Marsha Norris #129

This weekend is the official launch of I Survived Real Estate 2009. We launch the event with special guest, 14 year breast cancer survivor, and inspiration behind the event, Marsha Norris. Aaron Norris also joins the show as organizer of the event.

Marsha discovered that she had breast cancer in 1995. Bruce asks Marsha what emotions she felt when she discovered her cancer. Marsha said that she felt fear, anxiety, and terror. Fortunately, Marsha is not the kind of person who dwells on negative thoughts for very long, so she quickly began to look for help. Bruce and Marsha went to four doctors before they found one that they were comfortable with. Marsha did a lot of personal research and reading on cancer as well. When Bruce and Marsha went to UCLA they felt like they were being treated as people rather than a disease.

Bruce asks Marsha how important she thinks her attitude has been in regards to her ability to survive cancer. Marsha thinks that her attitude has been crucial, because negativity immobilizes you. She had to be her own cheerleader. She kept thinking, “What can I do for myself, and where can I find people that will help me?”

Marsha thinks that it is important to believe in the choices you have made for yourself, rather than just relying on your doctor. Marsha believes in working with traditional medicine as well as complementary therapies. You have to be comfortable with what is happening and not just let the doctors take control of everything. You have to believe in what will work for you.

Bruce asks Marsha if most people who encounter cancer for the first time are very independent. Marsha thinks that most people are so fearful that they just hand their life over to their doctors. Sometimes Bruce and Marsha go to different doctors and they assume that certain things have already occurred. For example, some doctors have automatically assumed that Marsha has done the lymph node test, and when they discovered that Marsha did not do that they were amazed. Now Marsha is being told that in the future doctors will no longer even use the lymph node test, so many of the things that Marsha was stubborn about turned out to be unnecessary. Her instincts have proven to be correct over time.

Marsha is taking a new treatment now. Cancer takes people on an emotional roller coaster. Coming home from Marsha’s first surgery they went to Claim Jumper for a gigantic lunch. At that point, Bruce was feeling confident that they could handle what they were up against. Two days later, they were told that Marsha needed another surgery. That swing from feeling happy and relieved to feeling downhearted is very tough, and they have dealt with these types of disappointments for 14 years. It can be very emotionally draining.

There has been a new word that has emerged in Marsha’s place for treatment, and it is “remission.” In the past, remission has never been a word that anyone used. It is exciting to hear people say that they are in remission and it is important for people to have hope. Marsha has never taken traditional chemotherapy but she has spoken to people who are in chemotherapy. These people are completely drained, sick, and depressed. Marsha remembers one man who said, “I have nothing left to loose. I have lost my job, my home, and now there is nothing left other than my life.” Every attempt that Marsha has made to get treatment was an attempt to continue living, but many other people suffering from Marsha’s situation are getting treatment to prevent death. She has a much more hopeful outlook.

When Marsha started taking this new treatment she lost some hair, so she decided to shave her hair and get wigs. She took her friend Diana, and Diana almost started crying, but Marsha told Diana, “Don’t do that. I’m choosing to do this.” She told Bruce, “Its just hair, it grows back.” Marsha and Aaron have made fun of her wigs. Aaron named each of her wigs and given each one a personality based on their look.

When people hear that Marsha has cancer, they expect a certain demeanor that they do not receive. They look at her and say, “Well, you do not look sick.” This makes Marsha feel very good. Every day Marsha wakes up and thanks God for giving her another day, and for the little things that she is able to do again now that her right hand is no longer broken.

When Marsha came to the radio show, someone from the radio show approached her and told her that they know someone who has cancer. Bruce asked Marsha how often people approach her and ask her for help with a friend or relative with cancer. This has happened several times with her. She has been able to give advice to people using chemotherapy, and she has offered her time to talk to them should they need it.

Bruce asked Marsha if it is emotionally draining for her to talk to people who need help. Marsha said that it used to be but now she is glad to offer help to anyone who needs it.

Marsha currently has a couple oncologists and ten other physicians/therapists who help her. Bruce asks Marsha how important it is for her to have many different places for her to get help. Marsha thinks that it is very important because you need to treat cancer with multiple tactics. It is not all about medication; you also need nutritional support, massage therapy, acupuncture, and chiropractic help to relieve pain.

