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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Thursday, October 16, 2008
Michael Pines of REventures #93
This week Bruce Norris is joined this week by Michael Pines, President of REventures. Michael is a licensed attorney, a licensed broker, and has first hand experience with the RTC in the 1990s.
Bruce asks Michael about his involvement with the RTC. He got involved originally with the RTC by working with a client who was dividing land to do manufactured housing. There was a legal dispute and the owner lost the property and the RTC got the property and inherited the litigation.
Michael and Bruce discuss the differences and similarities between now and the S&L crisis. Michael feels like he’s reliving the same scenario. It’s been 20 years since deregulation and you think we would have learned. The parallels are remarkable he says.
In the mid 90s the stock market did OK and real estate did horrible. Back then, real estate wasn’t as tied to the stock market as it is today. Michael says this time it’s intertwined and it’s impossible to separate. This time foreign counties are also much more involved.
When the RTC started it was thought it was going to be a $30-$50 billion dollar problem and then shortly there after it was much more expensive. Bruce thinks the government’s $700 billion is just the down payment. This is going to be a multi-trillion dollar solution. Telling people this would cause tremendous political fallout if they were honest upfront. Bruce talks about the story he read about a Congress woman being asked about where they came up with the $700 billion number and she replied they just needed a large number.
Michael says he doesn’t see it as a bailout. Michael says the people who made money said they got it and they are gone. There will be people who went to jail and some people will be forced to give money back. Michael thinks the major players who acted dishonestly will be tracked down and be used as an example. So many people were involved it will be hard to track everyone down. Those that profited will not be profiting from the solution.
No one knows quite yet where the money will go. Congress is not full of experts. There’s still much research that needs to be done. Institutions need to be studied and they know these institutions need money. They need the authority to buy some of these institutions.
The new bailout said the golden parachutes of the past will now be gone and some will be forced to give back unearned bonuses. Michael doesn’t think they will go down quietly.
In the RTC days, the first two years was a mess as the government tried to do it itself. They weren’t equipped. The office for disposing of California real estate was located in Dallas. They hired attorney in California but negotiations required people flying out from out of state. These individuals had no clue about the state. The RTC got taken advantage of because of the set up so it began to change. As the RTC went more into the 90s, property values kept going down.
RTC started willing to sell quantities of properties in small packages and then eventually packaged them in larger quantities. Eventually they only wanted to sell properties and debt in packages.
RTC properties were marketed in different ways ranging from auction to mailers to the bigger players who could purchase in bulk. It changed drastically every year. The arrangements got more and more complex.
Bruce asks Michael if the similar groups will be set up to handle this. Michael says past people who were involved are being solicited for jobs who can handle this again. Many are retired.
Michael says the better investor deals happened early in the cycle. Bruce asks Michael where the deals will be. Michael thinks this will take years and that the S&L Crisis was tiny compared to what’s coming. Opportunities are already here. He’s hoping there’s no great depression. Investors are a big part of the solution.
Michael and Bruce talk about the potential for true bulk deals coming our way. Stay tuned for more with Michael next week.
Michael Pines is currently principle of REventures that provides brokerage, investment, and property management services.
Michael has handled all types of civil, commercial, and business lawsuits, including cases involving real estate, insurance insolvency, insurance liability, and professional malpractice, breach of contract, lender liability, and white collar crime.
He has been involved in numerous complex cases including pursing actions against and defending major corporations.
Michael has tried cases in many state and federal courts throughout the Unites States. He represented clients before all levels of the Courts Of Appeal in California including presenting cases before the Supreme Court of California some of which resulted in a law changes for the state.
Michael represented parties and sued the RTC during the S&L crisis and hired an attorney from the law firm that represented the RTC. He is experienced in handling many complex large-scale workouts in and outside of bankruptcy and complex litigation within the insolvency proceedings.
