Tag Archives: real estate

Social Security: Issuing Checks & Hollow–Points

Social Security, US Marshals Service, hollow-point bullet, real estate, government spending, Infowars.com

Some of the more excitable members of the conservative Internet commentariat sounded battle stations when they learned the Social Security Administration (SSA) wanted to buy 174,000 hollow–point bullets.

Had granny decided she was not going passively the next time Paul Ryan tried to shove her off a cliff? Were irate seniors busy sharpening the legs on their walkers in preparation for the coming conflict over paying for Social Security?

The Infowars.com website speculated, “It’s not outlandish to suggest that the Social Security Administration is purchasing the bullets as part of preparations for civil unrest.” And the Daily Caller added the rounds have to be intended for domestic use, “since the SSA has never been used overseas to help foreign countries maintain control of their citizens.”

Which only makes sense when one considers how few foreigners are Social Security recipients, to say nothing of the lack of overseas Social Security offices.

Seeking to allay our fears, the SSA explained the ammunition was for the use of agents in the office of the inspector general that investigate Social Security fraud and other crimes.

That answered the “whom” but failed to address the “why.” The previously alarmed still wanted to know why the SSA was ordering hollow–points, which are bullets designed to expand upon contact with the human body, consequently doing more damage to the target.

The answer was for safety reasons — the bystander’s, not the target’s. As a hollow–point expands it loses velocity, so those rounds tend to remain inside the target. Military, or full–metal jacket rounds, don’t expand as much and consequently a military round is liable to pass through the target’s body and bury itself in a bystander.

For conservatives this firepower controversy is only a distraction. The real issue at hand is why does the SSA have a police force in the first place?

Bureaucrats have an answer already prepared. These agents “need to be armed and trained appropriately. They not only investigate allegations of Social Security fraud, but they also are called to respond to threats against Social Security offices, employees, and customers,” explained an official web post.

But lets look at the numbers. There are 295 agents working in 66 different offices that made a grand total of 589 arrests last year according to the WaPost.

It works out to less than two arrests per year, per agent. That’s hardly a punishing level of enforcement and it compares poorly with the nationwide average of 21 arrests per year for police officers. And it certainly does not justify the cost of duplicating existing federal law enforcement capability.

A better question is why does the SSA have it’s own police force when the U.S. Marshals Service is fully capable of making the SSA’s paltry 589 arrests?

This is why the US has a trillion dollar debt, a bloated, mismanaged government and conservatives who despair of ever reducing its size.  Empire–building bureaucrats duplicate services and programs and a compliant Congress sends us the bill.

Besides it’s just possible that if the Marshals Service had a few more warrants to serve they would occupy themselves with productive endeavors and not have time to cost victims money in the real estate market, as events in Manassas, VA demonstrate. There the service has just presided over the second auction of the old Post Office building that was seized as part of the assets in a fraud case.

Proceeds from the sale of the building are to go to victims who lost money. The first auction was held in April and attracted a bid of $385,000 that was accepted by the auctioneer. Anyone who has ever placed a bid for stolen electronics on eBay knows that means the bidder now owns the Post Office! Except the normal rules of the marketplace don’t apply to the government, which neither understands nor encourages a truly free market.

The feds make their own rules.

So the Marshals Service rejected the winning bid, because explained the spokesperson, “We felt it was too low.” Any real estate agent worth his photo featuring calling cards will tell you a property is worth what someone will pay for it, not what some bureaucrat thinks looks better in the news release announcing the distribution of the money.

The bidders, bless their hearts, increased their offer to $400,000, a sum that was also rejected. And there the situation stood until last month when another auction was held and guess what? This time the winning bid was $355,000.

Assuming this bid is accepted, the Marshals Service’s marketplace ignorance will have only cost the intended recipients of the proceeds $45,000. Unless the Marshals Service intends to hold out for an even lower bid.

But this mistake is consequence–free for the Marshals, just as building an unnecessary police force only enhances the organization chart at the SSA. In the first instance it only costs taxpayers and in the second only tax dollars. And what bureaucrat cares about either?

Obama's 'Underwater' Homeowner Rescue Already Sinking

President Obama is travelling several Western states to talk up a re-vamp of his failed “Home Affordable Refinance Program” (HARP) in another big-government attempt to rescue homeowners who owe more on their houses than the real estate is worth.