It can be overwhelming to watch Marsha’s daily schedule. She spends a large portion of her days taking care of her cancer needs, yet she continues to have a positive outlook. It can get exhausting taking supplements and having to eat a certain way all the time, but it becomes a lifestyle after a while. Every once and a while she has to get a burger.

There have been times where Marsha’s kids will ask if she still has cancer, because they cannot tell based on her attitude and the way she lives. If she feels good and acts good then everyone else feels better as well. Aaron is very proud of the way his mother is handling her cancer. Her strength, persistence, and stubbornness amazes him. There have been many times in which Bruce’s employees have cried in his office because of Marsha’s difficulties and that support is what makes the “I Survived Real Estate” event so important to Aaron. Every event they go to there are always people sending flowers and asking how Marsha is doing.

Bruce asks Aaron how people reacted to the event last year. Aaron said that many people were confused. He gets yelled at by people every month because people are expecting him to do advertising on the radio show. It was difficult to explain to people that The Norris Group and its partners were paying for the event so all TNG needed was for people to donate to or join the walk. This year the panel lineup is a real dream team and Aaron has been surprised by who decided to sign up.

Early in Bruce and Marsha’s marriage, Marsha’s father had lung cancer and he did not have a hopeful attitude. Bruce asked Marsha if her father’s reaction to cancer inspired her to act differently. Marsha said that when she saw him give up, she thought “I can’t believe that he is giving up so easily when he still has two sons to raise. If that ever happens to me, I will not give up like that.”

Marsha has learned a lot about herself through her experiences. She has discovered that she has a lot of inner strength. She does not let doctors push her around. She allows them to give her their opinion but always questions their judgment. Marsha enjoys her current oncologist because she is supportive, and she supports Marsha’s decisions.

Marsha has discovered who her real friends are through her experiences. She has had a lot of support from her family, and she has had a few friends who have not stuck around.

Marsha hopes that her family sees that they have the ability to withstand these difficulties as well.

If someone was recently diagnosed with cancer, the first thing that Marsha would tell them to do would be to relax, and start getting educated on their problems. Research your doctors and choose them wisely. Marsha also insists that people take the non-toxic treatments first, and use the toxic treatments as the last resort. Marsha takes baths with epson salt which helps take the toxins out of your body. There was a time where she was around multiple cancer patients and a doctor, and she suggested that the other patients try epson salt, but the doctor wasn’t supportive of her idea. Two weeks later, one of the ladies that she talked to about epson salt approached her and told her that she was feeling much better.

The event occurring on September 11 will be a formal event. For men, a tux is preferred, but not required. You can get involved by going to the website isurvived2009.com
You can donate to the walk or join the walk and raise the money to attend live for no cost to you while seats remain. If you raise 2000 dollars you can be a gold sponsor, and for 5000 you can be a platinum sponsor. Each seat is valued at $200 dollars so we ask everyone to donate or raise $200. That $200 must be made to our “I Survived Real Estate Walking Team” to count as sponsorship. Visit isurvived2009.com for more information.

Marsha Norris has four children, seven grandchildren, and has been married to Bruce Norris for 39 years. Marsha is a trained massage therapist and loves reading on holistic medicine, different massage techniques, and numerous other topics. She enjoys traveling and looks forward to seeing Alaska this summer.

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Stephen Blank of the Urban Land Institute #101

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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Inland Empire Economist John Husing #96

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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Industry Expert Matt Le Vesque #95

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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Michael Pines of REventures #94

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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Peter Schiff of Euro Pacific Capital #92

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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I Survived Real Estate 2008 part 9 #91

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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I Survived Real Estate 2008 part 8 #90

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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I Survived Real Estate 2008 part 7 #89

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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I Survived Real Estate 2008 part 6 #88

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
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I Survived Real Estate 2008 part 5 #87

Part five of “I Survived Real Estate 2008” picks up with Bruce Norris introducing Tommy Williams, president of the National Auctioneers Association and co-founder of Williams and Williams Auction Company. Tommy has been involved in over 10,000 real estate transactions in his very lengthy career.