Michael formed and runs the Michaelisa Foundation which engages in various types of charity work. It’s latest project is a “prisoner-canine” or “cell-dog” program. Under this program (dedicated to Michael’s recently deceased “best friend” for about 18 years, dogs will be taken from shelters to prisons. Prisoners will be taught how to train dogs. Then the dogs will be adopted out to good homes.
Play Now
Bruce asks Michael about his involvement with the RTC. He got involved originally with the RTC by working with a client who was dividing land to do manufactured housing. There was a legal dispute and the owner lost the property and the RTC got the property and inherited the litigation.
Michael and Bruce discuss the differences and similarities between now and the S&L crisis. Michael feels like he’s reliving the same scenario. It’s been 20 years since deregulation and you think we would have learned. The parallels are remarkable he says.
In the mid 90s the stock market did OK and real estate did horrible. Back then, real estate wasn’t as tied to the stock market as it is today. Michael says this time it’s intertwined and it’s impossible to separate. This time foreign counties are also much more involved.
When the RTC started it was thought it was going to be a $30-$50 billion dollar problem and then shortly there after it was much more expensive. Bruce thinks the government’s $700 billion is just the down payment. This is going to be a multi-trillion dollar solution. Telling people this would cause tremendous political fallout if they were honest upfront. Bruce talks about the story he read about a Congress woman being asked about where they came up with the $700 billion number and she replied they just needed a large number.
Michael says he doesn’t see it as a bailout. Michael says the people who made money said they got it and they are gone. There will be people who went to jail and some people will be forced to give money back. Michael thinks the major players who acted dishonestly will be tracked down and be used as an example. So many people were involved it will be hard to track everyone down. Those that profited will not be profiting from the solution.
No one knows quite yet where the money will go. Congress is not full of experts. There’s still much research that needs to be done. Institutions need to be studied and they know these institutions need money. They need the authority to buy some of these institutions.
The new bailout said the golden parachutes of the past will now be gone and some will be forced to give back unearned bonuses. Michael doesn’t think they will go down quietly.
In the RTC days, the first two years was a mess as the government tried to do it itself. They weren’t equipped. The office for disposing of California real estate was located in Dallas. They hired attorney in California but negotiations required people flying out from out of state. These individuals had no clue about the state. The RTC got taken advantage of because of the set up so it began to change. As the RTC went more into the 90s, property values kept going down.
RTC started willing to sell quantities of properties in small packages and then eventually packaged them in larger quantities. Eventually they only wanted to sell properties and debt in packages.
RTC properties were marketed in different ways ranging from auction to mailers to the bigger players who could purchase in bulk. It changed drastically every year. The arrangements got more and more complex.
Bruce asks Michael if the similar groups will be set up to handle this. Michael says past people who were involved are being solicited for jobs who can handle this again. Many are retired.
Michael says the better investor deals happened early in the cycle. Bruce asks Michael where the deals will be. Michael thinks this will take years and that the S&L Crisis was tiny compared to what’s coming. Opportunities are already here. He’s hoping there’s no great depression. Investors are a big part of the solution.
Michael and Bruce talk about the potential for true bulk deals coming our way. Stay tuned for more with Michael next week.
Michael Pines is currently principle of REventures that provides brokerage, investment, and property management services.
Michael has handled all types of civil, commercial, and business lawsuits, including cases involving real estate, insurance insolvency, insurance liability, and professional malpractice, breach of contract, lender liability, and white collar crime.
He has been involved in numerous complex cases including pursing actions against and defending major corporations.
Michael has tried cases in many state and federal courts throughout the Unites States. He represented clients before all levels of the Courts Of Appeal in California including presenting cases before the Supreme Court of California some of which resulted in a law changes for the state.
Michael represented parties and sued the RTC during the S&L crisis and hired an attorney from the law firm that represented the RTC. He is experienced in handling many complex large-scale workouts in and outside of bankruptcy and complex litigation within the insolvency proceedings.
