About Me 0063: December 2010

Thursday 30 December 2010

foreclosure agents

“More credit counseling could have prevented some of the worst banking practices that helped spur the recession,” says Mike Newbold. Mike is a regional president for Ohio-based Huntington National Bank. I know that the majority of professionals view our marketplace as a place where we need to close our current transactions and simply get paid. But the truth of the matter, is that we need to ensure that we grow with our current client base, they are our lifeblood through the most difficult marketplace, so we need to take care of them.

What about this scenario? Agents discuss a brief synopsis of the real estate process with their clients. Shortly thereafter, agents should call their trusted mortgage brokers to ensure that they can afford to buy, but also that the consumer knows the implications of taking on such a responsibility. A two-hour seminar can consist of loan qualifying and the latest banking laws that are in force. This would be appropriate for first time home buyers because the lending landscape has changed quite a bit. However, I would venture to guess that even veteran homeowners will benefit from this kind of program.

I can appreciate the fact that most lenders simply do a quick review of paperwork, then slam the paperwork through as quickly as possible. After all, that’s what all real estate agents need them to do. But according to the study, it may behoove borrowers to take some time at the beginning of a transaction to become educated about the process. It will improve our rates of foreclosure in the future and allow the loans to perform instead of default. Additionally, I think that the new homeowner’s would appreciate the extra knowledge.

I am not naïve to think that the foreclosure would not have been an issue, eventually. No one was standing at the banks stating that the bubble would burst. However, an educational approach would have made the buyers pause and take note of the conditions. Most educational classes could have included the latest market trends in real estate & finance. Perhaps, the consumers would have been placed in a position to make a decision on their own. Understanding the incredible rise in home values, perhaps the typical buyer would have decided to wait.

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Over the last two years, the Obama administration and the Democrats tried desperately to keep the housing bubble’s collapse from significantly lowering overinflated home values. Twice they extended tax credits to new-home sales, and then added resales into the effort as well. Instead of stabilizing the market, the short-term policy gimmicks only delayed the deflation of home prices to a more rational level, while injected more uncertainty into valuation in the context of the present and near-term future.

As a result, no one seems to have a clear idea how to appraise existing homes for sale — and that has created a huge problem for the limited number of buyers in the market:

There are problems in appraisal land that transcend weak housing markets and debt-ridden borrowers, and that are causing home buyers and would-be refinancers to miss out on low rates and dream houses.

“There’s been a pendulum swing in appraisals comparable to the one we’ve seen in mortgage credit, from foolishly lax to overly restrictive,” said Walt Molony of the National Association of Realtors. He reported that as recently as October, one in 10 member agents said they’d had a contract canceled as a result of a low appraisal, 13 percent said they’d had a contract delayed, and 16 percent said they’d had a contract negotiated to a lower sales price as a result of a low appraisal.

“We haven’t seen anything like what we are facing today,” said Mark Linne of Appraisal World, a company that provides automated valuation software and services to appraisal companies and lenders.

New and proposed federal rules governing appraisals, changes in the way appraisals are conducted, and a still uncertain housing market have hit the appraisal part of the process in a way that is adding to housing market instability.

No one can blame lenders for wanting assurances that they are not loaning more than the worth of the collateral. Unfortunately, there isn’t any clear sense of value, especially in markets with more rapidly-decreasing prices. Plus, as the Fiscal Times reports, banks are holding a “shadow inventory” of homes that are either just going into foreclosure or close to it that has the supply side of the market glutted:

The supply-side issues are much thornier. The total number of homes expected on the market in the coming year is little more than guesswork. Banks are keeping many previously-foreclosed homes off the market, even as new foreclosures continue to mount, creating a shadow inventory that threatens to depress prices further. Hard data say that more than four million new and existing homes are on the market and unsold, but according to CoreLogic’s latest tally there are another 2.1 million homes either in foreclosure, at least 90 days past due, or taken by the lender and not yet listed for sale. That is a total potential inventory of 6.3 million homes in the coming year, which represents a 23-month supply at current sales rates, more than triple the level consistent with a healthy market.

