Friday, December 26, 2008

102-TNG Radio - The Norris Group 12-27-08

Bruce Norris is joined this week by the loan officer for the Norris Group, Craig Hill, and the full-time property buyer for the Norris Group, Greg Norris.

Bruce asks Craig about how long he’s been in the hard money loan business and who the typical borrower was when he first started. Craig talks about buyers he used to work with and how it changed 20 years ago because of rule changes. Craig then talks about how he started working with Bruce and how it made much more sense to lend to investors. Craig says the investor has made not only more sense but are better at making payments.

Bruce then chats with Greg about his past year and a half as a property buyer. Greg talks about his early experience watching trustee sale buyers and what they liked to buy. Greg talks about loans available for investors and how conventional loans are currently at a liit of four.

Bruce asks Craig why lenders are hesitant to lend to investors. Craig says lenders have a false perception that investors are bad to lend to. An investor has more money down and has just as many reason to stay in a home as an owner occupant but lenders don’t want to be involved in that transaction.

Greg talks about how long ago he started making offers straight out of the MLS. Greg says making offers straight out of the MLS was not successful in early 2008 as the lenders wouldn’t budge. In the first six months of 2008, zero deals came out of the MLS, most were coming from auction. Now towards the end of the year, almost all came from the MLS that The Norris Group purchased. Now, The Norris Group is buying about 5% of the offers made.

Craig talks about last minute funding calls and why these investors are in a rush. Craig goes into detail why people with money make these investor loans. Craig says our main target market are seeing loans being made of $85,000 to $120,000 where last year those same homes were being bought for $200,000. There’s been a big change in price. Money sources have become a little nervous.

The perception right now is everyone wants a cookie cutter deal. Everyone wants a $100,000 loan and money sources do not want to be aggressive. Those that want larger loans or are buying in areas out of comfort zone areas will need more in money in the transaction. Money sources in Northern California are wanting to invest in smaller loan amounts and also invest in Southern California where they feel TNG performs best.

Most hard money loans have to have investors put more money into the deals right now. Different sources have gone out the window because of the market.

Bruce asks Greg what he is looking for now as he is making offers on things inside the MLS. Greg says he is looking for anything within a $30,000 range where he thinks he can buy it and make a profit. Sometimes these are short sales and sometimes his offers don’t get accepted for months. Sometimes he gets deals because other investors fall out and he’s the only one left.

At this point, Greg is not being able to talk with people directly often. Right now, banks seem to be dictating to REO agents where before there was much more relationship involved. Greg says he sometimes gets no reaction from REO agents when making offers. Every agent reacts different. Some email when we didn’t get a deal and some do.

Bruce says between 2000-2006 most of our hard money loans came from investors purchasing from people directly. Craig says it’s now changed almost completely where 100% are bought out of the MLS, through auctions, and occasionally from trustee sale and probate. The MLS at this point is creating the most real estate opportunities.

Out of the 40 properties Greg has purchased this year, 30% of the deals were auctions, the rest were from the MLS. Greg is not looking forward to attending auctions. It’s a lot of work for sometimes no results. REDC and Hudson and Marshall have been mixed this year.

Craig says the inventory he is making hard money loans on is different form the 90s. In the 90s there were more 30s and 40s built home located in San Bernardino and Moreno Valley. This time, the investors are being savvier. Investors are buying a little bigger homes and newer homes. The inventory is much better.

Craig talks about why some investors get frustrated because they can’t participate in our money program. Credit issues aren’t the biggest issue. Liquidity is just very important right now. Most people don’t mind hearing “no” because we’re trying to set them up for success. Some investors just don’t understand the process.

Bruce talks about deals Craig turns down and investors coming back later thanking him for now allowing them into the deal. Craig finds that very gratifying. More next week.

Craig Hill has been in the hard money loan business for over 25 years. Greg Norris has been working as the Norris Group's full time property buyer for going on two years. More information about The Norris Group at thenorrisgroup.com and tngproperties.com.

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Friday, December 19, 2008

101-TNG Radio - Stephen Blank 12-20-08

Bruce Norris is joined this week by the Senior Resident Fellow of Finance for the Urban Land Institute, Stephen Blank.

Bruce asked about the ULI Emerging Trends report and how long it’s been around. Stephen says it’s been around for 30 years and has always been national in scope. The report has gone through different partnerships but the report is now a joint venture between the Urban Land Institute and Price Waterhouse Cooper. The report interviews 100s of people in the real estate business and compiles their opinions. Interviewees include developers, private and public owners, advisors, institutional investors, service providers and lenders.

Stephen says the people that were interviewed in 2007 actually said they were expecting 2008 to be difficult. Emerging Trends is unique because of the process and the one-on-one interview process. These interviews tend to be very frank in nature. There is one writer and three editors to help put the report together. The real estate industry has been very supportive in being involved in this report.

Bruce asks Stephen where the blame is in his opinion. Stephen says there was a period of unparalleled liquidity. With that liquidity came an increasing need for income-producing assets and increased competition to lend money so interest rates were forced to low levels. Increased liquidity increased leverage pushing down rates of return.

The subprime market was unregulated and obviously became an issue. Mortgage bankers took these loans and then passed them on to Wall Street. Some argue the models that were used were too old and relied to heavily on ratings. There was a failure to do due diligence and it’s created a big mess. People ended up day trading condos.

Bruce says there’s been some confusion between investor and speculator. Now, we’ve assured ourselves the downturn because the investors are limited to the number of loans. Investors can’t 1031 exchange and investors can’t buy rentals due to limits put in place by lending institutions. Purchase prices are being driven down even further because of this issue and the government isn’t addressing it at this time.

Bruce asks if Stephen thinks the residential problem will move to commercial and if it will be as severe. Stephen says he doesn’t think they’re related and that an economic downturn needs to happen. Commercial is a lagging indicator. Residential could cause a downturn in the economy which would then spill over to commercial. Stephen says we didn’t build as much so we’re not going to have over supply meeting under demand like the last down market. Only some areas like Las Vegas and Florida will have issues because of over building.

Bruce asks if he sees commercial lenders taking back a glut of properties in the coming years. Stephen sees sharp increases in foreclosures for loans adjusting in 2009-2010. The loan-to-value ratios are going to be an issue unless their income has increased a great deal. Bruce and Stephen discuss if lenders could leave a loan in place to avoid taking back a building, also known as performing non-performing loans. The debt is still being paid. Lenders, if they can, would rather nurse these along until the market improves. Not all lenders can do that unfortunately.

Bruce asks if commercial lenders did the same kind of stated income programs that we saw in residential. Stephen says that as competition increased, banks started looking at other factors to base loan amounts on. Reserves were lowered. If the markets had continued to go up, the property could afford this new method. In a decline, it’s an issue.

Stephen sees cap rates going up. 15-20% price decline could occur because the cap rates are changing. Not as much personal guarantees are on commercial. Moving forward from now, more lenders are requiring personal guarantees.

Historically loans had an amortization with ten year term assuming a 25 year amortization period. In ten years you would historically amortize 12-13% of the loan which added protection for the lender, even if prices declined. As the market was more competitive, amortization period was eliminated and the loans were interest only. As these are refinanced, no equity exists.

Bruce asks about unemployment and commercial. Stephen says it will be an issue and vacancies will increase. Declining lease rates will also be an issue. Stephen says REITs are not originators of loans but purchase already existing debt. They may originate mezzanine loans but are not conventional lenders. REITs are owners of income producing properties. Primary lenders are commercial banks (40% of markets), insurance companies (20% of market), and commercial mortgage-backed securities (40% of market). Stephen says that the mortgage backed system is on life support. Insurance agencies are a major source now but it’s taking more time and they have the pick of the market.

For more information on the Urban Land Institute, visit uli.org.

Stephen R. Blank joined ULI-the Urban Land Institute (ULI) in December 1998 as Senior Resident Fellow, Finance. His primary responsibilities include: expanding ULI’s real estate capital markets information and education programs; authoring real estate capital market commentary for ULI’s web site (www.uli.org); participating as a principal researcher and adviser for the Emerging Trends in Real Estate series of publications; researching and authoring papers and articles on finance issues for Urban Land; and organizing and participating in real estate equity and debt capital markets programs at ULI’s Fall and Spring meetings, the McCoy Symposium on Real Estate Finance, District Council meetings, and ULI’s European, Asian, and Latin American Conferences, as well as participating in real estate industry meetings, seminars, and conferences.

Prior to joining ULI, Mr. Blank served from December 1993 to November 1998 as Managing Director, Real Estate Investment Banking of CIBC World Markets, the successor to Oppenheimer & Co., Inc. His responsibilities included: structuring, underwriting, and executing corporate financings including initial public offerings of common and preferred shares, unsecured debentures, and convertible bonds; property acquisitions, dispositions, and financing; and financial advisory services including mergers and acquisitions, corporate restructurings, and recapitalizations.

