Monday, January 31, 2011
Thursday, January 27, 2011
Monday, January 24, 2011
Recently Obama announced that over the next 90-days he is going to work to cut 100-Million dollars of spending out of the Federal Budget. A college student explains the real impact of this. MUST SEE TO BELIEVE.
VERY well done!
Check out the video here
VERY well done!
Check out the video here
Friday, January 21, 2011
The Eight States Running Out of Homebuyers
The single biggest problem in the U.S. real estate market is simple: There are very few homebuyers.
That seems obvious, but the "buyers' strike" has caused house prices to drop, along with an epidemic of foreclosures. What's worse, the long depression in real estate is probably not over. S&P has forecast that home prices will drop by 7% to 10% this year. The S&P Case-Shiller Index has dropped for most of the 20 largest real estate markets over the last several months. RealtyTrac recently reported that more than 1 million homes were foreclosed upon in 2010.
Many economists argue that the housing market may take four or five years to recover. Even if that's proven to be true, the all-time highs of 2006 may never be reached again.
The devastation in some regions will never be repaired. Parts of Oregon, Georgia and Arizona have become progressively more deserted. Since jobless rates may never recover, there is little reason to hope that the populations in these areas will ever rebound. Some homes will be torn down in these pockets of high foreclosures in the hopes that reducing supplies will boost prices. Whether that idea will work in hard-hit areas such as Flint, Mich., and Yuma, Ariz., remains to be seen.
24/7 Wall St. looked at a number of the standard measures to find the housing markets facing the biggest problems attracting buyers. After a detailed examination, six metrics were chosen: (1) vacancy rates for 2010; (2) foreclosure rates for 2010; (3) November 2010 unemployment rates; (4) change in building permits from 2006 to 2010; (5) change in population from 2005 to 2010; and (6) price reduction by major cities for 2010. Taken together, they create a strong statistical base to describe markets which buyers have largely abandoned.
Several states nearly made it onto the list, such as Colorado and South Carolina, but did not get poor enough marks across all of our measurements. Each was among the 10 worst for declines in building permits. Colorado had one of the worst foreclosure rates, and South Carolina one of the worst vacancy rates. However, the populations in both states have rebounded enough to make a strong case that their housing markets may recover moderately over time.
The review of the data raises several public policy issues. The most important of these is whether the federal focus on reviving the housing market should be concentrated in the hardest hit regions. The counter to that point of view is that some cities, such as Flint, or states like Nevada are in such bad shape that they are beyond assistance. Unemployment rates are too high in these areas, and perhaps the number of homes on the market is too large.
One thing is certain. The housing recovery will be wildly uneven. A city like New York, which has a dense population and large numbers of middle class and upper class buyers who will wait until they believe prices hit bottom, will have a rapid recovery soon. Building permits granted in New York City over the last four years have been very low. The supply of apartments is also low. Those forces taken together with an even modest economic recovery will help push real estate prices higher in New York and regions with similar characteristics.
The real estate crisis has gone on for four years. In the states 24/7 Wall St. has chosen here, the crisis will go on much longer.
1. Michigan
Vacancy Rate: 15.98% (9th Worst)
Unemployment: 12.4% (Tied for 2nd Worst)
Population Change 2005-2010: -2.05% (Worst)
Michigan is one of only two states whose population has decreased in the last five years. The state has lost more than 2% of its population since 2005. Most of this population loss was undoubtedly due to the depression in the car industry that led to the bankruptcies of GM and Chrysler. Flint, once one of the largest car manufacturing cities in America, has lost more than 10% of its population in the past 10 years. The state has the second-worst unemployment rate in the country at 12.4%. Michigan has a home vacancy rate of 15.98%, the ninth-worst in the U.S. There are large neighborhoods in Detroit that are vacant.