Michael formed and runs the Michaelisa Foundation which engages in various types of charity work. It’s latest project is a “prisoner-canine” or “cell-dog” program. Under this program (dedicated to Michael’s recently deceased “best friend” for about 18 years, dogs will be taken from shelters to prisons. Prisoners will be taught how to train dogs. Then the dogs will be adopted out to good homes.
Play Now
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.
Play Now
Bruce starts off by asking if the media and nonbelievers are now sending apologies since Peter had taken such heat for his views. Peter says they have not and doesn’t think many people understand the situation at hand.
Peter sees what the government is only going to make things worse. Although some are taking this week’s erratic behavior as the start of the next bull market, Peter says bear markets are well known for extreme fluctuations.
Bruce asks Peter what has surprised him most in the past 30 days. Peter is surprised that the government has stepped in and pretty much done whatever they want with what remains of our financial market. No one is challenging them.
Peter feels the financial system is in trouble and that we’re broke. Lending institutions loaned money to people who should have never had it. Instead of the banks failing, we’re going to fail.
Peter says that we should expect major inflation. By 2009, we’ll be seeing much bigger, phony CPI numbers. He doesn’t think the government will fess up to the numbers but the consumer will feel it.
Bruce asks about unemployment rate. Peter doesn’t think our wages will increase because we’re not competitive. Home prices will go down but other consumer staples will go up.
Bruce asks if Peter was in charge what he would do. Peter says there’s no solution. The US had a party and now we have a giant hang over. There’s no magic bullet. Peter would let the painful recession run its course. Peter would make government smaller and would slash government spending, military spending, and other drains on savings. We need savings.
Bruce talks about 70% of US GDP being consumer spending and asks what it will be in the future since we can’t keep that up. Since we’ve been borrowing all that money, Peter thinks people should only be spending what they have. We have to get back to basics. He feels we’re setting up a great depression combined with massive inflation.
Foreign investors will lose a lot of money and learn their lesson. No country will want US money and that will worsen inflation. Peter says he’s been surprised the dollar has done so well in the short run. He feels once the selling is over, the dollar is going to take a big hit.
Bruce asks about gold, silver, interest rates and oil and where Peter sees them in the coming year. Peter thinks by next year we’ll be over $100 a barrel. Peter says since the government is in control, it will be hard to say where interest rates will be.
Bruce asks if Peter sees a gold standard coming back and how that might help. Bruce says that we’ve nationalized Fannie, Freddie, and some of the banks, what’s next? Peter is looking to car manufacturers, states, and utilities. The issue is we can’t bail out everyone. FDIC doesn’t insure value, only quantity.
Bruce asks about the people about to retire. Peter thinks people we will be back in the work force and that things are drastically going to change. People will not be able to retire. Peter says his books really addressed how consumers could and can protect assets.
Bruce asks about tax changes. Peter sees tax increases for rich under Obama but the increases will further undermine the ability to create employment opportunities. The middle class will get tax cuts but they won’t do anything. The extra money won’t buy anything. Government will increase spending. If you have no income, the tax cuts don’t matter.
Bruce plays devil’s advocate and asks what a few more trillion would mean. Nobody would be poor if economic wealth could occur by printing money.
Peter strongly believes we need a new solid foundation built on savings and manufacturing. Anyone holding US debt will not get paid. They will get paid but the money will be worth less.
Bruce asks about two specific moves the audience can implement. Peter says to buy gold and silver and says move out of US stocks and go to global stocks. He also says there is a lot of value outside of the Unites States. Bruce says the global markets haven’t done so well in the past three months. Peter doesn’t think those will stay down long term and that most of this is emotional reaction.
Europac.net is Peter’s website and the number to reach his group is 800-727-7922.
Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation's leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and appears regularly on CNBC, CNN, Fox News, Fox Business Network, and Bloomberg T.V. His best-selling book, "Crash Proof: How to Profit from the Coming Economic Collapse" was published by Wiley & Sons in February of 2007. His second book, "The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down" was published by Wiley & Sons in October of 2008.