Prior to joining Oppenheimer & Co., Inc., Mr. Blank served from February 1989 to November 1993 as Managing Director of Cushman & Wakefield, Inc.’s Real Estate Corporate Finance Department, where he was responsible for property acquisitions, dispositions, and financings, as well as providing financial advisory services including mergers and acquisitions, restructurings, and recapitalizations.

From August 1979 to January 1989, Mr. Blank served as Managing Director, Real Estate Investment Banking, of Kidder, Peabody & Co., Inc. where his responsibilities included property acquisitions and dispositions, placement of mortgage financing, financial advisory services, and corporate financings. Additionally, Mr. Blank served as President of KP Realty Advisers, Inc., the firm’s real estate investment advisory subsidiary.

From August 1973 to July 1979, Mr. Blank was a Vice President, Corporate Finance, of Bache & Co., Incorporated, where he was responsible for transaction origination, due diligence, and structuring, marketing and closing, and post-offering supervision of SEC-registered and privately placed direct investments in real estate and other industries.

Mr. Blank is a member of The American Society of Real Estate Counselors (CRE designation), the National Association of Real Estate Investment Trusts, and ULI-the Urban Land Institute, and serves as a member of the board of directors and Chair, Audit Committee, of MFA Mortgage Investments, Inc., a member of the board of directors and the Audit Committee of Home Properties, Inc., and is a member of the board of trustees of Ramco-Gershenson Properties Trust where he serves as the Board’s Lead Trustee and Chair, Audit Committee. Additionally, Mr. Blank is a member of the Advisory Board of the Real Estate Research Institute, the editorial board of the Journal of Asia-Pacific Real Estate, and the Editorial Board of RERC Industry Outlook, a publication of the Real Estate Research Corporation. Further, Mr. Blank acts as ULI’s representative to the Green Building Finance Consortium.

Mr. Blank has participated as a Guest Lecturer at the Harvard University Graduate School of Design Advanced Management Development Program, the Boston College Graduate School of Business Administration, and the Cornell University Program in Real Estate.

Mr. Blank received his B.A. degree from Syracuse University and was awarded a M.B.A. degree from Adelphi University.

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Friday, December 12, 2008

100-TNG Radio - Lee and Associates 12-13-08

Bruce Norris is joined once again by Paul Earnhart (Founding Principle) and Erik Hernandez (Senior Vice President) of Lee and Associates in Ontario, CA.

Bruce asks Paul how this downturn compares to downturns he’s seen before. He says this one is broader compared to the 90s. In the 90s there was an oversupply of four years. Lenders ended up taking back large quantities of properties and the RTC got involved. Values fell rapidly because of quick liquidation. The Inland Empire survived because of the influx of companies from the LA area looking at their bottom-line and moving into cheaper areas. Capital, however, never dried up. Banks were still making loans. Capital now is much tighter. This time it’s systemic and more problematic.

Bruce asks about oversupply of inventory. Erik says certain categories are overbuilt and in certain areas there’s lots of standing inventory. Some inventory is too far along into building to stop. There’s more coming in the coming year. They started building when vacancy and absorption rates looked good and the world has changed.

Bruce thinks there is going to be a vacant building glut. He asks how vacant buildings are going to be appraised. Paul says appraisals will be looking at income values not at sale comps. If someone wants a loan on a vacant building the financing will be of the hard money variety or you’ll need to prove a tenant is coming in. Owner occupied is still good but the income will still be scrutinized.

Bruce talks about what happened in the past with the City of Perris. Bruce feels the next two years will be ugly but long-term migration outlooks look good. He asks Paul about unemployment and how that changes the commercial real estate industry.

Paul says it’s a two-edged sword. Warehouses are a very small piece of commercial and over 100 million square feet over the past five years. The assumption was that consumers would keep spending so it’s been really overbuilt. The question becomes now if there’s a structural vacancy. Some companies are already gone: Linen and Things, Bombay Company, Levitz, etc. If people aren’t working they aren’t spending. There’s less need for these kinds of spaces.

Bruce asks if the new tenant that takes over for some of these large spaces pay much less. Erik says landlords are very motivated and list lease rates and significant discounts.

Bruce talks about reading through loan docs for his line of credit and how he was surprised at the ways the lenders can get heir money back. He asks if commercial is the same. Paul says that lenders do have some say if things start going bad. If lenders see the balance sheet doesn’t look good then they can take action.

Bruce talks about some investors writing themselves a check into savings from their home equity line of credit and the bank then taking the money out of the account and then closing the line of credit altogether. All agree it seems far reaching but more and more, even the most credit worthy individuals are having credit disappear.

Bruce asks Erik if we’re gaining commercial tenants. Erik says people who don’t have to be here are gone. Paul says the taxes and bureaucratic nonsense of California is not very business friendly. Businesses are only here because they have to be due to logistics of distribution and manufacturing. Those that don’t have to be here go to states like Texas and Arizona who are more business friendly.

Bruce asks if businesses tend to lease or buy in this market. Landlords are being very aggressive so buying a building would need to pencil. Commercial leases vary by sizes. Fixturizing a commercial building can be expensive so companies who put in the infrastructure for larger buildings will stay in longer leases.

All three talk about the very short time frame that economists and experts give industry constituents as far as market outlook and much of it is wrong. For those in commercial, there’s a very long time line and the world can totally change. Those that came out early saying there was a real problem took lots of heat.

Finally, Bruce asks where Paul and Erik see opportunity in the commercial sector. Paul sees land opportunity coming first followed by small to mid-sized office product. Industrial on mid to large size won’t be good for 12 to 24 months. Liquidity is the real issue here.

Paul Earnhart is the founding Principle at Lee & Associates – Ontario which is one of the most successful commercial real estate teams in Southern California.

Paul has been with Lee & Associates since 1983. Paul has his Juris Doctorate from Western State University and is affilaited with the Society of Industrial and Office Realtors (SIOR), the American Industrial Real Estate Association, the Industrial Asset Management Council, State Bar Association of California, and the Board Member of the Inland Empire Economic Partnership. Paul speaks for the American Industrial Real Estate Association Annual Forecast Meeting, the Appraisal Institute Annual Real Estate Recap, and the Inland Empire Economic Partnership.

Erik Hernandez a Senior Vice President with Lee & Associates – Ontario, and a partner with TEAM EARNHART. TEAM EARNHART continues to be one of the most successful commercial real estate teams in Southern California, and has achieved regional and national recognition within Lee & Associates and the real estate community for its success. TEAM EARNHART has a combined experience of over 50 years and has completed over $3 billion worth of real estate transactions.

Specializing in industrial real estate, Erik’s specialties include active land sales and development, tenant/buyer representation, landlord representation and investment sales and analysis. Erik has been active in the commercial real estate market in the Inland Empire for over eleven years, and has been a licensed real estate agent with Lee & Associates since 2000. He is a CCIM (Certified Commercial Investment Member) candidate, expecting to complete the designation in 2006. Erik was also selected to part of NAIOP’s2006-07 Class of the Young Professionals Group.

Erik brings a unique perspective to the review and analysis of the commercial real estate market, having previously directed the market research efforts for two Lee & Associates’ offices (Ontario and Las Vegas, Nevada) from 1995 through 1999, and also directed a companywide, 10 office market research effort for a major competitor from 1999 to 2000, before returning to Lee & Associates as a sales associate and member of Team Earnhart in 2000.

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Friday, December 5, 2008

99-TNG Radio - Lee and Associates 12-6-08

Bruce Norris is joined this week by Paul Earnhart (Founding Principle) and Erik Hernandez (Senior Vice President) of Lee and Associates in Ontario, CA.

Lee and Associates specializes in industrial commercial real estate. Bruce asks when the commercial real estate market peaked. Paul said the peak was about the same as residential but that it became more obvious in July of 2007. This is when several partners backed out of deals and much more scrutiny started taking place.

Bruce asks Erik about financing and if commercial had its own version of stated income. Erik says Lehman was doing commercial lending as well but it wasn’t as aggressive. Paul says lenders were willing to finance on sales comparables instead of income streams. No income stream analysis was taking place but now that has changed.

The typical buyer from 2004-2006 in the commercial Inland Empire market were Asian entrepreneurs and domestic buyers for consumer services. The market has receded but some areas on the outer edges of the Inland Empire are being hit harder. No new development is taking place. Foreign investors haven’t disappeared but are slow and cautious when making decisions.

Bruce asks if commercial deals were leveraged or if they were bought cash. Erik says if it was an owner occupant (owner user) the deal would typically have 10% down and 90% would be financed. Lenders would do a first trust deed at 50% and then a second at 40% would be guaranteed by the Small Business Administration (SBA). Erik says this program is currently still around. Wells Fargo, Bank of America, and some regional banks are still active in the commercial arena since they are only 50% into a transactions. Bruce asks if the SBA is in line for the bailout.

Paul says prices are down around 15% from the peak. There are a few spots where it’s worse. For those that can’t refinance, they are letting the building go into foreclosure.