2. Nevada
2010 Foreclosures: 9.42% (Worst)
Unemployment: 14.3% (Worst)
Decrease in Building Permits 2006-2010: -84.39% (Worst)
In 2010, an incredible 9.42% of all housing units in Nevada were foreclosed upon. This is by far the highest foreclosure rate in the U.S., and is nearly twice that of the next-worst state. Nevada also has the highest unemployment rate in the United States, at 14.3%.The recession undermined profits in the gaming industry. Between 2006 and 2010, the state had an 84.3% decrease in building permit requests, the largest drop in the country. This has resulted in the loss of tens of thousands of construction jobs.
3. Arizona
Vacancy Rate: 17.3% (5th Worst)
2010 Foreclosures: 5.73% (2nd Worst)
Decrease in Building Permits 2006-2010: -81.36% (4th Worst)
Arizona is among a handful of states most deeply wounded by the real estate collapse. Some 5.73% of properties in the state have been foreclosed upon, the second highest rate in the country, and 17.3% of homes are vacant, the fifth greatest rate in the country. Also, Mesa, Phoenix and Tucson, the state's three largest cities, are all among the top five American cities with the greatest percentage of price reductions for homes in 2010, along with Minneapolis and Baltimore. As of December 2010, these cities had 43%, 42% and 38% of their listings with price reductions, respectively.
4. California
2010 Foreclosures: 4.08% (4th Worst)
Unemployment: 12.4% (Tied for 2nd Worst)
Decrease in Building Permits 2006-2010: -74.7% (6th Worst)
California's impact on the housing market is huge. The state is the largest among the 50 in total GDP and housing units. California's unemployment rate of 12.4% is now tied for second place with Michigan, once the jobless capital of the nation. In 2010, the state had one of the highest foreclosure rates in the country, at just over 4%. New construction has dropped off dramatically as well, with a 74 % decrease in new building permits between 2006 and 2010.
5. Illinois
2010 Foreclosures: 2.87% (9th Worst)
Decrease in Building Permits 2006-2010: -81.32% (5th Worst)
Population Change 2005-2010: 1.23% (8th Worst)
Although Illinois has a relatively low residential vacancy rate, finding people to buy homes can be difficult. The state's population only grew 1.23% between 2005 and 2010. This is the eighth worst growth rate in the country. Furthermore, the number of building permits issued since 2006 decreased 81.32%, the fifth greatest drop in the nation. The collapse of the state's industrial base has been so great that its economy will not recover anytime soon.
6. Georgia
2010 Foreclosures: 3.25% (6th Worst)
Unemployment: 10% (9th Worst)
Decrease in Building Permits 2006-2010: -82.29% (2nd Worst)
The number of building permits issued in 2006 in Georgia was 92,541. In 2010 that number dropped to 16,391. This is the second greatest decrease in the nation during that time. The state's unemployment rate, at 10%, is above the national average of 9.4%. Also in 2010, there were 130,966 foreclosures in Georgia, 3.25% of the state's properties. This is an increase of 53.62% since 2008.
7. Oregon
Unemployment: 10.6% (Tied for 5th Worst)
Decrease in Building Permits 2006-2010: -74.08% (7th Worst)
Number of Listings With Price Reductions (Portland): 35% (Tied for 8th Worst Among 50 Largest U.S. Cities)
Oregon's real estate market has suffered the double blow of a sharp drop in both building permits and price reductions on existing homes. Unemployment is 10.6%, the fifth worst rate in the country. The number of new building permits decreased by 74% from 2006 to 2010. In December 2010, 35% of listings in Portland, the state's largest city, had price reductions.
8. Florida
Vacancy Rate: 21.03% (2nd Worst)
2010 Foreclosures: 5.51% (3rd Worst)
Decrease in Building Permits 2006-2010: -81.37% (3rd Worst)
Unemployment in Florida is 12%, the fourth worst in the country. Approximately 1.1 million residents are out of work. Statistics show that 21.03% of the state's housing units are vacant. Furthermore, 5.51% of homes have been foreclosed upon. Florida was among five states that had the largest real estate booms from 2000 to 2006. Residential prices in some waterfront areas like Miami and Palm Beach rose by much more than double during that period. New home and condominium construction soared. Many of those residences have never been occupied and are still part of the inventory of homes for sale.
