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Table of Contents
Visit our new website at ncrei.com and receive $347 in FREE Real Estate Training Materials!
Feature Article: "Housing Bill Approved?!"
Special Offer: Attend Niches to Riche with a friend and one of you gets in fFREE $599 Value!
This Month's Speaker (Airtel Plaza Hotel, August 26th): Sam Sadat "NICHES TO RICHESs"
Calendar of Upcoming Trainings & Events:
Sam's Food For Thought: "Why do we resent our life experience? ." more...
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Feature Article
Fannie, Freddie takeover possible
Paulson discusses a rescue plan with the mortgage giants' chiefs, who may have to step down, sources say.
By Peter G. Gosselin, Los Angeles Times Staff Writer
September 6, 2008
WASHINGTON -- Treasury Secretary Henry M. Paulson Jr. called in top executives of Fannie Mae and Freddie Mac late Friday to hammer out details of a rescue plan for the troubled mortgage giants that could go so far as a full government takeover, according to people familiar with the effort.
Paulson, together with Federal Reserve Chairman Ben S. Bernanke, was expected to meet through the weekend with Fannie Mae Chief Executive Daniel Mudd, Freddie Mac CEO Richard Syron and federal regulators to unveil a plan by the time Asian financial markets open Monday morning.
Among the key issues: whether the two executives and perhaps their boards of directors would step aside in return for federal aid.
Doubts about the stability of Fannie and Freddie, which own or guarantee more than $5 trillion worth of mortgages -- about half of all U.S. home loans -- have dogged investors since the U.S. housing finance market began to unravel a year ago.
The government-chartered but shareholder-owned companies play such a central role in the U.S. financial system that any new worries about their functioning could send damaging ripples around the world and worsen the downward spiral of house prices and foreclosures here at home.
Treasury action could potentially help home buyers and sellers by keeping mortgage interest rates lower than they might be if the firms were to run out of capital and stop buying and guaranteeing mortgages.
Paulson sought to allay such fears in July by winning congressional authority to lend the firms taxpayer money, buy their stock or even force them into conservatorship, a sort of bankruptcy.
The Treasury secretary and other top officials hoped that attaining that authority would in itself be enough to steady the companies and that Washington would not be forced to use its new powers.
Any sort of Treasury intervention aimed at Fannie and Freddie would represent a huge expansion of the safety net that a deeply reluctant Bush administration has slipped under the financial system since the beginning of the crisis.
Fannie and Freddie's nose dive marks a spectacular fall from grace for two of Washington's most powerful institutions. Not only were the pair financial behemoths, but they were also among the capital's most aggressive lobbyists, convincing lawmakers and other officials that they were essential to the American dream of homeownership.
The options open to the government at this stage include making loans to the firms, buying stock or pushing them into conservatorship and effectively taking over their operations.
Policy analysts knowledgeable about the firms generally favor the takeover approach, saying that such a step would reassure financial markets that the firms are stable and would give the Treasury Department the power to eventually reorganize Fannie and Freddie's operations.
But such a move would almost certainly leave the companies' current investors with nothing, a move that some warn would sow doubts among stockholders in more conventional financial firms such as investment bank Lehman Bros.
And it would represent an about-face by Paulson, who as recently as last month was still saying he did not expect to use his new authority and supported the firms' remaining in their current form.
On the other hand, if the Treasury Department were simply to pump additional money into the companies, analysts said there would be no way to guarantee that financial market players wouldn't dump the stock anyway, leaving Fannie and Freddie still in danger.
That's a position that the government has been in repeatedly since the current crisis began, and to date it has yet to be able to revive the financial system and keep it stable. It was not clear Friday precisely what was causing Paulson and the administration to act now.
Between them, the companies have suffered about $14 billion in losses during the last year. But they appeared to be able to continue borrowing in world markets, crucial for their ability to continue to operate.
Paulson and the administration came in for heavy criticism for seeking financial backup authority. Critics charged that the administration was, in a widely used phrase, "socializing the companies' losses and privatizing their gains."
That's because the chief beneficiaries of the new authority appeared to be the companies' investors, who saw the steep decline in the price of their shares level off with Washington effectively promising to assume risks of loss they had previously borne.
At least in part, the meetings Friday were aimed at winning the approval of Mudd and Syron, Fannie and Freddie's chief executives, for the government bailout plan.