Paul says they are expecting a rough road for the coming year. Rents and values have dropped and financing is impossible for some. The SBA financing is only good up to $3 million dollars. Anything over must use conventional financing. SBA is also more conservatively underwriting their loans. SBA is paying more attention to debt-coverage ratios (DCR) as opposed to pure sale comps. DCR measures your ability to pay the property's monthly mortgage payments from the cash generated from renting the property. SBA has not dried up so financing is still there.

Conventional financing is now limited to 65% of value. Lenders are much more cautious here. Bruce asks about mezzanine financing. Paul says it’s changed. Mezzanine financing used to be anything above 75% loan to value. Now it’s 60% loan to value. If the underlying lender will allow it, it’s much more expensive. 14-15% rates will apply and the financing will be for 3-5 years typically. The first can be around 10 years. They will want to get as much risk out of the way as possible.

If the property is very good construction and has good tenants, Cap rates are held low. Investors feel better protected here. The all cash buyers are looking for these nicer buildings. Leveraged buyers see higher cap rates. Caps rates are up 25% and Paul expects it to go up another 10%.

Bruce asks about what happens when a cap rate goes up from six to eight and what happens to the value. Paul says about a 25% in value takes place. Any new development is nearly impossible because land and construction can’t keep up with price adjustments. Bruce says similar things are happening for the residential market as properties are being bought for land value.

Bruce brings up that there is $100 billion of commercial financing that comes due in 2009. Bruce asks if Paul and Erik think it’s a problem for those hoping to refinance. Paul thinks that number is low because that number is premised on individual loans and some business have leveraged their building for lines of credit and those are coming due as well. Paul says that lenders can also make margin calls on these lines of credit. It could be a huge problem.

Bruce asks if pension funds buy real estate free and clear. Paul says that is true and pension funds don’t act as quickly and have a longer range outlook for investments. REITs are structured differently and some are fairing better than others. Bruce and Paul talk about REIT values going through the floor and if that will change how they are able to fund future projects.

There were many non recourse loans being made in commercial. Non recourse loans are now much more difficult to get.

Bruce asks about how insurance companies are involved and if they are big players in the financing of commercial real estate. Paul says they are much more risk averse and have pulled back in availability of funds.

Paul says vacancies are not out of control yet but they are starting to increase. Erik talks about vacancy (buildings with no tenants) versus availability rates. Many companies are subleasing space since down sizing is taking place. Vacancy numbers may be around 6% for the West End but availability rates are around 12%.

More coming next week and you can find Paul and Erik at lee-assoc.com.

Paul Earnhart is the founding Principle at Lee & Associates – Ontario which is one of the most successful commercial real estate teams in Southern California.

Paul has been with Lee & Associates since 1983. Paul has his Juris Doctorate from Western State University and is affilaited with the Society of Industrial and Office Realtors (SIOR), the American Industrial Real Estate Association, the Industrial Asset Management Council, State Bar Association of California, and the Board Member of the Inland Empire Economic Partnership. Paul speaks for the American Industrial Real Estate Association Annual Forecast Meeting, the Appraisal Institute Annual Real Estate Recap, and the Inland Empire Economic Partnership.

Erik Hernandez a Senior Vice President with Lee & Associates – Ontario, and a partner with TEAM EARNHART. TEAM EARNHART continues to be one of the most successful commercial real estate teams in Southern California, and has achieved regional and national recognition within Lee & Associates and the real estate community for its success. TEAM EARNHART has a combined experience of over 50 years and has completed over $3 billion worth of real estate transactions.

Specializing in industrial real estate, Erik’s specialties include active land sales and development, tenant/buyer representation, landlord representation and investment sales and analysis. Erik has been active in the commercial real estate market in the Inland Empire for over eleven years, and has been a licensed real estate agent with Lee & Associates since 2000. He is a CCIM (Certified Commercial Investment Member) candidate, expecting to complete the designation in 2006. Erik was also selected to part of NAIOP’s2006-07 Class of the Young Professionals Group.

Erik brings a unique perspective to the review and analysis of the commercial real estate market, having previously directed the market research efforts for two Lee & Associates’ offices (Ontario and Las Vegas, Nevada) from 1995 through 1999, and also directed a companywide, 10 office market research effort for a major competitor from 1999 to 2000, before returning to Lee & Associates as a sales associate and member of Team Earnhart in 2000.

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Friday, November 28, 2008

98-TNG Radio - Mark Fleming 11-29-08

Bruce Norris is joined this week by chief economist of First American Corelogic, Mark Fleming. First American CoreLogic, Inc. is the nation’s largest provider of advanced property and ownership information, analytics, and solutions.

Mark starts by explaining what Corelogic’s Core Risk Monitor is and what it evaluates. This evaluation tool is used to forecast mortgage default risk areas. The report makes use of house price dynamic trends, economic trends, foreclosure delinquency trends and collateral risk trends. Bruce asks of those trends which is the one that causes the others to follow. Mark says the economic and house price trends are the most important. Issues with price decreases and the ability for people to pay their mortgages continue to create problems.

Bruce asks if the downturn from 1991-1997 in California is following the same model we are seeing today. Mark says it’s slightly different. Mark says in the 90s it was more a function of unemployment. This time around, the house price downward trend is causing more of a problem. The economic downturn is following.

Bruce asks if the core factors are different for different states. Mark says yes but these two primary conditions are key. Mark talks about the Midwest and how their market has changed and reacted.

Bruce asks Mark about his take on affordability and if increasing affordability means less risk. Mark says that increasing affordability means more individuals will be able to enter the market on the demand side and means that inventory will be able to stop the price slides. There are a few steps along the way to get the market really going but affordability is important.

Bruce asks about Corelogic and how much emotions play part in the economy. Mark talks about the emotions to prices and houses and how individuals don’t like to lose. Bruce talks about people and the fear of people not wanting to buy for fear of losses. Mark says that some homes become such a good deal they get back in anyway.

In Corelogic’s report in the 3rd quarter of 2007, Bruce asks how Ohio and Michigan topped the highest risk market but aren’t in this year’s report. Mark says it wasn’t that they improved, other markets got worse. In Corelogic’s 3rd report of 2008, California has 8 of the top 10 riskiest markets and did not appear in their 2007 report. Mark says the price declines got these areas on the list.

Bruce talks about the historic nature of price declines in California and how it’s the worst he’s ever seen. Mark says even nationally it’s bad. What once were the top markets are doing so poorly it’s bringing down the national numbers. California and Florida are seeing large price declines and they are two of the largest markets. Historically, housing recessions are more localized.

Bruce asks about the percentage of houses that are upside down in California. Mark says 28% of loans in California are in the negative equity position. Corelogic only recently started these evaluations so has no idea what happened in the 90s. Corelogic uses market trends and valuation models to figure out home prices and ran data for September for their most recent report they released.

Bruce asks if there are states that are in worse shape compared to California. Mark says Nevada is in the lead with 48% of homeowners owing more on their property then it is worth. The 48% includes investors and anyone with a mortgage is counted. The mortgage stock in Nevada is much younger than California. They didn’t have the time to pay down the mortgage hence the reason they are so upside down. California has many more mature loans.

Bruce asks about unemployment and how it might cause further price declines. Mark says rising unemployment will lead to more foreclosures as more people can’t afford their payments. However, when individuals are in the negative equity position, studies shows mobility decreases and will tend to look locally instead of moving out of state for jobs. Bruce brings up that California is a nonrecourse state and people will find it easier to walk. Mark says it will be interesting to watch the behavior of people in this cycle.

Bruce asks if the bailout will help stem the foreclosure situation. Mark says the more loans that are modified the better we’ll do. Bruce and Mark discuss the moral hazard of re-writing some loans but not others. Mark says this is part of the challenge for those creating these mortgage modification programs.

Bruce says the actually foreclosure data says we’re actually down in foreclosures because of SB1137. Lenders have to go through more steps in the foreclosure process now and data is very misleading at this time. Corelogic says they are ignoring the seeming improvement in foreclosure numbers because of this bottleneck.

Bruce asks if in the model if the percentage of those over encumbered include those that refinanced to get money out of the house. Mark says the report includes all mortgages. For more information, see corelogic.com.

Mark Fleming is chief economist for First American CoreLogic, America's largest provider of advanced property and ownership information, analytics, and services. Fleming leads the risk management economics and research team, responsible for developing collateral and credit risk models—the basis of the company's risk management product suite—through monitoring the real estate market, identifying real estate and mortgage market trends, and analyzing the data in light of demographics and the economy.

Prior to First American CoreLogic, Fleming worked for Fannie Mae, developing property valuation models designed to drive collateral assessment applications used in mortgage origination, quality control, and loss mitigation. He has published research on spatial econometrics and presented at many international conferences.

Fleming graduated from Swarthmore College with a BA in economics and holds MS and PhD degrees in agricultural and resource economics from the University of Maryland.

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Friday, November 21, 2008

97-TNG Radio - John Husing 11-22-08

Bruce Norris is joined once again by Inland Empire Economist and Specialist John Husing.