Another way to look at the pressure on prices is the number of vacant homes for sale. The homeowner vacancy rate stood at 2.5 percent in the third quarter. Economists at UBS estimate that the rate needed to stabilize prices is between 1.7 percent and 1.8 percent, implying an excess of about 580,000 homes that are vacant and for sale. Given conservative projections for household formation, replacement demand and new construction, they gauge that the excess can be eliminated by the fourth quarter of 2011, which would stop the downward pressure on prices. But that projection doesn’t account for the shadow inventory.

Under those circumstances, with as much uncertainty that the “shadow inventory” and gimmick-driven prices created in 2010, is it any wonder that appraisers can’t agree on valuations? Lenders only make money by issuing mortgages, but after getting burned badly over the last three years, they’re understandably more conservative about loan-to-value calculations, not just at the point of sale but in the longer term as well. They need to know that homeowners buying houses at 2010 prices will maintain equity positions in their property after the value erosion of another 23 months of excess inventory. Thanks to knee-jerk economic policies, that erosion is almost impossible to estimate with any confidence at all.

Nor will it improve until the economy starts creating enough jobs to put a serious dent in unemployment. The Fiscal Times report concludes with that analysis:

One thing is clear. While housing led the economy into a recession, it will not lead it out. Until the labor markets are strong enough to start repairing the economy’s most visible and most damaged sector, the economy’s progress just won’t look like, or feel like, a recovery.

Home valuations are secondary to the ability to pay the mortgage. It’s immaterial if one’s home is valued lower than the mortgage principal as long as the payments can be made — which means jobs have to exist for income to pay them. The only way to do that is to adjust tax and regulatory policy on a long-term basis so that capital investments can be made which will create jobs. As long as we’re tinkering with temporary tax and regulatory policies, we won’t solve either problem, but instead amplify the uncertainties.

Stubborn Joblessness Among Vets Darkens US Economy - AOL News

The newly reported drop in jobless claims belies continued rough going for America's Iraq and Afghanistan war veterans, who are experiencing 10 percent unemployment.

Keith Olbermann: 'Fox News Is 100% Bullshit'

Keith Olbermann is anything but hesitant when it comes to a battle with Fox News, and the MSNBC anchor took to Twitter Wednesday to share his views on the TV network he probably wouldn't even call a rival. "Fox News is 100% bullshit," ...

Year's Worst Ads Get What's Coming to Them - AOL News

The year's worst ads get honored with a very dubious award: a Tracy Award.

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Tuesday 28 December 2010

Making Money

After Taking Big Sugar Money, Florida Ag. Commissioner Adam Putnam Seeks To Halt Soda Ban In Schools

Rep. Adam Putnam (R-FL) has yet to take office in his new role as Florida Agriculture Commissioner, but he’s already making his Big Sugar contributors smile.

Throughout 2010, the State Board of Education has considered banning sugary drinks from Florida schools, including soft drinks, high-sugar juices, and chocolate milk. According to the Orlando Sentinel, Board member John Padget “has been pressing his colleagues for a year to cut out most beverages besides water, pure juice and white, low-fat milk.” Justifying such a move, Padget writes in a Key West Citizen op-ed, is the fact that “over one-third of America’s children are either overweight or obese,” leaving them “often less ready to learn in the classroom.”

A few weeks before the issue was to be considered, the state’s newly-elected Agriculture Commissioner, Adam Putnam, wrote a letter demanding that the Board of Education halt such a move. Putnam criticized the Board for choosing “to focus only on the nutrition content in beverages served in Florida schools,” rather than taking a more holistic approach:

One such area that I look forward to tackling is ensuring that Florida’s students have better nutrition options to reduce obesity and related long-term health risks. This is a topic your Board has discussed recently for possible policy recommendations. However, instead of looking at the entire nutrition intake of students, you have chosen to focus only on the nutrition content in beverages served in Florida schools. It is my belief that any nutrition improvement plan needs to be certain that students are receiving the best possible nutrition package, in concert with total wellness initiatives, to allow them to reach their optimum achievement potential.