Beginning in Nevada, the “We Can’t Wait” campaign is intended to show-up Congress while side-stepping them completely. Congress had passed HARP in an effort to help homeowners with troubled mortgages. The program promised to help about 5 million Americans, but in truth just  822,000 have been assisted – not even 10% of those upside-down on their home loans.

The new rules in “HARP Phase II” will loosen the rules on who can take advantage of the government program and reduce the fees the borrower must pay.

 Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
 Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
 Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
 Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
 Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.

In the original program, only those that owed up to 125% more than the property was worth could be accepted into the program. Now, there will be no limit to the amount the borrower may owe in relation to the value of the property.

If Jim, as an example, owed $250,000 on his house and the home was only worth $175,000, he previously would have  been denied a re-finance under the HARP program. Now, as long as Jim’s loan is backed by Fannie Mae/Freddie Mac, he can be approved. This will put the taxpayers on the hook for a quarter million dollars with only 175k in collateral. Who runs a business this way?

The program is also expected to only provide minimal relief. Due to the 20 year maximum term for the refinanced mortgage, monthly payments may only be 20-30 dollars less per month according to an example provided by the Federal Housing Finance Agency (FHFA).

If the borrower chose a 20-year loan term at a rate of 4.25 percent (mortgage rates tend to be less for shorter term mortgages), the monthly payment would be $1238 ($26 less than the borrower currently pays) and the borrower’s loan balance would reach $160,000 in five-and-one-half years

The real purpose of the new program may be even more deserving of investigation. This program doesn’t appear to modify existing loans. Instead, it replaces one loan for another. It’s  a traditional re-finance with one major difference – Fannie and Freddie are letting the banks off the hook for any illegitimate loans they originated as long as they re-fi through this program. David Dayen at FDL puts it succinctly:

So, earlier, I said “what’s not to like.” Here’s what’s not to like. The “reps and warranties” part of this. When you refinance a loan, you’re essentially creating a new mortgage, unlike a loan modification, where you modify the old mortgage. Under the plan, the FHFA will eliminate their ability to force repurchases on these old loans, and they would lower their ability to force repurchases on the new loans created. There will be a “modest fee” associated with relieving these reps and warranties, according to Donovan, which won’t be set until November 15. They will be lower than the current risk-based fees that Fannie and Freddie charge.

What does this mean? A “reps and warranties” case is a case where the loan was originated improperly. When Fannie and Freddie get sold a bad loan like this, they have the right to force it back on the originator. New lenders are reluctant to refinance such loans, because they become liable for the put-back.

What this means is that FHFA will essentially settle on all the loans that get refinanced for a “modest fee,” which we can safely assume will be next to nothing. And we know that a substantial amount of loans, perhaps a majority, were illegally originated during the bubble years. You’re letting the lenders who originated the loans off the hook for that, in exchange for allowing more refis.

FHFA estimates that this program may double the current number of re-finances by the end of 2013. An additional $447 Billion to help perhaps another 882,000 home owners over the next two years?  That’s more than half-a-million dollars per re-finance. Remember, they aren’t giving them half-a-million bucks, that’s just what Obama’s program costs to service 882,000 loans by the FHFA estimate.

“We Can’t Wait” may be yet another attempt to do anything quickly, no matter how ill-conceived it may be. Of some concern is where did the money to fund this come from if Congress didn’t approve it?

At a cost of $447 Billion this is a bank rescue and a move to prop up inflated real-estate prices all under the disguise of helping home owners. This ought to push the Occupy Wall Street crowd right over the edge .. but it won’t – because it came from Democrats.

 

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And The Winners Are: Ugliest Houses in America

DALLAS, Aug. 25, 2011 /PRNewswire/ — The people of America have spoken by casting their votes in the 2011 “Ugliest House of the Year” contest.  The winners are featured at www.TheUgliestHouse.com.

The contest is sponsored by HomeVestors of America, Inc., known as the “We Buy Ugly Houses®”company, with participation from franchises in various U.S. markets.