Bruce Norris mentions that The Norris Group is now ready to start purchasing properties with the intent to hold them as rentals. Bruce says we’re buying at 28% of what the lender was owed.

John takes Moreno Valley as an example of what happened in the last cycle with rentals. The injection of rentals in areas that were traditionally owner occupied caused problems. Rentals are generally not as well cared for as owner occupied properties in the area. Home values go down because of this. In areas dominated by rentals, calls for police soar. Soon turnover increases as renters look for the best deals and there’s soon a rent war. Side effects of too many rentals can cause many issues. John says Moreno Valley was destroyed by HUD in the last cycle because they didn’t even think about the effects to the communities.

In the stabilization act, money has been given to cities to help stop this issue. Cities can negotiate prices in bulk and then double escrow the homes at certain prices over to construction firms to bring them back to nice homes. They then sell these homes to qualified first time home buyers. San Bernardino did this in the last cycle. 90% of the people who purchased those homes were still in 10 years later.

Bruce mentions that homeownership levels got too high and that more rentals will be a natural conclusion. John thinks it’s more of a pricing question. If prices got down to a level that’s affordable, people will buy. He says California has never built enough homes for its population.

John says that demand for homes is accelerating greatly. Unfortunately, the supply of foreclosures is still coming in great quantity which continues to bring down prices. John feels the only real solution is to get the principal down.

Bruce says Riverside is one of the possible hot spots once this all turns around. John says the Inland region has more construction dirt available then other counties. Over the next 25 years, Southern California will add 6 million people. Orange County and San Diego are built out or zoned out of being able to build. LA is in a similar situation. Once we get through this downturn, the Inland region has tremendous growth opportunity.

Bruce says that people would rather be in California then many other states. For the next couple of years, people from other states will start to recognize the opportunity to move to California and be making the same payment or less and be able to live in a better climate. Bruce thinks we’ll see massive in migration. John says he too thinks people will be looking at California as a place to retire.

Bruce talks about how he got to Riverside and the massive growth that’s taken place. John explains the three stage growth process. By the late 70s, Riverside developers started developing in the area. People were putting up houses where people didn’t want to live. But affordability is important. Later, the entrepreneurial developers come out here because there was a market. Retail centers soon follow because of demand. Housing boom tends lead to population serving businesses coming into the area. Industrial developers follow after which creates blue collar jobs. The Inland area was in Stage 3 where we saw increasing upscale houses being built. The Inland Empire saw much younger people move into the area. This influx of young talent with higher education opens up the area for much different jobs and services. The Inland Empire economy will be back on John’s three stage development once we get through this cycle.

John says San Fernando and Orange County went through this same three stage growth cycle. Orange County went through stage three in the 70s. John tells the story of South Coast Plaza. Orange County is actually worried because it’s losing its young and educated workers to the Inland Empire.

In Riverside, all industries are having a difficult time. Residential construction brought in a large about of jobs. Warehousing and distribution have also been main drivers for jobs. Now that these have both slowed, unemployment has boomed.

Bruce asks John if the Feds will crank up infrastructure projects. John says that would be the way to help the economy. The influx of cash to consumers by the government in May didn’t work because they paid off debt or went to Walmart.

Bruce asks John about the difference in median incomes from the Orange County and Riverside. John says they are very different. However, if you take the median income and then subtract the cost of housing, it’s about dead even. As the economy approves, we’ll continue to pull more and more people from Orange County for this reason.

More on John Husing and his research at johnhusing.com

In August 2006, Dr. John Husing was listed by the L.A. Times Magazine as one of the 100 most powerful people shaping life in Southern California. He is a leading authority on the impact of the goods movement industry on the region, and in particular its role as a provider of upward economic mobility to blue collar workers. He has just completed major studies on the impact of the proposed Clean Truck Program at ports of Los Angeles and Long Beach and has recommended some changes in strategy.

In addition, Dr. Husing has spent decades studying the city & county economies of Southern California with a specialty on the Inland Empire. This research began when he began working on his doctoral thesis at Claremont Graduate University in 1964. For the past 43 years, Dr. Husing has conducted extensive research plus interviews with executives and entrepreneurs to understand the forces shaping Southern California. He has a deep understanding of our political process, having managed over 100 partisan and non-partisan campaigns. Today, he uses his extensive knowledge of the region and his political experience to explain the economy to business leaders and policy makers throughout the Southland.

Privately, John Husing enjoys life as an adventurer, taking treks into uncharted territories as well as traveling to 52 different countries. In recent years, he has twice entered the unexplored jungles of NW New Guinea to make first contact with previously undiscovered stone-aged tribes. His last trip was trekking over the Himalayas from Nepal into Tibet. Closer to home, Dr. Husing is an amateur genealogist with his American roots traced back 12 generations to Robert Fuller and his family on the Mayflower.

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Friday, November 14, 2008

96-TNG Radio - John Husing 11-15-08

Bruce Norris is joined this week by Inland Empire Economist Dr. John Husing. Bruce asks John if we’re facing the biggest mess he’s ever seen since he’s been an economist. John says it’s the worst mess he’s seen in his life.

John talks about how we got here. In 2004 the real estate market detached from reality. The housing shortage created unbelievable demand creating massive price increases. Investors came into the picture. Prices started increasing even more since they tied up supply. It had nothing to do with real supply and demand issues. The creative financing made it even worse.

Bruce brings up that the same financing was available to consumers just as well as it was for investors. The consumer too became the speculator.

Bruce asks if the Feds are taking the correct steps to fix the problem. John thinks they haven’t fixed the fundamental problems. John says all homes bought in 2004-2007 are upside down. John says it’s one third of the market. That does not include those that used their home as a piggy bank and refinanced.

Bruce asks if foreclosure moratoriums have worked in the past. John thinks it’s just a delay. There are three parts to a loan: the principal, interest rates and the terms. Ultimately it’s about the principal. The mortgage backed securities market is where it’s getting held up.

Bruce talks about some for these solutions and how they only apply for those that have the adjustable loans and how that doesn’t fair well for those that didn’t participate in those programs.

John thinks we’re only about one third through the houses that are upside down and that doesn’t include people who refinanced. If the price gets down far enough, they could just walk away anyway.

Bruce asks if commercial areas are affected by residential. John says the office market was the third tightest office market in the US because many firms were moving here because the size and growth of our economy. There was a subsequent boom in commercial building. We’ve gone from 7% vacancy to 19%. There’s more being finished so it will bring it over 20%.

Retail sales have plunged due to unemployment in residential building in the Inland Empire (Riverside, Moreno Valley, San Bernardino, Corona, Perris). We have a 10% decline in sales so now the shopping malls are being affected. General Growth, who owns several shopping malls, might go under. Their stock price has been hit hard.

John thinks we’ll see a few more large retail stores go under. Numerous furniture stores are already out of business. The auto industry is getting hit hard but that’s part of an industry issue that’s ongoing.

Bruce asks John about the cities in California and if they will be dealing with difficult issues in their budget as real estate taxes take a big hit. John says cities will be affected. The biggest item in the discretionary budget is retail sales. When sales go down, that makes things difficult.

Bruce asks about the ramifications of when cities go bankrupt and who ends up holding the bag. John talks about damaged credit and investors not getting paid. The typical investor in bonds includes pension funds. Bonds are typically considered a secure and safe investment. Triple A has really been misleading as many of these investments have not turned out to be safe at all.

As real estate supply increases, the supply of homes has dropped significantly. Demand has gone up but the supply is still too strong. The supply is what has to be addressed. As long as the supply still is too high, we won’t see new homes being built as it won’t pencil. Locally, if builders get the land for free, builders still can’t build because the fees and materials are still too expensive. Homes are going for less than replacement values. So many industries are connected to the building industry. 95% of all job losses in the Inland Empire can be traced back to the residential construction industry. The unemployment rate in the inland empire has reached 9.1%.

John doesn’t think high unemployment is causing too much out migration. John thinks nationally we are having a difficult time so there are no real safe havens.

Bruce asks if California has ever seen 12% unemployment. John says no and the worst for the Inland Empire area was 1993. That was localized because of the space/defense industry job losses.

Commercial construction is now not penciling. The projects currently underway will be finished. John doesn’t think another office space will be build until 2013-2014. We have to absorb around 20% vacancy rate.

With the US going into recession, world trade has slowed down substantially and directly affects the Inland Empire because of lack of warehousing and distribution space needed. Construction will now stop in the industrial market which is typically very strong.

Bruce asks who the typical lender is in the commercial market. Local banks and pension plans are behind some of these projects. Bruce feels they will own a lot of real estate in the coming years. This is happening in Orange County as well because the Financial Industry was hit so hard.

Technically many of these buildings are still leased but are now vacant. They don’t show up as vacancy. Therefore the availability rate is a better indicator John says.

Bruce asks about apartments. John says the coastal markets have the best chance of doing well. In the Inland Empire it hasn’t shown up as a bright spot. John thinks many people are moving closer to their jobs. Vacancies have actually increased. It’s a market we don’t have good data on.