Sources:
1) Vacancy rates for 2010 -- American Community Survey (Census Bureau)
2) Foreclosure rates for 2010 -- RealtyTrac
3) November 2010 unemployment rates -- Bureau of Labor Statistics
4) Change in building permits from 2006 to 2010 -- Census Bureau
5) Change in population from 2005 to 2010 -- Census Bureau
6) Price reduction by cities for 2010 -- Trulia
That seems obvious, but the "buyers' strike" has caused house prices to drop, along with an epidemic of foreclosures. What's worse, the long depression in real estate is probably not over. S&P has forecast that home prices will drop by 7% to 10% this year. The S&P Case-Shiller Index has dropped for most of the 20 largest real estate markets over the last several months. RealtyTrac recently reported that more than 1 million homes were foreclosed upon in 2010.
Many economists argue that the housing market may take four or five years to recover. Even if that's proven to be true, the all-time highs of 2006 may never be reached again.
The devastation in some regions will never be repaired. Parts of Oregon, Georgia and Arizona have become progressively more deserted. Since jobless rates may never recover, there is little reason to hope that the populations in these areas will ever rebound. Some homes will be torn down in these pockets of high foreclosures in the hopes that reducing supplies will boost prices. Whether that idea will work in hard-hit areas such as Flint, Mich., and Yuma, Ariz., remains to be seen.
24/7 Wall St. looked at a number of the standard measures to find the housing markets facing the biggest problems attracting buyers. After a detailed examination, six metrics were chosen: (1) vacancy rates for 2010; (2) foreclosure rates for 2010; (3) November 2010 unemployment rates; (4) change in building permits from 2006 to 2010; (5) change in population from 2005 to 2010; and (6) price reduction by major cities for 2010. Taken together, they create a strong statistical base to describe markets which buyers have largely abandoned.
Several states nearly made it onto the list, such as Colorado and South Carolina, but did not get poor enough marks across all of our measurements. Each was among the 10 worst for declines in building permits. Colorado had one of the worst foreclosure rates, and South Carolina one of the worst vacancy rates. However, the populations in both states have rebounded enough to make a strong case that their housing markets may recover moderately over time.
The review of the data raises several public policy issues. The most important of these is whether the federal focus on reviving the housing market should be concentrated in the hardest hit regions. The counter to that point of view is that some cities, such as Flint, or states like Nevada are in such bad shape that they are beyond assistance. Unemployment rates are too high in these areas, and perhaps the number of homes on the market is too large.
One thing is certain. The housing recovery will be wildly uneven. A city like New York, which has a dense population and large numbers of middle class and upper class buyers who will wait until they believe prices hit bottom, will have a rapid recovery soon. Building permits granted in New York City over the last four years have been very low. The supply of apartments is also low. Those forces taken together with an even modest economic recovery will help push real estate prices higher in New York and regions with similar characteristics.
The real estate crisis has gone on for four years. In the states 24/7 Wall St. has chosen here, the crisis will go on much longer.
1. Michigan
Vacancy Rate: 15.98% (9th Worst)
Unemployment: 12.4% (Tied for 2nd Worst)
Population Change 2005-2010: -2.05% (Worst)
Michigan is one of only two states whose population has decreased in the last five years. The state has lost more than 2% of its population since 2005. Most of this population loss was undoubtedly due to the depression in the car industry that led to the bankruptcies of GM and Chrysler. Flint, once one of the largest car manufacturing cities in America, has lost more than 10% of its population in the past 10 years. The state has the second-worst unemployment rate in the country at 12.4%. Michigan has a home vacancy rate of 15.98%, the ninth-worst in the U.S. There are large neighborhoods in Detroit that are vacant.
2. Nevada
2010 Foreclosures: 9.42% (Worst)
Unemployment: 14.3% (Worst)
Decrease in Building Permits 2006-2010: -84.39% (Worst)
In 2010, an incredible 9.42% of all housing units in Nevada were foreclosed upon. This is by far the highest foreclosure rate in the U.S., and is nearly twice that of the next-worst state. Nevada also has the highest unemployment rate in the United States, at 14.3%.The recession undermined profits in the gaming industry. Between 2006 and 2010, the state had an 84.3% decrease in building permit requests, the largest drop in the country. This has resulted in the loss of tens of thousands of construction jobs.