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for over twenty years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, Peter is a highly recommended broker by many leading financial newsletters and investment advisory services. He is also a contributing commentator for Newsweek International and served as an economic advisor to the 2008 Ron Paul presidential campaign. He holds FINRA Series 4,7,24,27,53,55, & 63 licenses.
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Friday, October 10, 2008
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.
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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
Play Now
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
Play Now
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
Play Now
Friday, October 3, 2008
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
Play Now
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
Play Now
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
Wholesale Capital Corporation - wccmtg.com
Play Now
Bruce shows the audience a list of 20 homes The Norris Group purchased in the past 45 days through auction or out of the MLS and the huge price hits lenders are taking. On 20 transactions, the banks took a $4.6 million dollar loss. Bruce says he’s worried about the domino effect. Too many people owe more than their property is worth.
Bruce says there are three ways to solve a vacancy. We can tear down houses and create an artificial housing shortage. We can leave it vacant and wait for till household formation catches up with supply. Or, we could make it possible for investors to have financing to hold them.
Four solutions that are needed to get us back on track. The 203k loan program from FHA should be made available to investors. It was available to investors until 1996 and then FHA discontinued because it had done its job of getting rid of foreclosures. FHA doesn’t have a ton of foreclosures because they didn’t make a ton of loans. However, the loan program needs to be made available for investors to expedite the foreclosure problem.
Fannie and Freddie need to increase the number of loans they will give to investors. Both want to open offices in California to help unload inventory more quickly and investors are likely candidates. At the same time, they are cutting back on financing available. Both are in a dire situation. Fannie and Freddie hold a huge amount of the foreclosures.
Option Arms are the next wave and these loans represent 50% of Fannie and Freddie losses. Bruce shows the Option Arm reset chart. The chart shows the expected resets and what’s currently happening now. A huge number of these Option Arm loan holders are making teaser payments. Once the loan balance hits a certain percentage, the loan resets. 90% of the borrowers of these loans made the minimum payment. Many won’t walk until the reset because the payment is cheaper than rent.
The foreclosure process is now taking longer because the banks are so slammed but because of the new regulations as well. The bulk of these are set to land in 2009. The loan amounts were typically more than subprime and the lenders will have to recalculate what they made because of how they were writing things off.
Bruce says a due on sale moratorium would make it possible for investors to buy properties that would undoubtedly become foreclosures, it would allow Realtors and auctioneers to make commission on properties with no equity but favorable financing, allow a consumer to move on with credit intact, and improve liquidity in the system.
In the 1980s, foreclosures exploded but price deterioration wasn’t bad. Assumptions of loans saved the market. When interest rates were 17%, people were able to assume better financing. Bringing back the simple assumption could really help.
Bruce also suggests the 90 day seasoning period on properties to be removed so investors can fix houses and sell them more quickly. Bruce shows the audience the picture of one of The Norris Group’s fixed up properties. Bruce describes why our fixed up inventory is so important for the market. The assumption that investors are committing fraud is completely wrong and is actually causing more problems. The creation of the two levels of comps is necessary to keep prices stable.
Bruce also wants to see long-term financing for investors so we can get the market cranking again.
Bruce then starts the second part of event. All eight guests appear on the stage to discuss the solutions brought forward.
Tommy Williams starts off by speaking on the point that there are some properties that should be bulldozed as some neighborhoods would actually be better off.
Christopher Thornberg brings up the political ramifications and complications of solutions and the difficulty of getting people to listen. Christopher also brings up the myth where some people renting must mean that person’s life is a complete wash. Christopher also brings up how investors were blamed for the current market.
Bruce brings up the fact that all the solutions he proposed are not new and that they had existed at one time in the past. It’s nothing new and they worked before.