Under the July legislation, the two must OK any government intervention unless the firms' new regulator, the Federal Housing Finance Agency, effectively declares the companies insolvent.
People familiar with the session said the two executives were told that federal aid may well be contingent on their stepping aside and being replaced with managers acceptable to the government.
Step by step, Washington has become ever more involved in trying to stabilize the nation's banking system and financial markets only to find that still more action is required
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Niches to Riches
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This Month's Speaker
Tuesday, September 23 NCREI Presents:
Bruce Norris:
12 Reasons You DON'T Sit On Your Hands in a Downturn
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- Specific examples of deals Bruce recently purchased
- Negotiation strategies that took place between Bruce and the broker representing the lender.
- Negotiation Strategies with the Auction Companies
- Which auctions are producing results
- Which auctions you should watch out for
- How premium prices exist for fixed inventory
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Overview
The Norris Group has purchased over 20 in the last 60 days. On 20 of these properties, lenders were owed $6,781,750. The Norris Group purchased them for $2,122,550. The lender took a 69% hit on these houses!
Everyday I receive calls from discouraged investors. One of their favorite sentences is, “So, should I wait?” In what I hope will be a very uplifting and motivational talk, I’ll give the top twelve reasons why you don’t sit on your hands in a downturn.
By sitting on the sidelines, you rely on other people for first hand knowledge. Because I’m in the trenches everyday as an investor, I know things you couldn’t possibly know. I know the lenders have just about given up on things. They are walking away from properties, giving huge discounts. I know the lenders have radically changed their approach to investor offers just in the past 60 days. How do I know that? The answer is because we continued to make offers; even when they “knew” it wouldn’t work.
National Club of Real Estate Investors (NCREI.com)
Our mission is to educate, enhance networking, and encourage you to take action to attain financial freedom.
When: Tuesday, August 26, 2008
Where: AIRTEL PLAZA HOTEL [directions] (818) 997.7676
7277 Valjean Ave (at Sherman Way), Van Nuys, CA 91406
Time: 6:30 Networking/Registration 6:30-7:30 Complimentary Refreshments! 7:30 Sam’s Insight, Tip of the Month and Guest Speaker
RSVP: Seating is Limited – Please RSVP to 1-800-998-9930 Admission:$25
Click here for details and directions
Be sure to come early and use the valuable network time
before the 7:30 PM start, and tell a friend or two!
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Calendar of Events
Click Here
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Sam's Food For Thought
Can External Factors Determine our Success and Happiness in Life?
The short answer is no. But wait Sam! How about all the evidence to the contrary? Well, the answer requires some examination because it’s a little more profound than that. After all, doesn’t it seem “obvious” that external factors are in fact influencing our lives to a great extent? On surface it looks as if we really attain happiness and success from external sources, does it not? The real estate market is booming and a s result it’s easier to make money. There is also no denying that a robust economy is conducive to our overall sense of financial well being. But do external factors alone determine our morale? Morale is defined as having a high sense of worth, confidence and high spirit. So, I ask the question again in a slightly different context. Can external factors alone lead us to prosperity and happiness? Upon further and deeper study, we discover that these factors, although important, are merely secondary to our internal state of being. That’s where our knowing guides our judgment not our knowledge. Knowing is not the same as knowledge. Knowledge is information gathered from the outside world. Knowing is somewhat disguised and not readily available on the surface, knowledge or information. Knowing lies deeper in your very core of being, it’s your DNA, scientifically speaking..
Let me give you an example.. Let’s say your business partner, spouse, child is driving you crazy. Do you really think that we sent him / her to a shrink for therapy suddenly your problems cease to exist? That your salvation comes from someone else improving his / her life? Here is another example. Did you know that the overwhelming majority of lottery winners revert to their original place in life only after 6 months from winning the jackpot? Sam, you mean to tell me that occurrence of such a wonderful external experience was not enough to make them the abundance of life? Precisely. I am telling you that external influences can only give you ephemeral sense of security and happiness. It’s really not even happiness. It’s merely pleasure, a euphoric phenomenon that will last a short while.