First steps would be to take a comprehensive look at current school foodservice offerings, rather than making individual product recommendations that do not address the broader health picture. This comprehensive approach will need time to develop and I would appreciate your Board considering delaying any plans to address just a single component of the nutrition factors and instead allow time for a complete approach to building a healthier generation of Florida students.

As a result, “the Board of Education decided to put off any further discussion of the issue,” Deborah Higgins of the Board of Education’s communications department told ThinkProgress, “until the agriculture commissioner-elect Adam Putnam was sworn in.”

However, campaign finance records show that Putnam is less than an impartial figure in the matter. A ThinkProgress investigation has found that the incoming Agriculture Commissioner has been the benefactor of a significant amount of money from both the sugar and dairy lobby during the campaign – both of whom have a strong financial interest in keeping sugary drinks in schools. Despite Florida’s $500 contribution limit for both individuals and PACs, Putnam received at least $61,000 in campaign funds from sugar and dairy interests, including maxed-out contributions from Coca Cola’s lobbyist in Tallahassee Brian Ballard and a slew of maxed out contributions from the Sugar Barons of South Florida, the Fanjul family.

Following his victory on November 2, Putnam also made a wealthy sugar magnate one of his first appointments. Tracy Duda Chapman, Vice President and General Counsel for the corporate megafarm A. Duda & Sons, Inc., was appointed by Putnam as co-chair of his four-member transition team. Chapman is not just heavily invested in the sugar industry herself. She also serves on the leadership of the Florida Land Council trade association alongside the senior vice president of the US Sugar Corporation, Robert Coker, who also maxed out to Putnam.

There is little doubt that sugarmakers take comfort with Chapman sitting at Putnam’s right hand. Now that Putnam has moved to block a ban of sugary beverages in schools, that faith has been vindicated. In an instance of life imitating art, Florida sugarmakers are proving true the classic Simpsons quote, “In America, first you get the sugar, then you get the power.”

Padget, who has spearheaded this issue for over a year, remains cautiously optimistic. “I think we could have 4 votes for this issue,” Padget told ThinkProgress by phone, which would constitute a majority of the seven-member Board. “Still,” he said, “there is a lot of work to be done. I look forward to Commissioner-elect Putnam’s contributions to this effort.”

A little OTB update: Yes, it's still dead and its employees have been put to pasture...except for CEO Gene Rayburn. Earlier this year, it was noted that Rayburn was being paid $125,000 a month and it turns out he's on payroll through January 14. The Daily News reports, per the governor's office, "Rayburn has stayed on to 'finish everything up.' The restructuring specialist is dealing with the outfit's remaining issues in bankruptcy court and is making sure money owed to various creditors and staffers is paid out... By the time he is through, Rayburn will have been paid at least $750,000 for six months on the job. His predecessor made $175,000 annually."

Thursday 30 December 2010

Tuesday 28 December 2010

After Taking Big Sugar Money, Florida Ag. Commissioner Adam Putnam Seeks To Halt Soda Ban In Schools

Thursday 23 December 2010

1. Epic Change

2. Stillerstrong

3. TwitChange

4. University of the People

More Social Good Resources from Mashable:

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Wednesday 22 December 2010

1. My Audience Doesn’t Play Social Games

2. Virtual Worlds Are Not for “Serious” Companies

3. It’s Always About Capitalism

4. Social Games Are a Fad

For more Business coverage:

1. Increased Spending on Websites

2. Smartphone Revolution

3. Social Shopping and E-Commerce Advancements

4. More Focused Social Media Efforts

5. Increased Adoption of Cloud Computing

More Small Business Resources from Mashable:

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Wednesday 8 December 2010