Rick Sharga says the number of properties in foreclosure that are not owner occupied have not gone up that much. The myth that the investor caused it is not correct. Rick points out that many of the solutions would have to be implemented one piece at a time and it would take time. Rick also talks about non profits getting involved. Habitat for Humanity is taking REOs and rehabbing them instead of starting from scratch. Rick also talks about how numerous investors are coming in with large pools of money ready to take down portfolios of notes.
Bruce talks about how he gets called by Wall Street often and how they are putting together multi-million dollar pools to do that and they want to know when bottom is. Bruce is not excited about the thought that the very companies that helped get us into this mess will be the ones who also take advantage of the current situation. More to come.
The following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
Friday, September 26, 2008
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
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
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
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
Friday, September 19, 2008
I Survived Real Estate 2008 part 4 #86
Part four of “I Survived Real Estate 2008” picks up with Bruce Norris introducing CEO of the California Builders Industry Association of the Southern California, Richard Lambros. There’s a little repeat from last week to get the show going.
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 to one third. 2009 is not looking very good. Riverside and San Bernardino account for much of the cuts.
The economic impact of less building is very important. Just in Southern California, the building industry created $48 million of economic activity in 2005. In 2008, reaching $18 billion
Homes today are no longer shelter, they are infrastructure. Energy efficiency in California is already cutting edge and new guidelines are making them even tougher. New homes are unfairly being forced to make up for the 99% of retail homes that aren’t energy efficient. This inequality is difficult for builders to manage at times as costs and regulations add not only costs but time.
At the same time, a new home is a “Prius” and an old home is the “Hummers.” New homes have come a long way in building standards and built-in efficiencies. Buying a home today is very different than buying
New home projects are difficult to get approved. He speaks on residual land value and how builders figure price for a project. Builders work from comparables down to land price and not the other way around. Valuing land right now is too difficult and no one wants to loan on it right now. Builders are focusing on costs control and concerned about anything that adds time or costs to a project.
Real strength will return to building when strength returns to all the other sectors. The state needs jobs and economic growth for builders to thrive.
Bruce Norris then introduces Joel Singer, Executive VP for the California Association of Realtors. Joel discusses the myth versus the reality of the market place. As a former CAR economist Joel has experience after being through other downturns. This downturn is definitely different. It’s unique in that price decline is really steep.
The adjustment process we can’t look at past cycles because the adjustment of each cycle is different. Joel gets asked often “When is bottom.” Joel does not know. Joel is looking at activity picking up and feels we’ve hit bottom.
Joel is aware it feels bad because price is down so much. New builders and the civilian sellers have been squeezed out. The market is full of short sales and foreclosures; all have-to-sell inventory. Roughly 2 out of 3 of all sales are distressed transactions. Joel does agree 2009 will be bad and thinks foreclosures will continue but not sure what will happen beyond 2009.
Unemployment is a problem. A bigger wild card is the notion that Fannie Mae and Freddie Mac are dead. They are insolvent. (At this point in time, Fannie and Freddie were not government controlled). One they are nationalized, Joel expects a further jolt to the marketplace. Fannie and Freddie account for 90% (with FHA) of all loans in the market place.
Affordability has improved and the number of first time buyers will be 50% of the market place. It will be the highest level in three years. Three years ago, any idiot could be a successful investor. In today’s market, good investors will make a difference. The opportunities will be risky, look at the opportunities but don’t assume explosive growth. Assume the property makes economic sense. It will be challenging but the pros will be very successful.
Bruce Norris then announces Tommy Williams, president of the national Auctioneers Association and co-founder of Williams and Williams Auction Company. Conversation to resume next week.
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
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 to one third. 2009 is not looking very good. Riverside and San Bernardino account for much of the cuts.
The economic impact of less building is very important. Just in Southern California, the building industry created $48 million of economic activity in 2005. In 2008, reaching $18 billion
Homes today are no longer shelter, they are infrastructure. Energy efficiency in California is already cutting edge and new guidelines are making them even tougher. New homes are unfairly being forced to make up for the 99% of retail homes that aren’t energy efficient. This inequality is difficult for builders to manage at times as costs and regulations add not only costs but time.