3. Arizona
Vacancy Rate: 17.3% (5th Worst)
2010 Foreclosures: 5.73% (2nd Worst)
Decrease in Building Permits 2006-2010: -81.36% (4th Worst)
Arizona is among a handful of states most deeply wounded by the real estate collapse. Some 5.73% of properties in the state have been foreclosed upon, the second highest rate in the country, and 17.3% of homes are vacant, the fifth greatest rate in the country. Also, Mesa, Phoenix and Tucson, the state's three largest cities, are all among the top five American cities with the greatest percentage of price reductions for homes in 2010, along with Minneapolis and Baltimore. As of December 2010, these cities had 43%, 42% and 38% of their listings with price reductions, respectively.
4. California
2010 Foreclosures: 4.08% (4th Worst)
Unemployment: 12.4% (Tied for 2nd Worst)
Decrease in Building Permits 2006-2010: -74.7% (6th Worst)
California's impact on the housing market is huge. The state is the largest among the 50 in total GDP and housing units. California's unemployment rate of 12.4% is now tied for second place with Michigan, once the jobless capital of the nation. In 2010, the state had one of the highest foreclosure rates in the country, at just over 4%. New construction has dropped off dramatically as well, with a 74 % decrease in new building permits between 2006 and 2010.
5. Illinois
2010 Foreclosures: 2.87% (9th Worst)
Decrease in Building Permits 2006-2010: -81.32% (5th Worst)
Population Change 2005-2010: 1.23% (8th Worst)
Although Illinois has a relatively low residential vacancy rate, finding people to buy homes can be difficult. The state's population only grew 1.23% between 2005 and 2010. This is the eighth worst growth rate in the country. Furthermore, the number of building permits issued since 2006 decreased 81.32%, the fifth greatest drop in the nation. The collapse of the state's industrial base has been so great that its economy will not recover anytime soon.
6. Georgia
2010 Foreclosures: 3.25% (6th Worst)
Unemployment: 10% (9th Worst)
Decrease in Building Permits 2006-2010: -82.29% (2nd Worst)
The number of building permits issued in 2006 in Georgia was 92,541. In 2010 that number dropped to 16,391. This is the second greatest decrease in the nation during that time. The state's unemployment rate, at 10%, is above the national average of 9.4%. Also in 2010, there were 130,966 foreclosures in Georgia, 3.25% of the state's properties. This is an increase of 53.62% since 2008.
7. Oregon
Unemployment: 10.6% (Tied for 5th Worst)
Decrease in Building Permits 2006-2010: -74.08% (7th Worst)
Number of Listings With Price Reductions (Portland): 35% (Tied for 8th Worst Among 50 Largest U.S. Cities)
Oregon's real estate market has suffered the double blow of a sharp drop in both building permits and price reductions on existing homes. Unemployment is 10.6%, the fifth worst rate in the country. The number of new building permits decreased by 74% from 2006 to 2010. In December 2010, 35% of listings in Portland, the state's largest city, had price reductions.
8. Florida
Vacancy Rate: 21.03% (2nd Worst)
2010 Foreclosures: 5.51% (3rd Worst)
Decrease in Building Permits 2006-2010: -81.37% (3rd Worst)
Unemployment in Florida is 12%, the fourth worst in the country. Approximately 1.1 million residents are out of work. Statistics show that 21.03% of the state's housing units are vacant. Furthermore, 5.51% of homes have been foreclosed upon. Florida was among five states that had the largest real estate booms from 2000 to 2006. Residential prices in some waterfront areas like Miami and Palm Beach rose by much more than double during that period. New home and condominium construction soared. Many of those residences have never been occupied and are still part of the inventory of homes for sale.
