properties on the books at the end of the second quarter. That figure includes properties held by Fannie MaeFreddie Mac, the Federal Housing Administration, as well as trusts for private-label securities and non-FHA government agencies.  “The supply of homes for sale could grow in coming months if recent increases in foreclosure filings become a lasting trend,” Radar Logic said.

Chris McLaughlin

Chris is widely known as America’s top Real Estate Attorney and Investment Consultant.

Copyright Loss Mitigation Institute LLC 2010. All Rights Reserved.


My take on it ~~ More foreclosures are on the horizon considering millions more home owners are being shut out on refinancing their upside-down property. I see no end to a depressed housing market anytime soon until high unemployment falls and the overall economy improves. (Yes, real people struggling terribly trying to get back to work.  Hey, US Government please get out of the way!)

That said and while we watch the stock market continuing to tumble, it is becoming quite obvious that real estate is where you might want to park your money for awhile. Land-lording may seem quite intimidating, but these fears are easily overcome with the right people on your team.  Its time to take a serious look at real estate investing. Whether you have never bought an investment home or are a seasoned investor, there is no better time to invest and build your team. Contact me for a free consultation on how to build your real estate holdings and create or increase your monthly cash-flow.

All the best!

Patrick Thurmond


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