At the same time, a new home is a “Prius” and an old home is the “Hummers.” New homes have come a long way in building standards and built-in efficiencies. Buying a home today is very different than buying
New home projects are difficult to get approved. He speaks on residual land value and how builders figure price for a project. Builders work from comparables down to land price and not the other way around. Valuing land right now is too difficult and no one wants to loan on it right now. Builders are focusing on costs control and concerned about anything that adds time or costs to a project.
Real strength will return to building when strength returns to all the other sectors. The state needs jobs and economic growth for builders to thrive.
Bruce Norris then introduces Joel Singer, Executive VP for the California Association of Realtors. Joel discusses the myth versus the reality of the market place. As a former CAR economist Joel has experience after being through other downturns. This downturn is definitely different. It’s unique in that price decline is really steep.
The adjustment process we can’t look at past cycles because the adjustment of each cycle is different. Joel gets asked often “When is bottom.” Joel does not know. Joel is looking at activity picking up and feels we’ve hit bottom.
Joel is aware it feels bad because price is down so much. New builders and the civilian sellers have been squeezed out. The market is full of short sales and foreclosures; all have-to-sell inventory. Roughly 2 out of 3 of all sales are distressed transactions. Joel does agree 2009 will be bad and thinks foreclosures will continue but not sure what will happen beyond 2009.
Unemployment is a problem. A bigger wild card is the notion that Fannie Mae and Freddie Mac are dead. They are insolvent. (At this point in time, Fannie and Freddie were not government controlled). One they are nationalized, Joel expects a further jolt to the marketplace. Fannie and Freddie account for 90% (with FHA) of all loans in the market place.
Affordability has improved and the number of first time buyers will be 50% of the market place. It will be the highest level in three years. Three years ago, any idiot could be a successful investor. In today’s market, good investors will make a difference. The opportunities will be risky, look at the opportunities but don’t assume explosive growth. Assume the property makes economic sense. It will be challenging but the pros will be very successful.
Bruce Norris then announces Tommy Williams, president of the national Auctioneers Association and co-founder of Williams and Williams Auction Company. Conversation to resume next week.
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
Saturday, August 30, 2008
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.
Play Now
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.
Play Now
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.
Play Now
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.
Play Now
I Survived Real Estate 2008 part 1 #83
For the next several weeks we’ll be taking a break from our regular interviews to air the I Survived Real Estate 2008 event over the radio. The event took place August 23, 2008 at the Nixon Library in Yorba Linda California. The event proceeds went to benefit the Orange County Affiliate of the Susan G. Komen for the Cure. Over 400 attended the live event, many more online via Proxibid who aired the entire event nationwide online over the Internet, and many more will watch the videos online.
This event was about solutions for our ailing real estate industry and to help an important cause. Eight industry experts from different real estate sectors converged to discuss how we got here, where we're going, and how we move forward together and prosper in the coming years. This is a rare opportunity to hear how leadership from the Realtors, builders, investors, mortgage industry, auctioneers and service providers each would approach and solve issues in the current real estate market.
If you’ve been listening to the past 8 shows on the radio, you’ve been introduced to the panelists one by one. The event officially kicked off on June 21st with the first interview prepping the audience for the live event. Video of the live event is also available at thenorrisgroup.com under free resources.
This first radio segment starts of the show with Aaron Norris introducing the event, introducing the amazing Platinum Sponsors, introducing the speaker from the Orange County Affiliate of the Susan G. Komen for the Cure, the introduction of Bruce Norris, Bruce talking about the importance of this event, the introduction of Christopher Thornberg, Christopher’s presentation on the current state of the real estate downturn and what we should expect in the coming year.
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
This event was about solutions for our ailing real estate industry and to help an important cause. Eight industry experts from different real estate sectors converged to discuss how we got here, where we're going, and how we move forward together and prosper in the coming years. This is a rare opportunity to hear how leadership from the Realtors, builders, investors, mortgage industry, auctioneers and service providers each would approach and solve issues in the current real estate market.