Bruce and John discuss about the oil market. John says lower gas prices are like a tax decrease which helps in the short term. In the long term, projects we were hoping was going to happen are now on hold (alternative energy projects). Bruce talks about the how this is a repeat of the 80s.

John talks about an oil set price solution and how it might help.

Bruce talks about the new regulations and how REO agents are going to adjust. They’ve laid off staff knowing they will have to hire them back to handle the huge volume coming shortly. John really thinks we need to find out how can we get restructuring on the underlying loan on the mortgage backed securities. See Dr. John Husing on his website at johnhusing.com.


In August 2006, Dr. John Husing was listed by the L.A. Times Magazine as one of the 100 most powerful people shaping life in Southern California. He is a leading authority on the impact of the goods movement industry on the region, and in particular its role as a provider of upward economic mobility to blue collar workers. He has just completed major studies on the impact of the proposed Clean Truck Program at ports of Los Angeles and Long Beach and has recommended some changes in strategy.

In addition, Dr. Husing has spent decades studying the city & county economies of Southern California with a specialty on the Inland Empire. This research began when he began working on his doctoral thesis at Claremont Graduate University in 1964. For the past 43 years, Dr. Husing has conducted extensive research plus interviews with executives and entrepreneurs to understand the forces shaping Southern California. He has a deep understanding of our political process, having managed over 100 partisan and non-partisan campaigns. Today, he uses his extensive knowledge of the region and his political experience to explain the economy to business leaders and policy makers throughout the Southland.

Privately, John Husing enjoys life as an adventurer, taking treks into uncharted territories as well as traveling to 52 different countries. In recent years, he has twice entered the unexplored jungles of NW New Guinea to make first contact with previously undiscovered stone-aged tribes. His last trip was trekking over the Himalayas from Nepal into Tibet. Closer to home, Dr. Husing is an amateur genealogist with his American roots traced back 12 generations to Robert Fuller and his family on the Mayflower.

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Friday, November 7, 2008

95-TNG Radio - Matt Le Vesque 11-8-08

Bruce Norris is joined this week by radio host of the Construction Zone Radio Show on KTIE 590am, general building contractor, and industry expert for the State License Board, Matt Le Vesque.

Bruce starts by asking Matt about the term general contractor and what type of license is implied. Matt talks about the different A, B, C, and D licenses. A license is a general engineering license which means streets and bridges. B is for general building contractors which means they perform two or more unrelated trades on a particular project. C license allows the contractor to subcontract out parts of a job.

Bruce asks if that having a general contractors license describes capability and expertise. Matt says there are many that have a license that shouldn’t try to do other areas of specialty and how that comes into play. Matt says four years of experience in general construction working for someone else or specific education is necessary to become a general contractor. There are three parts to the test to pass: legal, trade and within the trade is a large section on math. General contractors can’t do specialty projects out of their industry not does it always work out well when they try.

Matt talks about people who pose as general contractors who are not. Matt describes what happens to those who pose as generals and get caught.

Bruce asks what licenses a handyman is required to have. Matt tells him none and expands to talk about the limitations of what a handman can and cannot do and the dollar amount allowed. Overhead does change quite a bit when you get the general contractors license. Matt talks about the bond costs for different specialties.

Bruce asks Matt what people should have to be protected. Matt says general contractors should have workers compensation and why it’s necessary. Bruce talks about a certain issue that the Norris Group has recently found about. Matt talks about how people get around the rules or work the loopholes.

Bruce asks what happens if people are caught not paying workers comp. Matt talks about Workers Comp fraud laws and what could happen. People can search sclb.ca.gov to find out info on contractors. He says not to be fooled by the except status and explains what to look for.

Matt and Bruce discusses general liability and when that kicks in. Matt talks about a third party that gets injured on a job and not an employee or home owner.

Bruce asks about the rights of the consumer if the general contractor who do not deliver. Matt talks about how many consumers get shamed, especially with early payments. Some people pay before the work is complete which is a mistake. Don’t let the payment get ahead of the work he warns.

Bruce talks about the scenario about contractors who do work and get paid but who fail to pay supply stores like Home Depot and Lowes for the materials. Matt says this is actually a problem for the consumer and how to protect yourself. Matt reminds people to get the lien release and talks about preliminary lien notices. Consumers want to make sure they have the opportunity to write a joint check. Bruce and Matt talk about how this works with subcontractors.

Bruce asks Matt the best way to get connected with reputable contractors. Matt likes when people talk to their friends and neighbors and to make sure you do your homework.

Bruce asks about a warranty of work from a contractor. Matt says there’s a four year minimum for all work. Most contractors don’t know that or believe it and sometimes write something different in their contracts. They can extend it but can’t make it shorter than four years.

Bruce asks about how to be a good customer. Matt says payment is key followed by interesting and/or challenging work.

Bruce asks about Matt’s radio show and what they do. The Construction Zone Radio Show has live experts and also has live callers call with their questions. See czronline.org or visit ktie590am.com.

Matt Le Vesque is a long time resident of Southern California. He currently lives locally with his wife and youngest of three sons. He is involved with many local charities including Habitat for Humanity, Arthritis Foundation, and United Cancer Research Society.

After several years as a marketing consultant, Matt changed careers and started working in the construction industry in the late 1980s. Over the years his positions included Technical/Marketing Manager and Vice President of a national remodeling company. In 1992, he started Bishop Construction Services.

As a licensed contractor, Matt is a member of the International Code Conference, National Association of Home Builders, Building Industry Association of California, and the Remodelor's Council. He is also an Industry Expert with the Contractors State License Board and the American Institute of Architects, California Council. Matt is a residential and commercial builder/remodelor and a consultant on construction matters. Matt is an "A" licensed General Engineering Contractor.

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Thursday, October 16, 2008

94-TNG Radio - Michael Pines 11-1-08

Bruce Norris is joined once again by President of REventures, Michael Pines. Michael and Bruce are discussing foreclosure law changes in California bill 1137.

Bruce wonders why there are so many loopholes left open for interpretation. Michael says when bills are written so hastily there is not enough time to do the most thorough job. Michael believes 1137 wasn’t done very well. Courts will have to be involved to interpret this law. The courts will be used to set precedence. Some of this could be unconstitutional. These issues will take years to fix. In the short term, we will deal with ramifications. Lenders would have to do some major work to get changes quickly. Lenders might be able to get a preliminary injunction.

The new law effects loans originated January 2003 and December 2007. Bruce asks if former owners can get served. If you were a bonafied purchaser you will have protection under the law and protection on title. If you purchased at trustee sale, that could be another issue. The consumer could collect damages but not get the property back. The lender who did not follow the correct process will be more at risk. However, lawyers and clients could be liable if not done correctly.

1137 was really created to make lenders really sit down with the people to try and work things out. It’s a little vague. Bruce asks if there is any training for those people making these phone calls. Bruce says meetings and phone calls by trained people would be very different. Michael says there is currently no precedence and the lenders are scrambling. Some lenders don’t even know 1137 has passed. Lawyers might be telling some lenders this is unconstitutional and should fight it. There will probably be class action lawsuits.

Title companies are now requiring a letter from the lender making them liable for not following procedure. The title company will make it clear that they are not liable. They do not want to be responsible for this law.

1137 is talking about owner occupied properties. Bruce is wondering what type of products qualify. There could be conflicts with other laws currently on the books including California foreclosure laws.

Under 1137, lenders can get fined up to $1000 a day for a brown lawn. Bruce brings up that the lenders will be out of business very shortly where he buys in Moreno Valley. Bruce brings up a meeting with another city The Norris Group had about this very issue. The City’s perception was that they could only charge at city cost, not at the full $1000. People are already reading this differently. This law will be applied differently in different cities. Michael says this will be a dream bill for lawyers. Some judicial process will be in place so the lenders will be able to fight this. It depends on how much the fines amount to.

Under 1137, neighbors could have brown law and this law doesn’t apply. If an investor buys an REO, the law doesn’t apply. However, if investors purchase at trustee sale, 1137 will apply and the investor will be fined if a brown lawn exists. Michael says this is why many are calling this law unconstitutional. Bruce thinks most trustee sale buyers don’t know they have the same liability as the lenders.

Bruce talks about having bought a property and how there was a fine and how it caused it to stall the closing since the bank didn’t even know. Some lawyers will use SB 1137 to stall the foreclosure process. Bruce tells Michael about that happening with a property where it got retracted because they had done the foreclosure incorrectly. Judges are requiring lenders bring original paper work.

Bruce sees the change in the number of files in the NOD phase since many banks are trying to catch up. It’s a bottleneck since the process has changed.

It’s very common for people in foreclosure to get very active late in the process. If they contact a foreclosure consultant, the people may not be eligible for parts of the bill. Michael says there is an exception but the qualifications are unclear. Lenders probably won’t count on that.

