New Housing Construction Education for Real Estate Investors

Educational Meeting next Tuesday the 15th at the North San Diego Real Estate Investors Group! This is my baby - do us right, Leo!
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Creating Inventory with New Construction

with Leo Clark

Are you looking for a real estate business with high profit margins, little competition and opportunities everywhere you look? Due to low levels of housing inventory coupled with soaring demand -- the time has never been better to create your own inventory and profit.

Now may be the time to add new construction to your real estate investing tool belt. Building quality new homes can be easier than rehabbing many existing properties, and often yield higher profit margins. Leo Clark, a successful land developer and new construction specialist, has mastered this unique investment strategy and will teach us what he knows.

Topics covered will be:

• Why creating inventory through new construction is the best strategy NOW!
• How to locate projects for development
• Adding square footage for a higher-priced sale
• Acquiring the private lenders needed for your projects
• Case studies of 8 current new construction projects
• Don’t succumb to the notion that all the low hanging fruit has been picked. Join us to learn how to create your own inventory with new construction!

Here is a Link to the NSDREI website: http://www.nsdrei.org/

Mortgage_Loss Mitigation_Short Sales_Bank Negotiations... NEWS YOU CAN USE is BACK!

Hello Fellow Real Estate Investors, Agents, Homeowners and Industry Professionals. After working a year + on some specific personal projects, and taking some time off from the public eye, I'm baacckk! Not sure that is good news for anyone, but like it or not, here I come. Ready to blast Bank of America, wreak havoc on Wells Fargo, challenge Chase, and take down Nationstar and OCWEN! It's time to put these big boys back in their places.

After retiring from the North San Diego Real Estate Investors Group, I have been busy working on my own real estate portfolio and dabbling in notes, hard money lending, and seller finance investments. Also, I have seen the fix and flip business tank like no other time in my 30 year history in the business.

But 'ya know, a funny thing happened on the way to the forum. Recently, I started to notice a strong deja vu feeling when looking at the market - and attitudes of buyers, sellers, and agents. It's 2006 all over again! Or is it 1929 all over again? Well, no matter, it's time to get back to work!

So hang on to your hats! For the latest news, developments, hints and advice on taking advantage of the imminent Real Estate Meltdown 2 - subscribe to this newsletter now!

Richard Worcester | San Diego Realty and Investment Group
960 W San Marcos Blvd | Suite 230 | San Marcos, CA 92078
CA BRE License # 00919559 | CA CSLB License # 874711
For the Latest Market Information go to: www.78Homes.com !

2nd Lien Short Sale Nightmares

As a long time short sale negotiator for investors, homeowners, and agents, I have seen many changes in the loss mitigation practices of the lenders. From downright incompetence to criminal wrongdoing, the banks have shown ME their true colors many times over. Let's just say that the lawyers will have their work cut out for them for at least a decade, once the banks have been called on the carpet for their actions.

At this time, let me talk specifically about 1 alarming trend - dealing with subordinate lien holders. It seems that subordinate liens have decided to make a stand, and hold out for payoffs which are out of sync with the standard short sale configuration, often times in conflict with another department of the SAME BANK!

Prior to spring of 2014, with rare exception, 2nd liens and other subordinate liens had acknowledged and accepted that they were in a weak position in a short sale settlement. They would take an industry standard settlement of 3 to 8% (of their unpaid balance) to allow a short sale to take place. Lately, however, these lenders have changed their position and are now holding out for settlements of 20 to 50% of their balance - or more.

The problem with this is twofold. First, the senior lien holders will not agree to these amounts. So the subordinate liens have taken to "suggesting" that they get paid in some roundabout way that in essence defrauds the senior lien. Sound ridiculous? Sound criminal? Remember we are dealing with collections departments here - the Wild West of the financial industry.

Second, and most important of all, this practice does irreparable harm to the principals in the sale. The seller is deprived of a fair and timely resolution to their distress, and often forced into an unnecessary foreclosure, while the the buyer is forced to wait far too long for settlement - if it comes at all!

All of this is because these financial institutions can not get their act together, or they think their culture of corporate greed is somehow good for the shareholder.

So bottom line, if you are hoping for a short sale settlement agreement from a subordinate lien, be prepared for lengthy delays and unreasonable demands.