“We’re proud to sponsor a contest that celebrates ugliness, recognizing that even the ugliest house on the block has the potential to be transformed into a lovely home,” said David Hicks, co-president of HomeVestors of America.  “If you’re the owner of an ugly house and have any doubt about whether someone wants to buy it, call HomeVestors at 1-800-44-BUYER (28937).”

The 2011 “Ugliest House of the Year” contest was open to the public, who could vote after viewing photos and property descriptions on the HomeVestors® website.  Nominees were selected from a call-for-entries inviting all real estate investors in participating market areas to submit the ugliest houses they had bought at any time between March 1, 2010 and May 15, 2011.  Most of the houses nominated have since been rehabbed and transformed into lovely homes, with some sold on the retail market and others maintained as rental properties.

Dallas-based HomeVestors of America, Inc., the #1 buyer of houses in the U.S., was incorporated and began franchising in 1996.  The first franchise real estate investment company, HomeVestors trains and supports franchisees that specialize in buying older homes in need of repair or updating, and rehabbing them.  Most commonly known as the “We Buy Ugly Houses” company, HomeVestors strives to make a positive impact in each community.  In 2010, for the fifth consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com .  To learn more about the HomeVestors franchise, visit www.HomeVestorsfranchise.com .

SOURCE HomeVestors of America

CONTACT: Cary Brazeman,             +1-310-205-3590      , [email protected], for HomeVestors of America

Florida Real Estate Takes Double Dip

Government programs ending, new foreclosures starting, zombie foreclosures coming back to life and Florida’s weak employment base all add up to bad news for Florida’s real estate market for the next few quarters, says Roy Oppenheim in a video interview

WESTON, Fla., July 26, 2011 — Foreclosure is the new “F” word and it’s back with a vengeance as Florida foreclosure defense activity is up and, as a result, Florida real estate prices are expected to go down again, reports Roy Oppenheim, legal blogger and foreclosure defense attorney at Oppenheim Law (see Oppenheim’s recent video interview discussing Florida real estate’s double dip: http://youtube.com/oppenheimroy).

“Florida real estate prices are likely going to decline again starting in the third quarter of 2011 and into the next few quarters of 2012,” says Oppenheim, who also specializes in foreclosure defense workshops and serves as an expert source to real estate media outlets. “Expect a tidal wave of new foreclosures to hit the Florida markets.”

The Florida Real Estate Double Dip culprits:

“There is just not enough economic support to sustain housing prices,” said Oppenheim. “Meager gains of the market will be washed out by the next tidal wave of foreclosures that only a surge in new construction can save us from.”

Oppenheim Law Foreclosure Truths and Consequences

  • The only remedy for less government benefits is an increase in hiring. But … the job market is dismal. Employers added only 18,000 jobs last month, with millions still unemployed.
  • The situation is even worse in South Florida, with above average unemployment in both Broward and Miami-Dade counties.

Oppenheim Law’s prediction

All of the cuts will result in more Floridians unable to stay in their homes. The more people unable to stay in their homes, the more foreclosures Florida will have.

“The lull in foreclosures, as reported most recently by the media, is merely the eye of the storm,” said Oppenheim.

Oppenheim Law sees a tidal wave of foreclosures about to hit. The Florida real estate foreclosure tides are already starting to rise as noted in the South Florida Law Blog.

About Oppenheim Law

Oppenheim Law is one of the leading Florida real estate and foreclosure defense law firms, founded in 1989. The firm has a 9.6 out of 10 rating from AVVO, the world’s largest legal directory, as well as the highest rating (A-V) conferred by Martindale Hubbell Law Directory, the most respected directory of lawyers and law firms in the U.S. Join Oppenheim Law on Facebook athttp://www.facebook.com/oppenheimlaw

Contact: Lisa Buyer, [email protected], 954-354-1411 x14

Study Reveals Impact of Real Estate ‘Shadow Inventory’ on Recovery

ATLANTA, June 30, 2011 /PRNewswire/ — Despite steady gains in key industry sectors, the nation’s housing market continues to exert pressure on the overall rate of economic recovery. While financial conditions across multiple financial sectors suggest economic stabilization and growth, delinquencies still exceed pre-recession levels due to continued turbulence in the mortgage marketplace, according to Equifax (NYSE: EFX) national credit trend research for May 2011.