Michael and Bruce discuss whether lenders are getting motivated to sell notes as they would be taking on the responsibility. Buyers should consider the responsibility coming if they are purchasing debt. SB 1137 has not yet solved much of anything. It could create opportunity for investors as the lenders will get much more motivated.

Michael Pines is currently principle of REventures that provides brokerage, investment, and property management services.

Michael has handled all types of civil, commercial, and business lawsuits, including cases involving real estate, insurance insolvency, insurance liability, and professional malpractice, breach of contract, lender liability, and white collar crime.

He has been involved in numerous complex cases including pursing actions against and defending major corporations.

Michael has tried cases in many state and federal courts throughout the Unites States. He represented clients before all levels of the Courts Of Appeal in California including presenting cases before the Supreme Court of California some of which resulted in a law changes for the state.

Michael represented parties and sued the RTC during the S&L crisis and hired an attorney from the law firm that represented the RTC. He is experienced in handling many complex large-scale workouts in and outside of bankruptcy and complex litigation within the insolvency proceedings.

Michael formed and runs the Michaelisa Foundation which engages in various types of charity work. It’s latest project is a “prisoner-canine” or “cell-dog” program. Under this program (dedicated to Michael’s recently deceased “best friend” for about 18 years, dogs will be taken from shelters to prisons. Prisoners will be taught how to train dogs. Then the dogs will be adopted out to good homes.

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93-TNG Radio - Michael Pines 10-25-08

This week Bruce Norris is joined this week by Michael Pines, President of REventures. Michael is a licensed attorney, a licensed broker, and has first hand experience with the RTC in the 1990s.

Bruce asks Michael about his involvement with the RTC. He got involved originally with the RTC by working with a client who was dividing land to do manufactured housing. There was a legal dispute and the owner lost the property and the RTC got the property and inherited the litigation.

Michael and Bruce discuss the differences and similarities between now and the S&L crisis. Michael feels like he’s reliving the same scenario. It’s been 20 years since deregulation and you think we would have learned. The parallels are remarkable he says.

In the mid 90s the stock market did OK and real estate did horrible. Back then, real estate wasn’t as tied to the stock market as it is today. Michael says this time it’s intertwined and it’s impossible to separate. This time foreign counties are also much more involved.

When the RTC started it was thought it was going to be a $30-$50 billion dollar problem and then shortly there after it was much more expensive. Bruce thinks the government’s $700 billion is just the down payment. This is going to be a multi-trillion dollar solution. Telling people this would cause tremendous political fallout if they were honest upfront. Bruce talks about the story he read about a Congress woman being asked about where they came up with the $700 billion number and she replied they just needed a large number.

Michael says he doesn’t see it as a bailout. Michael says the people who made money said they got it and they are gone. There will be people who went to jail and some people will be forced to give money back. Michael thinks the major players who acted dishonestly will be tracked down and be used as an example. So many people were involved it will be hard to track everyone down. Those that profited will not be profiting from the solution.

No one knows quite yet where the money will go. Congress is not full of experts. There’s still much research that needs to be done. Institutions need to be studied and they know these institutions need money. They need the authority to buy some of these institutions.

The new bailout said the golden parachutes of the past will now be gone and some will be forced to give back unearned bonuses. Michael doesn’t think they will go down quietly.

In the RTC days, the first two years was a mess as the government tried to do it itself. They weren’t equipped. The office for disposing of California real estate was located in Dallas. They hired attorney in California but negotiations required people flying out from out of state. These individuals had no clue about the state. The RTC got taken advantage of because of the set up so it began to change. As the RTC went more into the 90s, property values kept going down.

RTC started willing to sell quantities of properties in small packages and then eventually packaged them in larger quantities. Eventually they only wanted to sell properties and debt in packages.

RTC properties were marketed in different ways ranging from auction to mailers to the bigger players who could purchase in bulk. It changed drastically every year. The arrangements got more and more complex.

Bruce asks Michael if the similar groups will be set up to handle this. Michael says past people who were involved are being solicited for jobs who can handle this again. Many are retired.

Michael says the better investor deals happened early in the cycle. Bruce asks Michael where the deals will be. Michael thinks this will take years and that the S&L Crisis was tiny compared to what’s coming. Opportunities are already here. He’s hoping there’s no great depression. Investors are a big part of the solution.

Michael and Bruce talk about the potential for true bulk deals coming our way. Stay tuned for more with Michael next week.

Michael Pines is currently principle of REventures that provides brokerage, investment, and property management services.

Michael has handled all types of civil, commercial, and business lawsuits, including cases involving real estate, insurance insolvency, insurance liability, and professional malpractice, breach of contract, lender liability, and white collar crime.

He has been involved in numerous complex cases including pursing actions against and defending major corporations.

Michael has tried cases in many state and federal courts throughout the Unites States. He represented clients before all levels of the Courts Of Appeal in California including presenting cases before the Supreme Court of California some of which resulted in a law changes for the state.

Michael represented parties and sued the RTC during the S&L crisis and hired an attorney from the law firm that represented the RTC. He is experienced in handling many complex large-scale workouts in and outside of bankruptcy and complex litigation within the insolvency proceedings.

Michael formed and runs the Michaelisa Foundation which engages in various types of charity work. It’s latest project is a “prisoner-canine” or “cell-dog” program. Under this program (dedicated to Michael’s recently deceased “best friend” for about 18 years, dogs will be taken from shelters to prisons. Prisoners will be taught how to train dogs. Then the dogs will be adopted out to good homes.


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92-TNG Radio - Peter Schiff 10-18-08

Bruce Norris is joined by economist and President of Euro Pacific Capital, Peter Schiff. Peter is author of “Crash Proof: How to Profit From the Coming Economic Collapse” and “The Little Book of Bull Moves in Bear Markets.”

Bruce starts off by asking if the media and nonbelievers are now sending apologies since Peter had taken such heat for his views. Peter says they have not and doesn’t think many people understand the situation at hand.

Peter sees what the government is only going to make things worse. Although some are taking this week’s erratic behavior as the start of the next bull market, Peter says bear markets are well known for extreme fluctuations.

Bruce asks Peter what has surprised him most in the past 30 days. Peter is surprised that the government has stepped in and pretty much done whatever they want with what remains of our financial market. No one is challenging them.

Peter feels the financial system is in trouble and that we’re broke. Lending institutions loaned money to people who should have never had it. Instead of the banks failing, we’re going to fail.

Peter says that we should expect major inflation. By 2009, we’ll be seeing much bigger, phony CPI numbers. He doesn’t think the government will fess up to the numbers but the consumer will feel it.

Bruce asks about unemployment rate. Peter doesn’t think our wages will increase because we’re not competitive. Home prices will go down but other consumer staples will go up.

Bruce asks if Peter was in charge what he would do. Peter says there’s no solution. The US had a party and now we have a giant hang over. There’s no magic bullet. Peter would let the painful recession run its course. Peter would make government smaller and would slash government spending, military spending, and other drains on savings. We need savings.

Bruce talks about 70% of US GDP being consumer spending and asks what it will be in the future since we can’t keep that up. Since we’ve been borrowing all that money, Peter thinks people should only be spending what they have. We have to get back to basics. He feels we’re setting up a great depression combined with massive inflation.

Foreign investors will lose a lot of money and learn their lesson. No country will want US money and that will worsen inflation. Peter says he’s been surprised the dollar has done so well in the short run. He feels once the selling is over, the dollar is going to take a big hit.

Bruce asks about gold, silver, interest rates and oil and where Peter sees them in the coming year. Peter thinks by next year we’ll be over $100 a barrel. Peter says since the government is in control, it will be hard to say where interest rates will be.

Bruce asks if Peter sees a gold standard coming back and how that might help. Bruce says that we’ve nationalized Fannie, Freddie, and some of the banks, what’s next? Peter is looking to car manufacturers, states, and utilities. The issue is we can’t bail out everyone. FDIC doesn’t insure value, only quantity.

Bruce asks about the people about to retire. Peter thinks people we will be back in the work force and that things are drastically going to change. People will not be able to retire. Peter says his books really addressed how consumers could and can protect assets.

Bruce asks about tax changes. Peter sees tax increases for rich under Obama but the increases will further undermine the ability to create employment opportunities. The middle class will get tax cuts but they won’t do anything. The extra money won’t buy anything. Government will increase spending. If you have no income, the tax cuts don’t matter.

Bruce plays devil’s advocate and asks what a few more trillion would mean. Nobody would be poor if economic wealth could occur by printing money.

Peter strongly believes we need a new solid foundation built on savings and manufacturing. Anyone holding US debt will not get paid. They will get paid but the money will be worth less.

Bruce asks about two specific moves the audience can implement. Peter says to buy gold and silver and says move out of US stocks and go to global stocks. He also says there is a lot of value outside of the Unites States. Bruce says the global markets haven’t done so well in the past three months. Peter doesn’t think those will stay down long term and that most of this is emotional reaction.

Europac.net is Peter’s website and the number to reach his group is 800-727-7922.


Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation's leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and appears regularly on CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V. His best-selling book, "Crash Proof: How to Profit from the Coming Economic Collapse" was published by Wiley & Sons in February of 2007. His second book, "The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down" was published by Wiley & Sons in October of 2008.

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for over twenty years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, Peter is a highly recommended broker by many leading financial newsletters and investment advisory services. He is also a contributing commentator for Newsweek International and served as an economic advisor to the 2008 Ron Paul presidential campaign. He holds FINRA Series 4,7,24,27,53,55, & 63 licenses.

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Friday, October 10, 2008

91-TNG Radio - I Survived Real Estate 10-11-08

Part nine of “I Survived Real Estate 2008” is the final portion of the radio segments for the event. The show picks up with a bit of a rerun from last week. All new discussions around minute 14.

We pick up where Tommy Williams chimes in and says there are other states that had the same inventory for half the price of the states that got overheated. Overheated states have to come back to “normal.”

Bruce says he agrees but says that’s part of the reason he loves California real estate. California wins so many tie breakers. There’s exciting volatility you don’t get in other states.

Bruce talks about Fannie and Freddie and if we’ll see them stay in private ownership.

Christopher Thornberg says they are clearly insolvent and he doesn’t know what they will do or how they will react. Typically they overact.

Bruce asks the panel if the government writing these big checks will increase inflation and if we’ll see much different interest rates three years from now.

Christopher describes the two ways our government pays the bills; issue debt or printing money. Christopher says our government assumes that investors have confidence in the system. If investors see the bottom drop out of the public bond market and the treasuries go crazy then there’s a problem but he says we’re far from that. Christopher says interest rates are now adjusting for the increased risk. Eventually they’ll come down when this crisis passes.

Bruce talks about when he became an investor he refinanced his house at 17% interest. Many people were telling him at the time he’d never see single digit interest rates again. Bruce says interest rates can be very high as long as the income to median price ratio makes sense. There could still be a healthy market.

Rick talks about market psychology and how nervous buyers and lenders are at the moment.

Bruce talks about the velocity of price drops in the market being historical and some are unaware. 35-50% price declines are shocking.

Joel discusses a Zillow study where 7 out of 10 people thought their home was still appreciating. Christopher Thornberg calls that homo-illucination and what it stands for.

Bruce asks Phil Tirone if lenders are skewing too conservative and not making loans at all. The automated underwriting was such a blessing at the time because it made things ease and now it’s making it worse. Phil describes people putting 50% down and he still can’t get financing because his client’s credit score is low.

Christopher says those automated systems were a disaster and that lenders knew how to manipulate the systems. Philip says these systems did help cause the problem. Christopher says once the price gets down low everyone will qualify.

Bruce touches on affordability. Bruce describes affordability and what it solves and does not solve. He describes past cycles and what he looks for in a turned around market. Bruce looks for migration coming back as the true indicator as the decline for foreclosures. We’ve gone from 16 months of inventory to under 7 months but sees it as a false indicator. Those that didn’t have to sell left the market.

Joel Singer disagrees. He’s assuming 85% of homes are owner occupied. He doesn’t see too many rentals occurring for those pulling out of the market since they don’t have to sell, especially in coastal regions. Inland Empire is where most of the vacancies are occurring. He agrees that people who don’t have to sell don’t and pull out of the market. He said it was like this in the 90s. Affordability tells you about first time buyers but not the trade up market. We still have to consider unemployment rate. Affordability is not perfect but decent indicator of first time buyers. Psychology is important too.

Joel says 50% more sales are occurring on top of tight lending so things could be changing. He thinks more investors are going to be needed for a certain period of time. He thinks a few of Bruce’s ideas could be sold but others could not. He does think from a policy point of view that affordability going up is a good thing.

The vacancy rate is getting close to the national average but it’s always different here in California. Joel thinks the loan assumptions idea won’t work. 90 day seasoning period for investors should be able to work with some sort of certification that the repairs have been done.

Bruce asks Christopher which chart he’s looking at for an end of the downturn. He says when prices stop dropping. Joel says that seasonally prices are sure to fall in the coming months as they typically do. Christopher rephrases his original comment to seasonally adjusted.

Joel feels prices in some areas are already improving and multiple bidding is occurring. Joel feels a bottom floor is starting to appear in some areas. The overall economy will be important in deciding the outcome as will the outcome for Fannie and Freddie.

Christopher says we have way too many 4,000 square foot houses. He also brings up unemployment so there are still other things to consider before he calls it over.

Joel reminds the audience that markets are local and that San Bernardino and South Bay are very different. He says most people will miss the bottom.

Bruce beings up the list of properties the Norris Group purchased. Homes The Norris Group purchased for $110k are now being bought for $85k. These properties often also have multiple bids but our offers are stronger. Bruce is worried about twice as many trustees deeds then sales in Riverside County. That ratio is much worse then last time.

Joel says statewide though it’s different and there’s still more sales than foreclosures. He’s actually surprised. If you go up to 400,000 foreclosures then there’s a much more serious problem.

Philip says there are portfolio lenders that are stepping up with non-owner occupied with low 7%-high 6%, 30% down, with no limit for investors. So there is financing out there.

Bruce thanks the panel and the evening ends. See also the video on YouTube or Google video.

The following partners and sponsors without whom the event would not have been possible:

Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtpro.com
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers

Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com

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90-TNG Radio - I Survived Real Estate 10-11-08

Part eight of “I Survived Real Estate 2008” picks up with Rick Sharga of RealtyTrac talking about a discussion he had with a man who handled the REO assets at a credit union. The man was wondering if RealtyTrac could supply him a list of who owned the firsts on a list properties. Rick was surprised since he thought that would have been information that was gathered. The man said they did not have the information as little information was gathered on the first mortgage and little was taken on the homebuyer.

Rick says this downturn is different from others in that other downturns were preceded by an economic downturn. RealtyTrac feels this kicked in first quarter of 2006. Unemployment was historically low as were interest rates. Rick sees we saw capitalism at its worst. We saw Realtors and mortgage brokers getting greedy along with Wall Street. Tools were being used in ways they never should have been used. The wheels this time all came off at once.

Bruce says there are a lot of new people in business. The greatest bull run got more and more people in and they rationalized that it would continue. Bruce talks about the discussions people make in a boom market and why it’s unwinding. Bruce also mentions a bet with a friend he made where he thought oil prices would be at $50 before they hit $150. This was when the price was $142.

Bruce asks Richard Lambros how the building industry looks at this market and the possibility of building. Richard talks about the builder journey through the last few years. This is a housing crisis combined with a credit crisis. Richard brings up how most people don’t like the solutions being presented but feels the solutions may be less painful then letting it correct on its own. He says builders are really in a position of waiting and the core issues are still an issue. California homes are very expensive to create and the government doesn’t seem to realize that.

Bruce asks Richard if when building resumes if the size of the homes will decline. Richard says the average went from 2,200 to 2,500 square feet and builders were looking at demand.

Bruce says he thinks this is an unusual event and this might never been happen again in our lifetime. Prices might skew so low that it will eventually attract mass migration. Once our home prices dip below those of neighboring states, we win the climate and coast battle and win migration. Once we get the migration, building will really be up and running again.

Tommy chimes in and says there are other states that had the same inventory for half the price of the states that got overheated. Overheated states have to come back to “normal.”

Bruce says he agrees but says that’s part of the reason he loves California real estate. California wins so many tie breakers. There’s exciting volatility you don’t get in other states.

Bruce talks about Fannie and Freddie and if we’ll see them stay in private ownership.

Christopher Thornberg says they are clearly insolvent and he doesn’t know what they will do or how they will react. Typically they overact.

Bruce asks the panel if the government writing these big checks will increase inflation and if we’ll see much different interest rates three years from now.

Christopher describes the two ways our government pays the bills; issue debt or printing money. Christopher says our government assumes that investors have confidence in the system. If investors see the bottom drop out of the public bond market and the treasuries go crazy then there’s a problem but he says we’re far from that. Christopher says interest rates are now adjusting for the increased risk. Eventually they’ll come down when this crisis passes.

Bruce talks about when he became an investor he refinanced his house at 17% interest. Many people were telling him at the time he’d never see single digit interest rates again. Bruce says interest rates can be very high as long as the income to median price ratio makes sense. There could still be a healthy market.

Rick talks about market psychology and how nervous buyers and lenders are at the moment.

Bruce talks about the velocity of price drops in the market being historical and some are unaware. 35-50% price declines are shocking.

Joel discusses a Zillow study where 7 out of 10 people thought their home was still appreciating. Christopher Thornberg calls that homo-illucination and what it stands for.

Bruce asks Phil Tirone if lenders are skewing too conservative and not making loans at all. The automated underwriting was such a blessing at the time because it made things ease and now it’s making it worse. Phil describes people putting 50% down and he still can’t get financing because his client’s credit score is low.

Christopher says those automated systems were a disaster and that lenders knew how to manipulate the systems. Philip says these systems did help cause the problem. Christopher says once the price gets down low everyone will qualify.