If you’ve been listening to the past 8 shows on the radio, you’ve been introduced to the panelists one by one. The event officially kicked off on June 21st with the first interview prepping the audience for the live event. Video of the live event is also available at thenorrisgroup.com under free resources.
This first radio segment starts of the show with Aaron Norris introducing the event, introducing the amazing Platinum Sponsors, introducing the speaker from the Orange County Affiliate of the Susan G. Komen for the Cure, the introduction of Bruce Norris, Bruce talking about the importance of this event, the introduction of Christopher Thornberg, Christopher’s presentation on the current state of the real estate downturn and what we should expect in the coming year.
Special thanks to the following partners and sponsors without whom the event would not have been possible:
Platinum Sponsors:
The San Diego Creative Investors Association (SDCIA): sdcia.com
Investors Workshops: investorsworkshops.com
Frye Wiles: fryewiles.com
Proxibid: proxibid.com
White House Catering: whcatering.com
MVT Productions: mvtproductions.tv
Pechanga Resort and Casino: pechanga.com
The Denver Nuggets: nba.com nuggets
The Chicago Bulls: nba.com bulls
The Cleveland Cavaliers: nba.com cavaliers
Gold Sponsors:
7 Steps to a 720 Credit Score and Philip X. Tirone - 7stepsto720.com
Chicago Title - ctic.com
Elite Auctions - sellwithauction.com
Foreclosure Trackers - foreclosuretrackers.com
Investors Resource Center of America LA and Steve and Robyn Love - irca-losangeles.com
Las Brisas Escrow - lasbrisasescrow.com
National Club of Real Estate Investors and Sam Saddat - ncrei.com
Northern California Real Estate Investors Association (Norcalreia) and David Granzella - norcalreia.com
North San Diego Real Estate Investors and Linda Wessels - nsdrei.org
RealtyTrac - realtytrac.com
RE Ventures and Michael Pines - reventuresrealty.com
Real Estate Investors Club of Los Angeles and Phyllis Rockower - realestateclubla.com
Real Wealth Investor and Scott Whaley - realwealthinvestor.com
Saddleback Valley Communities - svc4.com
Silverstar Finance and Janet French - silverstarfinance.com
Sunset Hills Memorial Park and Mortuary - sunsethills.cc
The Mission Inn - missioninn.com
The Mortgage Equity Group - http: themeg.net
The Naked Real Estate Investor Club - Rosie Nieto - nakedrealestateinvestorsclub.com
The Short Sale Processor and Nick Manfredi - theshortsaleprocessor.com
Virtual Real Estate Tour and Layla Tusko - 1wealthcreation.com
Wholesale Capital Corporation - wccmtg.com
Play Now
Saturday, August 23, 2008
Bruce Norris #82
This week we shake things up as Carl Angeloff, a radio celebrity in his own right, interviews Bruce Norris (President and CEO of The Norris Group) in preparation for “I Survived Real Estate 2008” where Bruce will act as investor representative and moderator.
Bruce and Carl discuss how Bruce got started in the business, Bruce’s first foreclosure experience, Bruce’s “California Crash” report written in January 2006, why Bruce wrote the report, Bruce’s mid-90s report called “The California Comeback” predicting the boom, HR3221 and his view of the solutions it presents, what the potential consequences are from HR3221, California being a non recourse state, when Bruce thinks this downturn will end, what things he looks for when predicting a boom, Bruce’s prediction for the remainder of 2008-2009, the percent increase in foreclosure numbers, what 2010 will hold, why this downturn happen so quickly, this downturn compared the 90s downturn, why the inexperienced got surprised, what The Norris Group does today, purchasing California REO properties, the bank taking 31% of what they were owed, what skills are needed, who the typical buyer is in this California market, the good points of HR3221, what kind of house The Norris Group likes in a downturn, why inventory preferences changes depending on the California real estate market, how The Norris Group fixes the houses, why condition and price are important, why cities need inventors to fix properties, what inventory Bruce dislikes, why Bruce doesn’t like corner houses, what we can do now to help solve the problems, the thought behind I Survived Real Estate 2008, isurvived2008.com.