Tommy starts right away with his solution. Tommy brings to the table an idea he’s been passionate about for many years. Reality in the market place is what it is and there’s no way around it. The entire world sets prices by the auction process and not just real estate.

Instead of having a foreclosure process, Tommy suggests we skip foreclosures all together. The foreclosure process leaves an empty house and starts a very expensive process for the bank. The neighboring homes next door to the foreclosure see house values go down because of blight, the bank goes the a long and expensive process, and the foreclosed consumer leaves with damaged credit.

Tommy suggests a short sale auction hybrid. The consumer about to foreclosure would still be in the home when the auction took place and the home would be handed to someone ready to fill the home and at true market price. After the auction, the foreclosed consumer and the bank would need to deal with the deficiency but at the least the property would never be vacant.

The free market needs to work and the auction process needs to be involved. It would help us get back on track more quickly.

Bruce is the last speaker of the evening and starts talking about the cycles we go through and how we as humans often repeat the same mistakes. Solutions can also be from the past.

Bruce says that when we have a euphoric period there’s an exuberance that gets people in the market that should not be. The last to get in are usually the ones that are least capable. Emotions come into play and typically they cannot afford the home they purchased. This cycle we saw a record number of home owners but maybe we should never have got to such a high number.

Bruce shows a vacancy chart and how it climbed since 1985. Now it’s declining and rightfully so. Bruce thinks about 6% of homes will end up being vacant.

Tightening loan standards are creating issues. Bruce reads an article about lenders tightening programs. It makes it harder for people hard to qualify and refi what the already have which will make it worse.

We now have to deal with the largest foreclosure issue in history. Foreclosures are already at an all time high and will continue. These foreclosures have caused huge price erosions.

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. It saved the system.

Bruce also suggests the 90 day seasoning period on properties to be removed so investors can fix houses and sell them more quickly. More to come next week. Thenorrisgroup.com

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I Survived Real Estate 2008 part 3 #85

Part three of “I Survived Real Estate 2008” picks up with Bruce Norris introducing Philip Tirone who is author of the “7 Steps to a 720 Credit Score” and President of the Mortgage Equity Group. Philip brings to the table experience from the lending and consumer side of the equations.

Philip talks about people still wanting stated income and how much harder consumers are have to work to get financing. Banks are going after co-borrowers more aggressively and doing much more background checking.

Philip discusses the issue of consumers that owe much more on their home as a similar home in the same neighborhood because of the market at the desire to buy the new one and foreclosure on the current home. Philip says that lenders are catching on to this practice and has revised lending policy accordingly. As of August 1st, if a consumer wants to buy a home in the same neighborhood, it needs to make logical sense that the consumer needs the new home due to extra bedroom, more space, etc. And if the consumer has less than 30% equity, the consumer cannot accept rental income on previous home and must have 6 months reserves.

Philip discusses the top three lending strategies for investors. Many investors that have purchased for cash want to refinance. The best financing is available within the first 60 days. If buying in an LLC, Philip says a single member LLC will get an investor a better rate. Philip also says to go to portfolio lenders for loans. They don’t have the limitations that Fannie and Freddie currently have in place.

For sellers, Philip discusses the natural inclination for sellers to drop price if a property is not selling. Instead of dropping price, Philip thinks sellers should consider buying down the buyer’s interest rate. This could save the consumer a great deal of money and also support prices in the area. Philip also addresses buyers that don’t qualify because lack of down payment. If buyers don’t have down payment, FHA allows gifts for down payments. Philip says that although there is a seasoning rule for FHA, investors should make sure all due diligence is done up front so at the 90 day mark the loan will fund quickly.

Philip also says consumers and investors should manage their credit actively. 80% of people have an error on their credit report that could possibly hinder them from getting a loan. Philip says credit is really easy to manage and scores can swing 100 points. Using credit to your advantage isn’t as hard as many people think.

Bruce then introduces Annemaria Allen who is President of the Compliance Group who specializes in loan complains and is the representative for the California Mortgage Bankers Association.

