Real Estate in a Slowing Economy

Hello all,

I know it's been forever since I posted anything. The economy caught up with my business as well. Due to the tightening mortgage guidelines and media blowing everything out of proportions. I have had a lot of buyers decided to wait thinking home prices will fall further and a few who no longer qualify. Sellers are having a hard time dealing with the reality that it is going to take a while to sell you home unless you price very aggressively from the start.

Here is the Seattle area we really haven't seen that big of a decline compared to other markets. Luckily we have enough different large employers that unemployment and wages have remained fairly steady through the downturn of the economy.

Here is what surprises me. This happens ever 10-15 years it's a market correction. Yet the media plays it up like it is "The End of the World". This too will pass and those individuals who recognized the opportunities that are all around us right now are going to make a fortune when the market is back on the upswing.

It's investing 101.

"Buying when everyone is selling and then Sell when everyone is buying."

I for one joined a nationwide community of successful Real Estate investors. Took some classes to learn how I can creative (yet legally & ethically) aquire properties while the cost is low. I know have the contacts and ability to pickup several homes without using my own $$ or credit. I plan to find and hopefully purchase 10 properties before the market turns and starts going up. Nouveau Riche is the name of the community I joined. I highly recommend anyone who is interested in the making some great money by investing in real estate check this company out.

Here's a couple websites.

www.investorconcierge.com - Login as a guest and check out the deals exclusively available to members...WOW

"Wake Up America" - Watch the video..It really hit home w/ me.

www.reinvestorsolutions.com/AuxierFinancial - Go here to get more information on signing up or email me directly.

That's all for tonight. Life is good. Just remember...If you're not sure what to do...pay attention to the Media then do the exact opposite. Have a great night.

Josh

Foreclosure Options

Home Foreclosure Options Explained

Foreclosure occurs when the homeowner falls behind in monthly mortgage payments and defaults on the loan. The lender repossesses or sells the home in order to satisfy the debt. Typical options you can pursue to avoid a home foreclosure are set out below. Your solution will depend on your financial status, the mortgage's default status, the type of loan you have and the various laws that apply.

Reinstatement

Prior to a foreclosure sale, borrowers have the right to reinstate a delinquent loan. The
reinstatement option gives homeowners the opportunity to make up back payments plus any
incidental charges incurred by the bank such as filing fees, trustee fees and legal expenses.
Paying off the reinstatement amount will cancel the foreclosure and enable the homeowner to
continue to live in the home as if no default occurred. For many delinquent borrowers, however,
reinstatement is not an option because they are deep in debt and cannot make up back payments, plus other expenses.

Short Sale

A short sale occurs when a property is sold and the lender agrees to accept a discounted
payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

Short Refinance

In a short refinance, the lender may agree to forgive some part of your debt and refinance
the remaining debt into an entirely new loan.

Special Forbearance

A forbearance is an agreement made between a mortgage lender and delinquent borrower
in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the
borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower
current on his or her payments. A forbearance agreement is not a long-term solution for
delinquent borrowers; it is designed for borrowers who have temporary financial problems
caused by unforeseen problems such as temporary unemployment or health problems.

Borrowers with more fundamental financial problems - such as having chosen an
adjustable rate mortgage on which the interest rate has reset to a level that makes the monthly
payments unaffordable - must usually seek remedies other than a forbearance agreement.

You may qualify for this if you have recently experienced a reduction in income or an
increase in living expenses. You must furnish information to your lender to show that you would
be able to meet the requirements of the new payment plan

Mortgage Modification

A mortgage modification is a modification to an existing loan made by a lender in
response to a borrower's long-term inability to repay the loan. Loan modifications typically
involve a reduction in the interest rate on the loan, an extension of the length of the term of the
loan, a different type of loan or any combination of the three. A lender might be open to
modifying a loan because the cost of doing so is less than the cost of default.

A loan modification agreement is different from a forbearance agreement. A forbearance
agreement provides short-term relief for borrowers who have temporary financial problems,
while a loan modification agreement is a long-term solution for borrowers who will never be able
to repay an existing loan.

You may qualify if you have recovered from a financial problem and can afford the new payment amount. Most lenders can work with home owners even if they have poor credit and have a foreclosure date. Chances to obtain a loan to regain a current status on your mortgage become diminished once you have received a notice of default (NOD). Notice of Default is usually sent after 90 days of the mortgage payment being late.

Partial Claim.

Your lender may be able to work with you to obtain a one-time payment from the FHAInsurance fund to bring your mortgage current.

You may qualify if:

• your loan is at least 4 months delinquent but no more than 12 months delinquent;
• you are able to begin making full mortgage payments.