Secondary Servicer Karma...

from Paul Muolo at Inside Mortgage Finance...

Keep in mind that Ocwen, Nationstar Mortgage and Walter Investment have built their businesses on the purchase of “legacy” MSRs from the megabanks. But what if that business model no longer works? What do they do next? Next week Nationstar reports its second quarter results. If the company misses the targets set by investment bankers, it could be a blood bath...

… CLARIFICATION: This past week, in a news item about Nationstar, we said the nonbank lender/servicer was under investigation by the NYDFS. But a spokesman for the company took umbrage at the language we used, saying: “We work with regulators and government entities every day and are continually asked to provide information for their review. That doesn’t constitute being ‘under investigation,’ and again, to my knowledge it’s not a term that the NYDFS has used itself. We have not provided any further commentary regarding this matter since our initial statement that we would comply with the request, which we have.” However, we will point out at that back in March the NYDFS said it had received hundreds of complaints about Nationstar’s practices, including problems with loan modifications, improper fees and lost paperwork. NYDFS chief Benjamin Lawsky asked Nationstar to disclose a number of operating details to help the state regulator gauge whether the servicer’s growth is harming borrowers. I guess that’s not considered an investigation.
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So I wonder whom the BIG Banks are gonna dump this crap on next? Get ready for wholesale packaging of nonperforming notes....

The Federal Reserve and the Banksters... 2 Peas in a Pod!

I was rudely awakened from my Financial Slumber this evening by our old friend Mish Shedlock. As usual, he has his foot mashed down on the gas pedal, hurling us into the realization that the Federal Reserve does not give a damn about the little guy, as it contends, but rather it watches out for the banksters and their ill gotten gains.
Here is a snippet from an Article by Yves Smith of Naked Capitalism.  Thanks to Yves and Mish for the wake up call...

In other words, readers are supposed to take Yellen’s claims at face value, when the Fed’s policy of saving banks by goosing asset prices and convincing itself that ordinary people would benefit because the “wealth effect” would lead to more consumption. The result has been widening income and wealth disparity and corporate profits at record levels as a percent of GDP, meaning workers are getting less than they’ve ever gotten. Yellen as the head of one of the regional Federal Reserve Banks and member of the FOMC can’t escape from responsibility for these policies. And there’s no evidence of meaningful opposition; unlike some Federal Reserve presidents, like Charles Plosser and Dick Fisher, who have often taken issue with the Fed’s official position in their speeches, Yellen made little use of her bully pulpit at the San Francisco Fed.

Here is the link to the article. Fascinating reading...

http://www.nakedcapitalism.com/2014/07/yellen-tells-whoppers.html

That this grandmotherly appearing woman can be so disingenuous is hard to swallow. But as Bob Campbell often says, these people have never had a real job. They're clueless politicians.

From the National Association of Homebuilders... One of my 5 Key Metrics - Consumer and Homebuilder sentiment. As you can see from the article, homebuilder sentiment is up to 49% positive. Of course that means that 51% are negative, but it is on the rise...

Builder Confidence Rises Four Points in June

June 16, 2014 - Builder confidence in the market for newly built, single-family homes rose four points in to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. It remains one point shy of the threshold for what is considered good building conditions.

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “However, builders are facing strong headwinds, including the limited availability of labor.” 

“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe. “Builders are reacting accordingly, and are moving cautiously in adding inventory.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three index components posted gains in June. Most notably, the component gauging current sales conditions increased six points to 54. The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three-month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47. The Midwest fell a single point to 46.

Has the Market hit a Wall?

Published: July 2, 2014
Below is a chart showing the run up of new listings in San Diego County over the last month. We will be presenting this and other related inventory, sales and "days on market" charts over the next 30 days. Why are we doing this? Because it is our belief that the market may have hit a wall, with declining demand, increasing days on market, and spiking inventory. Deja vu ala 3rd quarter 2006?

So check out this 1st chart showing New Listings on the San Diego Multiple Listing service. As you can see, on a technical/moving average basis, we should see inventory decline again as it has over the past 4 inventory spikes. However, we believe that inventory may continue high and even spike higher. As a result, due to the law of supply and demand, prices may stall and even decline.