Sources:
1) Vacancy rates for 2010 -- American Community Survey (Census Bureau)
2) Foreclosure rates for 2010 -- RealtyTrac
3) November 2010 unemployment rates -- Bureau of Labor Statistics
4) Change in building permits from 2006 to 2010 -- Census Bureau
5) Change in population from 2005 to 2010 -- Census Bureau
6) Price reduction by cities for 2010 -- Trulia
Wednesday, January 19, 2011
Economics: Association of Mortgage Investors Shares Solutions to Foreclosure Crisis
In a White Paper directed to the states Attorneys General, the Association of Mortgage Investors (AMI) which represents private investors, public and private pension funds and endowments, puts forth a broad indictment of the mortgage servicing industry and offers its solutions to the foreclosure crisis.
All 50 of the Attorneys General are engaged in an investigation of the mortgage process and are expected to design a multi-state settlement in the next few months. AIM, in a press release accompanying the White Paper said, "It is the greatest hope of mortgage investors that any settlement carefully considers the impact on the performance of state pension, retirement systems, life insurance, and medical savings plans and ensure that the responsible parties bear the expense of past bad acts. Furthermore, mortgage investors believe the only way to truly put distressed borrowers on a sustainable path forward is by including the borrower's entire debt load in the modification or workout program."
AMI says that 90 percent of the money invested in mortgage-backed securities (MBS) is public money, invested on behalf of state pension funds, retirement systems, university and charitable endowments and that these investors have suffered material losses through faulty, inefficient, and sometimes improper servicing of the mortgage loans. Borrowers have also suffered in their interactions with servicing which AMI states has dumped excessive fees on them, delayed resolutions of problems, and created longer term housing and mortgage problems.
The Paper, The Future of the Housing Market for Consumers after the Crisis: Remedies to Restore and Stabilize American's Mortgage and Housing Markets, outlines AMI's solutions to the foreclosure crisis broken down into two components: Better Execution, and Sustainable Solutions.
In the first component AMI states that resolving the current crisis requires intermediaries to interact with consumers and distressed borrowers in a fair and productive manner. To that end, servicers should staff their collections operations so that employees should not be handling a caseload of no more than 100 to 150 120-delinquent loans and that those borrowers each have a single point of contact. It also recommends the use of special servicers who can offer enhanced counseling to find a "right-sized" modification. There also needs to be an independent entity to resolve other consumer debt issues where credit card and auto loan holders are not willing participate.
Loss mitigation and foreclosure should be transparent and open to the homeowner. The servicers have an obligation to educate the homeowner as to the process of foreclosure and available alternatives and underlying mortgage and foreclosure data such as servicing fees, foreclosure expenses, and the asset loss breakdown must be disclosed. Costs due to servicer error should not be reimbursed by the RMBS trust and borrowers must be protected from "egregious fees" when they fall behind on mortgage payments. The process must be equally transparent to investors who do not have access to the most basic information about the mortgages such as the loan files.
Homeowners need sustainable solutions that put them on a clear path to affording their debts in order not to prolong the recovery of the housing markets. AMI said that investors support sustainable modifications and suggests an option to re-establish payment under a 31 percent front-end debt-to-income ratio; a refinance at 97.75 LTV into the FHA Short Refinance Program, or a reduction of all junior liens at a minimum of a proportional write-down. Most important, however, the paper says is that all consumer debt should be restructured as part of the modification. A sustainable mortgage will have a combined loan-to-value of not more than 115 percent and a back-end ratio of 50 percent of less. Without resolving consumer debt, it is inevitable that modifications will not succeed. A mechanism such as bankruptcy or binding arbitration is necessary to compel other consumer debt holders to participate in debt reduction which they have not been willing to do.
Where a sustainable modification does not work, the servicer and/or loan counselor should work with the borrower to efficiently avoid foreclosure through a short sale or deed-in-lieu. If there is a second lien there needs to be a mechanism to bypass that lenders approval in order to avoid foreclosure.
As great as these suggestions are, they do not address the overwhelming challenge facing homeowners and investors at the most important time which is RIGHT NOW!
Our governments failure to grasp the catastrophic situation at hand continues to confuse the person who is facing foreclosure or has seen their investments disappear. When will those that represent us start doing that instead of focusing on their own needs of re-election or lining their pockets while protecting the banks and financial institutions that have funded their careers.