Annemaria talks about the lending industry yesterday being full of unsophisticated borrows, greedy lenders, minimal loan compliance, and inflated home prices. Today, a complete overhaul is taking place. Lending has somewhat stabilized because subprime is gone and full document loans are back. She calls it “back to the basics” of underwriting. Annemaria says automatic underwriting isn’t used as much and lenders are doing much more due diligence.

Annemaria thinks home prices still are too high and that we haven’t seen the worst of it. The adjustable rate mortgages will cause more problems in the next year. HERA (Housing Economic Recovery Act) was signed into law by Bush in July. The Safe Act that passed seeks to protect consumers by requiring loan originators, lenders, and brokers will have to register with the system. Some of these news acts are several hundred pages long and are still being reviewed.

Regulation Z means more disclosures to consumers. It is supposed to capture all subprime and Alt-A loans. There will be more advertising restrictions and more disclosures.

California has 30 bills in legislature to help with current issues. Foreclosure prevention laws are being passed nationwide along with loan modification and servicing laws. The Non-Traditional Mortgage Guidelines are being adopted nationawide.

Annemaria feels it’s a little too late but the biggest solution moving forward will be consumers being more educated and for the industry to prevent fraud. Annemaria feels stronger standards in compliance and safety will prevent this from happening in the future.

Bruce then brings forward the CEO of the California Builders Industry Association of the Southern California, Richard Lambros.

Richard discusses real estate as a speculative investment and the cycles. Richard warns us not to think of it as a cycle because that means we can have no influence over the outcome. Total new home production is down and will produce the lowest number of homes in history. In the building industry, they say it’s a building depression. In three years, production has been cut by one third.

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I Survived Real Estate 2008 part 2 #84

The airing of I Survived Real Estate 2008 continues to air. Video is also available on thenorrisgroup.com.

Part two picks up with Bruce Norris introducing Christopher Thornberg who represents the economics part of the equation. Christopher is a self proclaimed bear and was one of the few that predicted the downturn was coming. Christopher discusses employment, housing starts and how they can only go to zero, consumer sales, exports, his thought on recession and the varying views that exist, if the worst is yet to come, and where he stands.

Christopher talks about the housing market and the false indicator of increases in home sales. Christopher says homes prices got too ridiculous and that prices did not match what people were making. Increases in incomes did not keep up with home price appreciation. The only reason prices got that high was of the crazy financing that took place.

Christopher says the pace of home price declines look to be around 30% per year and the mix of foreclosures to home sales is not looking good. Christopher addresses how far prices will fall.

Christopher believes financial losses will total over $1 trillion and that several institutions will fail because of overexposure. The leverage of some institutions is 100 to 1 such as Fannie Mae and Freddie Mac.

Christopher reviews some of the new features of the newly passed housing bill and how little it will actually accomplish. With the money that the government will release to California alone, doing the math it means California will only be able to purchase around 4,000 homes which is a very small piece of the large REO pie. Allowing banks to revise certain consumers loans. The government actually foots the bill. $140 billion lent to banks but they are still a big mess.

Christopher talks about the tax rebate and how it didn’t increase spending enough. He says the consumers are dealing with two bubbles. Savings rates have gone from 8% to 0% and that a great amount of net wealth disappear. Consumers will be forced to save for the first time and will also be bad for the short run. With contraction in spending, it means a slow down in retail and other consumer-driven sectors. Cocktail statement: Keep you’re eye on 2010.

Bruce introduces Rick Sharga who is the VP of marketing for RealtyTrac. Rick talks about foreclosures and the implication of the current glut on the market. Rick talks about the media obsession with foreclosures and the huge interest in foreclosure data.

Rick talks about how we got into the position we’re in; lending. What drove some of the behavior was Fed policy and that money became practically free. People who should never have been able to get a loan got one in the boom. Wall Street securitized these loans and had a voracious appetite to do so. Due diligence was practically thrown out the window. Bankers went from buy and hold strategy to buy, package and sell and do it again.
RealtyTrac captures foreclosure data from 2,200 counties nationwide. 1.2 million foreclosure filings occurred in 2006 and over 2.3 million in 2007. In California the numbers were much worse as a percentage compared to other states. 2008 will be far worse. Rick discusses the areas hit the hardest. He mentions 7 of the top 12 markets hit hardest are in California. In Stockton, 1 in 25 receives a foreclosure notice. Foreclosure homes are outselling the resale of homes at this point. Existing homes sales aren’t increasing like most would think. The resets for subprime will continue. 32 months of foreclosure data increases thus far with no end in sight. Alt A and Option Arms will cause more problems in 2009.