Slowing today’s economic recovery are the challenges posed by high shadow inventory levels, which are contributing to the continued rise of severe mortgage delinquencies and write-offs. According to Equifax research, write-off dollars for home finance, which includes first mortgage and home equity installment loans as well as home equity revolving accounts, are still climbing and have yet to show signs of peaking. In fact, home finance write-offs reached $304.6 billion in 2010 compared to a combined total of $126.7 billion for 2006 and 2007.

Equifax data shows that severe delinquencies among these loan vintages have remained nearly constant since the first quarter of 2010. Further analysis reveals that as of May 2011 there are approximately$319.7 billion in 2006 and 2007 first mortgage vintages that are in the initial foreclosure process – many of which may be written off.

Real estate owned (REO) properties represent another roadblock to recovery. According to Equifax, first mortgage REO rates remain high as lenders struggle to divest of properties unsuccessfully sold through a short sale or foreclosure auction. While various factors over the last few years have led to fluctuations in the number of REO properties, REO rates since March 2011 are on the rise and causing continued economic strain. Equifax data shows that in May 2011:

  • Three percent of all U.S. first mortgages representing $21.8 billion were REO properties.
  • Foreclosure complete rates of 1.45 percent were almost in lock step with bankruptcy rates of 1.6 percent – suggesting that the majority of REO properties are the result of bankruptcy proceedings.

 

“Shadow inventory and real estate owned properties are still playing a dominant role in today’s mortgage market and slowing the pace of economic recovery. While we are seeing stabilization across multiple sectors of lending, there remains a significant volume of delinquent first mortgage loans, which has slowed the foreclosure process. Until these foreclosures are processed, the mortgage market will continue to impact economic growth,” said Craig Crabtree, senior vice president and general manager, Equifax Mortgage Services.

National Home Prices Hit New Low in 2011

NEW YORK, May 31, 2011 /PRNewswire/ — Data through March 2011, released today by Standard & Poor’s for its S&P/Case-Shiller(1) Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010.  The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.

As of March 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were down compared to March 2010. Twelve of the 20 MSAs and the 20-City Composite also posted new index lows in March. With an index value of 138.16, the 20-City Composite fell below its earlier reported April 2009 low of 139.26. Minneapolis posted a double-digit 10.0% annual decline, the first market to be back in this territory since March 2010 when Las Vegas was down 12.0% on an annual basis. In the midst of all these falling prices and record lows, Washington DC was the only city where home prices increased on both a monthly (+1.1%) and annual (+4.3%) basis.  Seattle was up a modest 0.1% for the month, but still down 7.5% versus March 2010.

The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 5.1% decline in the first quarter of 2011 over the first quarter of 2010. In March, the 10- and 20-City Composites posted annual rates of decline of 2.9% and 3.6%, respectively. Thirteen of the 20 MSAs and both monthly Composites saw their annual growth rates fall deeper into negative territory in March. While they did not worsen, Chicago, Phoenix and Seattle saw no improvement in their respective annual rates.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. The National Index, the 20-City Composite and 12 MSAs all hit new lows with data reported through March 2011. The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities – Atlanta, Charlotte, Chicago,Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa – fell to their lowest levels as measured by the current housing cycle. Washington D.C. was the only MSA displaying positive trends with an annual growth rate of +4.3% and a 1.1% increase from its February level.

“The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit.  Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”

“Looking deeper into the monthly data, 18 MSAs and both Composites were down in March over February. The only two which weren’t, are Washington DC, up 1.1%, and Seattle, up 0.1%. Atlanta,Cleveland, Detroit and Las Vegas are the markets where average home prices are now below their January 2000 levels.  With a March index level of 100.27, Phoenix is not far off.”

As of the first quarter of 2011, average home prices across the United States are back at their mid-2002 levels. The National Index level hit a new low in the first quarter of 2011; it fell by 4.2% in the first quarter of 2011 and is 5.1% below its 2010Q1 level.

Eleven cities and both Composites have posted at least eight consecutive months of negative month-over-month returns. Of these, eight cities are down 1% or more. The only cities to post positive improvements in March versus their February levels are Seattle and Washington D.C. with monthly returns of +0.1% and +1.1% respectively.