When your lender files a Partial Claim, the U.S. Department of Housing and Urban
Development will pay your lender the amount necessary to bring your mortgage current. You
must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full. The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property.

Pre-foreclosure sale.

For owners who don’t care to save the property, or who have no other choice than to let
the property go, selling the property may be a smart choice. If you have enough equity in the
house to allow you to pay off the mortgage in full, then a sale is usually your best option. This
option preserves your equity and what’s left of your credit score. Selling also leaves you in a
much better financial position should you want to buy another home in the future.

Deed-in-lieu of foreclosure

A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which
the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in
exchange for the release of all obligations under the mortgage. Both sides must enter into the
agreement voluntarily and in good faith.

A deed in lieu of foreclosure has advantages for both a borrower and a lender; mainly the
avoidance of time consuming and costly foreclosure proceedings. In addition, the borrower
avoids some public notoriety, and may even be able to lease the property back from the lender.
The homeowner needs to assess certain risks which include, among other things, the risk
that the property is not worth more than the remaining balance on the mortgage and that junior
creditors might hold liens on the property.

This won't save your house, but it is not as damaging to your credit rating as a
foreclosure. You may qualify if:

• you are in default and don't qualify for any of the other options;
• your attempts at selling the house before foreclosure were unsuccessful; and
• you don't have another FHA mortgage in default.

Bankruptcy

A Chapter 13 bankruptcy filing can stall or derail foreclosure proceedings. That's because
of bankruptcy's "automatic stay" provisions that force creditors to the sidelines while the
bankruptcy court sorts things out. The lender can petition the court to allow it to continue with
the foreclosure, depending on where you are in the foreclosure process, but it should buy you
some time.

If there is no equity in the house (today's value less costs of sale less payoff balances on
all liens) the trustee in a Chapter 7 may abandon the house to you. That is, you keep it, as long as
you pay the mortgage.

A bankruptcy does not relieve the property of the liability for voluntary liens, like
mortgages or deeds of trust, nor for tax liens. So, the lender retains the right to foreclose if you
don't pay.

Economic Update June 2nd, 2008

Last Week in the News

New home sales unexpectedly rose 3.3% in April, the first increase in six months, the Commerce Department said May 27. As a result, the inventory of unsold new homes fell slightly to a 10.6 months’ supply versus the 11.1 months’ backlog recorded in March.

The Commerce Department further reported that the median price of a new home sold in April rose to $246,100, up 1.5% from April 2007. In a separate report, however, the Standard & Poor’s/Case-Shiller Index showed existing home prices falling 14.1% in the first quarter of 2008, compared with a year earlier, the biggest year-over-year decline since the index began in 1988.
For the week ending May 29, interest rates on 30-year fixed-rate mortgages rose to an 11-week high, Freddie Mac said.

More mixed economic news came from the industrial sector. Orders to U.S. factories for durable goods — those expected to last three or more years — dropped 0.5%, dragged down by big declines in demand for commercial aircraft and autos. However, excluding transportation, orders rose 2.5% in April, the biggest gain in nine months. Orders for electrical equipment and appliances surged 27.8%, the biggest increase on record.

Another boost for the economy came on May 29 when the Commerce Department upwardly revised first-quarter gross domestic product or GDP — the total tally of the nation’s goods and services — from its previous estimate of 0.6% to an annual rate of 0.9%.

Finally, despite the government’s sending out billions of dollars in stimulus checks, consumer spending nudged up a small 0.2% in April, half of March’s increase, the Commerce Department said May 30. Personal income also edged up 0.2% in April, again half of March’s 0.4% increase.
This week, watch for the May unemployment report due out on June 6.

Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar.

The predicition from economists is now that if the Fed Chairman lowers the key Federal Funds Rate it will be by only .25%. Or, Bernanke may leave things the same in an attempt to curb the rising commodity (Oil/gas, wheat, gold..etc) prices (inflation?) that we are all very aware of.

Some say the Federal Reserve Board has lost sight of one of their main objectives to curb or keep inflation under control by sharply lowering interest rates from 5.25% at the start of the Mortgage/Subprime Meltdown to the now very low 2.25%. The Prime Interest Rate (Prime)is very closely tied to the Federal Funds Overnight Lending Rate which stays right at 3% below the Prime. The Prime Rate (Prime) is what credit card, car loan, personal loans, & Home Equity Lines of Credit (HELOC) are calculated on. By lowering rates, The Fed, helps to stimulate the economy by reducing the cost of credit for consumers which usually causes people to get out in the market and buy more stuff.