All 50 of the Attorneys General are engaged in an investigation of the mortgage process and are expected to design a multi-state settlement in the next few months. AIM, in a press release accompanying the White Paper said, "It is the greatest hope of mortgage investors that any settlement carefully considers the impact on the performance of state pension, retirement systems, life insurance, and medical savings plans and ensure that the responsible parties bear the expense of past bad acts. Furthermore, mortgage investors believe the only way to truly put distressed borrowers on a sustainable path forward is by including the borrower's entire debt load in the modification or workout program."
AMI says that 90 percent of the money invested in mortgage-backed securities (MBS) is public money, invested on behalf of state pension funds, retirement systems, university and charitable endowments and that these investors have suffered material losses through faulty, inefficient, and sometimes improper servicing of the mortgage loans. Borrowers have also suffered in their interactions with servicing which AMI states has dumped excessive fees on them, delayed resolutions of problems, and created longer term housing and mortgage problems.
The Paper, The Future of the Housing Market for Consumers after the Crisis: Remedies to Restore and Stabilize American's Mortgage and Housing Markets, outlines AMI's solutions to the foreclosure crisis broken down into two components: Better Execution, and Sustainable Solutions.
In the first component AMI states that resolving the current crisis requires intermediaries to interact with consumers and distressed borrowers in a fair and productive manner. To that end, servicers should staff their collections operations so that employees should not be handling a caseload of no more than 100 to 150 120-delinquent loans and that those borrowers each have a single point of contact. It also recommends the use of special servicers who can offer enhanced counseling to find a "right-sized" modification. There also needs to be an independent entity to resolve other consumer debt issues where credit card and auto loan holders are not willing participate.
Loss mitigation and foreclosure should be transparent and open to the homeowner. The servicers have an obligation to educate the homeowner as to the process of foreclosure and available alternatives and underlying mortgage and foreclosure data such as servicing fees, foreclosure expenses, and the asset loss breakdown must be disclosed. Costs due to servicer error should not be reimbursed by the RMBS trust and borrowers must be protected from "egregious fees" when they fall behind on mortgage payments. The process must be equally transparent to investors who do not have access to the most basic information about the mortgages such as the loan files.
Homeowners need sustainable solutions that put them on a clear path to affording their debts in order not to prolong the recovery of the housing markets. AMI said that investors support sustainable modifications and suggests an option to re-establish payment under a 31 percent front-end debt-to-income ratio; a refinance at 97.75 LTV into the FHA Short Refinance Program, or a reduction of all junior liens at a minimum of a proportional write-down. Most important, however, the paper says is that all consumer debt should be restructured as part of the modification. A sustainable mortgage will have a combined loan-to-value of not more than 115 percent and a back-end ratio of 50 percent of less. Without resolving consumer debt, it is inevitable that modifications will not succeed. A mechanism such as bankruptcy or binding arbitration is necessary to compel other consumer debt holders to participate in debt reduction which they have not been willing to do.
Where a sustainable modification does not work, the servicer and/or loan counselor should work with the borrower to efficiently avoid foreclosure through a short sale or deed-in-lieu. If there is a second lien there needs to be a mechanism to bypass that lenders approval in order to avoid foreclosure.
As great as these suggestions are, they do not address the overwhelming challenge facing homeowners and investors at the most important time which is RIGHT NOW!
Our governments failure to grasp the catastrophic situation at hand continues to confuse the person who is facing foreclosure or has seen their investments disappear. When will those that represent us start doing that instead of focusing on their own needs of re-election or lining their pockets while protecting the banks and financial institutions that have funded their careers.
Friday, January 7, 2011
Patti and Cheryl Murray
Patti and Cheryl just closed on the refinance of their home, listen to what they have to say about their experience with Cornerstone Mortgage.
Tuesday, January 4, 2011
Mortgage Insurance is Tax Deductible!!
Congress recently extended legislation that makes mortgage insurance (MI) premiums tax deductible for many homeowners through 2011. Click here to find out more.
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