Bruce Norris is an active investor, hard money lender, and real estate educator with over 25 years experience. Bruce has been involved in over 2,000 real estate transactions as a buyer, seller and money partner. Renowned for his ability to forecast long-term real estate market trends and timing, the release of The California Comeback in 1997 gained him much notoriety and its accuracy of the extensive report led many California investors to financial freedom. His January 2006 release, The California Crash, is an in-depth look into the California market correction and the statistics behind Bruce's predictions.
Bruce speaks and debates throughout California and has been a guest speaker at the California Builders Industry Association, Appraisal Institute, Learning Annex, Real Wealth Expo, Foreclosures.com, several local and national investment clubs, and Realtor associations.
Bruce has contributed articles to many real estate magazines and newsletters including RealtyTrac's Foreclosure Newsletter, Creative Real Estate Magazine, AOA Magazine, and the Daily Commerce. He has also been featured in The Wall Street Journal, The New York Times, Fortune, Mortgage Banker Magazine, Money Magazine, The Orange County Register, and numerous others.
Bruce is now host of his own radio show on KTIE 590am where he interviews real estate industry leaders. Guests have included Frank Nothaft with Freddie Mac, Peter Schiff of Euro Pacific Capital, Leslie Appleton-Young with C.A.R., Alan Nevin with the CBIA, RealtyTrac, PIMCO, PMI Group, REDC, HUD, National Auctioneers Association, and the Center for Responsible Lending to name a few.
Bruce is currently on the Board of Advisors at Chapman University’s Roger C. Hobbs Institute for Real Estate, Law and Environmental Studies.
Friday, August 15, 2008
Tommy Williams with the National Auctioneers Association #81
Thomas L. Williams is a graduate of
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
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.
Friday, August 8, 2008
Richard Lambros with the Building Industry Association #80
Richard Lambros is the Chief Executive Officer of the Building Industry Association of Southern California (BIA/SC), a non-profit trade association representing over 2,200 member companies involved in all aspects of the building industry in the six-county Los Angeles metropolitan area. The 38,000-square-mile region is home to over 16-million residents.
Richard is responsible for the day-to-day management of the sixth largest local homebuilding trade association in the nation and the largest local association in the state. He works with BIA/SC’s Board of Directors, six chapters and twelve councils to craft and implement strategies that will grow the size and strength of the association, provide valuable member services, advance industry causes and create a pro-housing climate that is conducive to sustained housing growth in Southern California. At BIA/SC, Richard has utilized his wealth of political, business and association management experience to help the association reestablish itself as the leading regional voice for the homebuilding industry. His efforts and skills were recognized nationally in 2004 when he won the National Association of Home Builders’ (NAHB) “Executive Officer of the Year Award.”
After nearly winning an election in 1996 to represent California’s 56th Assembly District, Richard served a two-year term as Executive Director for the California Republican Party, where he managed the administrative and political activities for the largest state Republican Party in the nation.
Prior to his political post, Richard spent over 10 years representing the interests and efforts of the housing industry. He served as the Vice President and Director of Public Affairs for the Apartment Association of Orange County (AAOC) and as Director of Governmental Relations for the Rancho Los Cerritos Association of REALTORS©. His years of service and contributions to the housing industry earned him special recognition in 1996 as the Alliance of Real Estate Associations’ “Legislative Advocate of the Year.”
A second-generation California native, Richard was born in Los Angeles and raised in Downey, California. He attended the University of Southern California, where he earned a Bachelor of Arts degree in Political Science. Richard is married and lives with his wife, Colleen, and four children in Fullerton.
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