While the market is sure to continue its decline, Rick points out there will be plenty of opportunities for investors in the coming years.

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Tommy Williams with the National Auctioneers Association #81

Bruce Norris is joined this week by President of the National Auctioneers Association, co-founder of the Williams and Williams Auction Company, and panelist for I Survived Real Estate 2008, Tommy Williams. Bruce and Tommy discuss the extremely volatile past 5 months, the possibility for more unknowns in the coming year, what caused this to happen, innovative financing, homeownership levels, what buyers should have to bring to the table in order to own a home, what would happen if deposits weren’t required at auctions, people taking advantage of government system, HR3221 and some of the benefits, the unintended consequences of HR3221, valuation of properties and how auctions are part of that process, a correct version of an auction and how it brings out true value, overbids during a boom market, why auctioneers get frustrated because they are typically only considered during a downturn, builders releasing phases via auction and the benefits, if Realtors view auctions as partners or competition, how auctions work with Realtors, why auctions aren’t in the MLS, the task force between NAR and NAA, if Tommy can tell from auctions which areas are in trouble, NAA as a vast resource of statistics, how quality holds much more weight than price, if California is getting worse, the two states with the worst declines, ignoring true affordability, how we can do better in the near future, isurvived2008.com

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation's premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

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Philip Tirone of The Mortgage Equity Group #76

Bruce Norris is joined this week by president of 7 Steps to a 720 Credit Score, The Mortgage Equity Group, and panelist for I Survived Real Estate 2008, Philip X. Tirone. Bruce and Philip discuss his term mortgage lifestyle dilemma, the consumer and disposable income, people trying to get out of loans, the percentage of people now able to get financing, the speed of the credit dry up, issues funding even with a large down payment, risk level exaggerations, the current state of home equity lines of credit, credit cards becoming the next line of liquidity, credit limits being reduced if a consumer’s credit score is not good, credit card companies looking into a consumer’s industry where they work, certain industries falling out of favor with credit issues, the Universal Default Clause and the interest rate associated with this clause, the different types of lenders, wholesale brokers, how the collateralized debt was put together, the main liquidity in the market, the price difference between a fixed and unfixed home, how lenders feel about unfixed homes, the national and local bills being discussed to help, who people are blaming for this mess, non-owner occupied financing, solutions being aimed at the wrong crowd, how lenders are dealing consumers looking to walk away even though they are current, ISurvived2008.com

Philip's commitment to educating homebuyers prompted the “7 Steps Licensing Program,” which allows mortgage brokers nationwide to become licensed in the 7 Steps and in turn help improve their clients' credit scores. He is also developing the 7 Steps Foundation, a charitable foundation that will allocate funds to help low-income and underserved Americans increase their credit scores and buy homes.

Philip has been featured in articles on credit and mortgage trends in the Los Angeles Times, New York Times.com, Wall Street Journal, Newsday, Woman's World Magazine, San Jose Mercury News, Bottom Line Magazine, Bankrate.com, and several others.

Philip created the Complete Financial Navigator™, a tool to analyze his borrowers' needs and financial picture, thereby helping borrowers overcome barriers to achieving their real estate goals. As a frequent guest lecturer at the University of California Los Angeles, Philip has authored and delivered numerous speeches regarding the “Mortgage Lifestyle Dilemma,” a phrase he coined to describe an emotional buying decision that results in overextension and a life that revolves around high mortgage payments. By analyzing industry-specific buying trends, he has devised a series of questions to help borrowers avoid this dilemma.

Philip was named Arizona State University's Man of the Year upon graduating with a real estate degree in 1994. Since then, he has continued to receive acclaim, most recently in the New York Times best-seller, Secrets of the Young & Successful.

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