March 3rd, 2009 by Scott

Banks need to remove special assets (bank speak for collection or nonperforming loans) off the books to be able to get back to the business of banking.  While removing these assets are easily talked about the transactions and how to go about it is a royal headache.  In the 80’s and 90’s RTC (Resolution Trust Corporation) was formed by the government to buy toxic assets from the failed or failing Savings and Loans.  This process served the needs fairly well, and there are signs that we may reinstate this type of program.  Market Watch.com is reporting that last week FDIC sold a block of loans to a private investment group that ended up with a shared interest in the portfolio. http://www.marketwatch.com/news/story/FDIC-sells-15-billion-toxic/story.aspx?guid=%7BB08BA9AC-3B4F-490E-9B0F-789D14EE365C%7D 

In true free market style two investors in NJ are taking there own approach to buying up some bank problems and converting them to opportunities.  Raj Bahati and Albert Behin are rolling up their sleeves and finding profits from buying the mortgages in groups from the lenders.  The catch is they must buy several loans at one time, but they are getting them for 40 cents on the dollar.  These are Alt A loans that were not the worse of the worse but still were mostly no income verification loans.  This approach buys the loan before it goes to foreclosure so this allows the investors a chance to be creative in how they deal with the homeowner allowing a lot of them to stay or at least humanizing the experience by having one on one dealings instead of the cold corporate special asset department.  This post is based on a story ran on NPR.  To hear the whole report    

http://www.npr.org/templates/story/story.php?storyId=101227971

bank owned real estate, Mortgage, real estate, real estate investing, RTC, shortsales, toxic assets

February 27th, 2009 by Scott

Warren Buffet says, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” While Mr. Buffet was writing about buying stocks, the same can be said for housing today.

Housing issues have permeated the economy both locally and nationally. This week, one index that tracks housing prices, S&P/Case-Shiller Home Price Indices, indicated home values fell the most since 1968, declining 18.5% in December from the year before.

Looked at from a different perspective, this means home prices have fallen to levels not seen in six to twelve years, depending on individual markets. Following the Case-Schiller report was the report from the National Association of Realtors (NAR) recently. The NAR reported that home prices for the month of January fell by 14.8%.

The bright spot though in contrast was that the number of homes sold in December increased. Home buyers from coast-to-coast have been buying distressed properties at the rate of 45% of total sales.

Recognizing that now is the time to buy, everyone – from those looking to purchase their first home to seasoned real estate investors – is buying homes today. Bruce Norris, the head of an investment group in Southern California, expects to buy at least 100 homes this year as, “This is the buying opportunity of our lifetime.”

Fundamentals Point to Strength
The basic fundamentals of the housing market point to higher prices ahead. Almost half of the properties being sold today are existing homes that are either owned by banks or homes on which banks are accepting short sales, allowing them to be sold for less than what is owed.

New homes or homes under construction are near all-time lows. The country’s demographics point to more potential buyers coming into the housing market than projected inventory in coming years. This all points to higher prices on the horizon as demand will be greater than supply. This is supported by the fact that the inventory of unsold homes fell 2.7% in January.

Why Buy Now?
Three very important reasons to buy now are:

• Interest rates are near all time lows;
• Home prices have declined to levels not seen in years; and
• Qualified first-time home buyers are now eligible for up to an $8,000 tax credit.

Lower Prices Don’t Always Equate to Lower Payments
One final point to consider. Even if you believe that home prices will continue to decline, it’s very difficult to believe that interest rates will remain at these low levels.

Did you know that even if home prices were to decline 10% but also during that time, interest rates available for home loans were to increase by 1.00%, your monthly principal and interest payment would actually be higher? It’s true. So, if you are thinking of buying or the end of your lease is near, get busy and get in the game. To quote Mr. Buffet again, “If you wait for the robins, spring will be over.”

atlanta, bank owned real estate, first time home buyers, home prices, interest rates, Mortgage, real estate, real estate investing, real estate market, shortsales, tax credit

February 27th, 2009 by Scott

BB&T grew from a small NC bank making loans to tobacco farmers to one of the largest banks in the US.  This happened under the leadership of one CEO John Allison.  The link here is to a lecture Mr. Allison did for the Ayn Rand Center for Individual Rights.  Mr Allison has just retired from BB&T and he gives an interesting “insider” look at how the goverment aided the market meltdown.  He goes on to look at what policies and individual changes must be made to get out of this mess.  He has some strong free market beliefs and is not afraid to put them out there.

One warning, this is 97 minutes long, and Allison is not the most entertaining speaker, but you will be impressed by his command of the subject.

http://www.aynrand.org/site/PageServer?pagename=reg_ls_financial_crisis

Ayn Rand Center for Individual Rights, BB&T, John Allison, Mortgage, news, real estate, real estate market, reccesion, tax credit

February 26th, 2009 by Scott

Rain, rainbow and ice?!!?

atlanta, real estate, real estate investing, real estate market, scott farmer