Example: Due to an unforeseen flood, my wife and I had to remodel our home. As this was unplanned I used our HELOC to pay for a portion of the cost. The balance on our HELOC is approx $90,000. The monthly Interest Only (I/O) payment before The Fed began lowering interest rates in Fall of '07 was $581.25/mo. After the 3% decrease, the payment on the same balance (it's I/O so doesn't get paid down unless extra payments are made) is only $356.25. That's over a $200 difference.

The lowering of rates was put in motion in an attempt to keep the US Economy out of a recession as a result of the Subprime Mortgage/Credit Crisis. Has it worked? We'll see--it can take 6-12 months to see the full results of The Fed lowering rates. Unfortunately, unlike consumer credit like I mentioned before, mortgages aren't directly affected when The Fed lowers rates. So, we haven't seen a dramatic decrease in the interest rates for 1st Mortgages. We have seen many of the more creative and higher Loan-To-Value (LTV) programs being eliminated. This is causing there to be fewer buyers and, as a result, home prices have declined even in strong economic areas like the Puget Sound. What does all this mean? Investors: Now is a great time to pick up some Real Estate! Home prices are currently a bit lower, sellers are more flexible, and consumer credit is less expensive.

Example: Get your Integrated Agent (like myself) to find you a good quality home at a below market price (short sales are a plenty right now). Negotiate the seller to buy your interest down & possibly accept an extended closing, so the property will cash flow immediately (more rent than expenses=$$$/mo.). Maybe do some minor quick fixes, using low cost consumer credit, if absolutely necessary. Plan to hold the property for a minimum of 5-10 years. The results of an investment like this will include ongoing cashflow, a build-up of equity, plus additional bonuses which may include tax advantages.

This is investing 101 - Buy Low, Sell High. When is a better time to buy low? Contact me for a personalized investment analysis.

Economic Stimulus Video

Check out this video on CNN Money. It tells exactly what I have been promoting over the last couple months. The Stimulus package has some fantastic benefits for those homeowners who owe more than the standard convention loan limits of $417,000. These new loans and savings are available now. Just give me a call to see how much you can save.

http://money.cnn.com/video/#/video/fortune/2008/04/17/fortune.sloan.mortgage.fortune

If this link doesn't work in your browser go to http://money.cnn.com/video/ and find the stimulus plan's hidden gifts

My 1st Blog Post -- What I do.

I work mostly independently. The company I hang my licenses at is "The Real Estate Group" & "Integrated Mortgage," Jim Turner owns these as well as Integrated Property Management & Integrated Escrow. I was lucky enough to start my real estate career at these companies in Jan. of '05. I, unlike many real estate agents, received extensive training in many different fields including: Agency Law, how to represent both buyers and sellers, financing, appraisal, title, escrow, home inspection, and negotiation. Over the last 3-1/2 years I have helped my clients work through many different types of transactions.

What I enjoy most is representing those clients who are ready to move up into the next class of home. This is where an Integrated Agent really shines. Because I hold both an Associate Real Estate Broker License & a Loan Officer License, I am able to assist these clients with their entire transition into a home that better suits their needs. This allows me to make sure the transaction goes smoothly all the way to closing. I am also able to make sure my clients are getting the best deal possible in both their real estate negotiations & their financing. This one benefit has translated into savings in the $100s/mo and some of my clients have been able to purchase up to $60,000 more home for similar payments as the lesser expensive homes they were previously looking at prior to working with me.

Here are a few of the services I provide:

Selling
My cross training can provide insight into the thought process of buyers as well as make sure that when an offer is received it has the ability to successfully close. I also make sure my sellers' properties are consistently & continually being marketed to attract potential buyers who will see the highest value in the homes.

Buying
As an Integrated Agent who handles virtually every aspect of the transaction I am able to make sure your purchase is smooth and effortless. Having control of both your real estate and financing allows me to make sure you get the most benefit from the negotiations of a purchase & sale contract, allowing you to purchase significantly more home for your hard earned money.

Investment Analysis
I have the tools and experience necassary to make sure you take into consideration all of the important factors before making a commitment to purchase a property. Using our Return-On-Investment calculator you can see if a particular property has the potential to make your specific goals, allowing you to make an fully educated decision about whether or not to proceed with investing.

Refinances
My cross-training and continious observation of the underlying factors that control how interest rates & lending guidelines change allow me to predict the best time & whether or not a refinance is the best option.

Reverse Mortgages
Just one other option available to homeowners 62 and over. An easy way to access the equity in your home without having to sell.

There are many other educational services I provide to my clients throughout the real estate process. Please check back often to find out what is going on in the market through my eyes. I will continue to keep this blog updated with current information as I become aware of it.