Bruce touches on affordability. Bruce describes affordability and what it solves and does not solve. He describes past cycles and what he looks for in a turned around market.
More in the last and final show. See also the video on YouTube or Google video.

The following partners and sponsors without whom the event would not have been possible:

Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtpro.com
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers

Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com

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Friday, October 3, 2008

89-TNG Radio - I Survived Real Estate 10-4-08

Part seven of “I Survived Real Estate 2008” picks up with the panel interview from the last session where Bruce talks about how Wall Street keeps calling to find out when bottom is so they can profit even though they are part of the reason we’re in this current situation.

Rick talks about large pools of money purchasing these loans at deep discounts and then fixing the principles of the people in the homes.

Bruce then responds by talking about HR3221 about how HUD can buy first trust deeds at a discount and how the new structure would allow them to alter the loan of the person in the property. Bruce worries about the ramifications of this program. It is limited in who can apply since it applies to adjustable mortgages only. The people who really get burned are those next door who qualified for a fixed loan and are making the payments. They did everything correctly but they don’t apply for the principle reduction. With California being a non recourse state, Bruce worries the dominos that might fall. Bruce then asks Philip Tirone if bailing from mortgages is becoming more acceptable.

Philip says clients don’t care about the moral issue of walking away; they are more concerned about the credit ramification. Philip talks about the raised loan limits and how everyone thought it would make a difference. They think things are going to help but when you get into the legislation, it doesn’t.

Bruce agrees with Christopher in that the median price has to become more reasonable. Christopher thinks another 6 months and everyone will qualify.

Tommy Williams brings up the very important point of moral hazard in letting something like a bailouts occur. Not holding consumers accountable sets up a larger problem for the future.

Bruce asks Christopher about Merrill Lynch taking .22 cents on the dollar for a $30 billion package of CDOs . He says they actually got 5% in cash and carried back a note and guaranteed the pile. Bruce asks whose money was actually lost. Christopher says it was the consumer investing in their company. Christopher says this buyout is another instrument and accounting mechanism. The financial system, Christopher says, is an absolute mess. All banks are having a difficult time. We’re having an issue with cash because of it.

Bruce asks Christopher about how FDIC can handle writing these sort of checks and if the government will just keep writing checks. Christopher says that they’ll have to be bailed out as well. Bruce asks if stagflation will be a problem. Christopher says he doesn’t think it will be an issue.

Bruce asks Rick Sharga about the difference between a bank owning a loan and the individual owner. Rick explains how the process works. Banks can accept the losses but the private investors can’t as easily take the hit. These loans are not as flexible as the securitized loans. Bruce talks about HR3221 and how the second must be wiped out first.

About 10% of the foreclosures list in Riverside being non-owner occupied but 70% out of the 90% that are owner occupied have simultaneous first and second at the time of purchase. Almost 100% of these properties are 100% financed.

Joel Singer brings up refinancing. The number of first payment defaults is huge because of bad credit and no skin in the game. The good news, he says, 2 out of 3 will stay in their home most likely. However, he is much more concerned about price drops then the mortgage resets. He thinks more people will walk if the prices get too low.

Bruce also brings up unemployment and how it will continue to go up. He says out migration will then probably force more to leave.

Bruce asks Annemaria if loan tightening happens during every cycle. Annemaria talk about how there’s a cycle and she thinks that this will never happen on this scale again. Lenders are in sheer panic because of what’s gone on and all the legislation now being presented. It’s a little late to implement since everyone has already got in. Bruce feels once we get into a safe market, the next person will dream up the next special mortgage.

Christopher says financial investors are always slipping in risk and hiding it. Incentives from Wall Street are bazaar and we need to not trust them so this doesn’t happen.

Bruce sees the foreclosures coming as being a huge problem and much worse then the 90s. In the 90s we had two times as many sales as we had foreclosures. This year, we’ll have two times as many foreclosures to sales.

Joel Singer says the 90s downturn was caused by unemployment. There were 7 years where prices were flat. Joel is curious to see if the market will clear faster because of the steep price drop. He thinks we have to make the market clear and he feels that it really already has. Joel is stunned at how many sales are currently being made and he doesn’t think it’s investor purchases. It’s cheaper to buy then rent in some places. Builders are having a hard time competing because homes are being bought below replacement costs.

Bruce talks about his Grand Junction, Colorado experience buying all of HUD’s condos. Bruce set all the costs at $8,000 a condo but no one would buy because the market was too scary. Emotions definitely play a role.

Rick says he talked to a man who handled the REO assets at a credit union and the man was wondering if RealtyTrac could supply him a list of who owned the first. Rick was surprised since he thought that would have been information that was gathered. The man said they did not have the information as little information was gathered on the first mortgage and little was taken on the homebuyer. More next week or see YouTube or Google video for the entire program. Next week is the final week of the audio.


The following partners and sponsors without whom the event would not have been possible:

Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtpro.com
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers

Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com

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88-TNG Radio - I Survived Real Estate 10-4-08

Part six of “I Survived Real Estate 2008” picks up with review from last week. Since this is the solution portion it’s very important. Later in the interview the Q&A with all panelists begins.

Bruce shows the audience a list of 20 homes The Norris Group purchased in the past 45 days through auction or out of the MLS and the huge price hits lenders are taking. On 20 transactions, the banks took a $4.6 million dollar loss. Bruce says he’s worried about the domino effect. Too many people owe more than their property is worth.

Bruce says there are three ways to solve a vacancy. We can tear down houses and create an artificial housing shortage. We can leave it vacant and wait for till household formation catches up with supply. Or, we could make it possible for investors to have financing to hold them.

Four solutions that are needed to get us back on track. The 203k loan program from FHA should be made available to investors. It was available to investors until 1996 and then FHA discontinued because it had done its job of getting rid of foreclosures. FHA doesn’t have a ton of foreclosures because they didn’t make a ton of loans. However, the loan program needs to be made available for investors to expedite the foreclosure problem.

Fannie and Freddie need to increase the number of loans they will give to investors. Both want to open offices in California to help unload inventory more quickly and investors are likely candidates. At the same time, they are cutting back on financing available. Both are in a dire situation. Fannie and Freddie hold a huge amount of the foreclosures.

Option Arms are the next wave and these loans represent 50% of Fannie and Freddie losses. Bruce shows the Option Arm reset chart. The chart shows the expected resets and what’s currently happening now. A huge number of these Option Arm loan holders are making teaser payments. Once the loan balance hits a certain percentage, the loan resets. 90% of the borrowers of these loans made the minimum payment. Many won’t walk until the reset because the payment is cheaper than rent.

The foreclosure process is now taking longer because the banks are so slammed but because of the new regulations as well. The bulk of these are set to land in 2009. The loan amounts were typically more than subprime and the lenders will have to recalculate what they made because of how they were writing things off.

Bruce says a due on sale moratorium would make it possible for investors to buy properties that would undoubtedly become foreclosures, it would allow Realtors and auctioneers to make commission on properties with no equity but favorable financing, allow a consumer to move on with credit intact, and improve liquidity in the system.

In the 1980s, foreclosures exploded but price deterioration wasn’t bad. Assumptions of loans saved the market. When interest rates were 17%, people were able to assume better financing. Bringing back the simple assumption could really help.

Bruce also suggests the 90 day seasoning period on properties to be removed so investors can fix houses and sell them more quickly. Bruce shows the audience the picture of one of The Norris Group’s fixed up properties. Bruce describes why our fixed up inventory is so important for the market. The assumption that investors are committing fraud is completely wrong and is actually causing more problems. The creation of the two levels of comps is necessary to keep prices stable.

Bruce also wants to see long-term financing for investors so we can get the market cranking again.

Bruce then starts the second part of event. All eight guests appear on the stage to discuss the solutions brought forward.

Tommy Williams starts off by speaking on the point that there are some properties that should be bulldozed as some neighborhoods would actually be better off.

Christopher Thornberg brings up the political ramifications and complications of solutions and the difficulty of getting people to listen. Christopher also brings up the myth where some people renting must mean that person’s life is a complete wash. Christopher also brings up how investors were blamed for the current market.

Bruce brings up the fact that all the solutions he proposed are not new and that they had existed at one time in the past. It’s nothing new and they worked before.

Rick Sharga says the number of properties in foreclosure that are not owner occupied have not gone up that much. The myth that the investor caused it is not correct. Rick points out that many of the solutions would have to be implemented one piece at a time and it would take time. Rick also talks about non profits getting involved. Habitat for Humanity is taking REOs and rehabbing them instead of starting from scratch. Rick also talks about how numerous investors are coming in with large pools of money ready to take down portfolios of notes.

Bruce talks about how he gets called by Wall Street often and how they are putting together multi-million dollar pools to do that and they want to know when bottom is. Bruce is not excited about the thought that the very companies that helped get us into this mess will be the ones who also take advantage of the current situation. More to come.

The following partners and sponsors without whom the event would not have been possible:

Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers

Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com

Play Now