The fact is that unless you improve your understanding of who you are you will not be able to sustain any level of success and happiness in life. The ancient Greek sought the advice of Apollo at the Oracle of Delphi. Above the temple there were two words carved into the stone which read: KNOW THYSELF. This is the essence of what I like to convey to you today. I find it odd and amusing that people are so hard at work trying to know God, their friends, teachers, partners, children, etc. before even making any attempt at knowing themselves. How can you know anyone else if you have no clue about your identity, your purpose and your place in life?
So, start with yourself first. Spend some quality time with yourself. Get to know who you really are much like the way you try with others. Ask yourself good, effective questions. The answers to these questions would reveal your life’s purpose and help you blossom your greatness. Spend time alone in nature to go within so you can discover your true essence. There are many other ways to tap into your internal knowingness but the aim is the same, recognizing who you are and what you’re here to do. All the knowledge and insight that is necessary for your progress as a human being lies within every cell of your body. By all means, seek outside help from mentors, teachers, etc. but only use them as a spark to light the candle within you. Once the candle is lit it will serve as an internal compass to lead you to the Promised Land.
Regards,
Sam Sadat
Sam Sadat
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U.S. home foreclosures hit record level, boosted by California
A sharp drop in prices is cited, along with the resetting of ARM loans in California and Florida.
By E. Scott Reckard, Los Angeles Times Staff Writer
September 6, 2008
The decline of housing markets in California and Florida has led to record numbers of foreclosures and is causing even good borrowers to pay more for loans, according to analysis and statistics released Friday.
To add to the bleak picture, the government Friday reported the eighth straight month of declining employment, increasing pressure on borrowers burdened by tumbling home prices and loans with rising interest rates. The U.S. jobless rate jumped in August to a nearly five-year high of 6.1%, with nonfarm payrolls down 84,000.
"It's really the very last thing the housing market needs right now -- unemployment going up and we're heading into a recession," said Richard K. Green, director of the USC Lusk Center for Real Estate.
Job losses in construction and lending in the hard-hit Inland Empire are spreading to manufacturing. "And that causes a spillover effect," Green said. "If manufacturers are laying off people this month, retailers are likely to be laying off people next month."
The Mortgage Bankers Assn. said Friday that the one-two punch of declining home prices and resetting adjustable-rate loans in California and Florida is largely responsible for unprecedented national foreclosure numbers.
"The worst states are continuing to get much worse," the MBA's chief economist, Jay Brinkmann, said during a conference call discussing the group's second-quarter report on mortgage delinquencies.
With a combined 18% of the population, "California and Florida accounted for 39% of all the foreclosures started in the country," Brinkmann said.
The national average for foreclosure starts -- a lender's turning over of a delinquent loan to lawyers -- was 1.09% during the quarter, up from 0.99% for the first quarter and 0.65% a year earlier, the MBA said. The latest figure was 1.82% in California, which has 12% of the nation's population, and 2.21% in Florida, which has 6% of the population.
Nationally, the percentage of loans at some stage in the foreclosure process was 2.75%, up from 2.47% in the first quarter and 1.4% in the second quarter of 2007. The California number was 3.86% and Florida was at an even 6%.
The figures are the highest since the MBA began publishing its survey 29 years ago, Brinkmann said.
Tricky pay-option adjustable-rate mortgages, which allow borrowers to pay so little that their loan balances rise, were more common in California and Florida, the MBA said. These "option ARMs" show up in MBA data as prime mortgages because they were made to borrowers with decent credit scores.
When these loans "recast" and require full payments, three to five years after they were made, borrowers are finding themselves with sharply higher payments on higher loan balances than they started with, at a time when their home values are sharply lower.
Seriously delinquent loans -- those with payments at least 90 days in arrears -- totaled 7.73% of all adjustable-rate prime loans in California in the second quarter. The Oregon percentage was 3.04% and in Washington state it was 2.41%, the MBA said.
Such figures have spooked lenders and investors in loans, driving rates higher for even the best California borrowers. Mortgage broker rate sheets show Californians are paying half a percentage point more than borrowers in Washington and Oregon for all prime loans except those eligible for purchase by Fannie Mae and Freddie Mac, the government-sponsored loan buyers, Green said.
Subprime adjustable-rate mortgages, those made to the highest-risk borrowers, were also at higher levels in California. The serious delinquency rate hit 32.33% on California subprime ARMs, compared with 14.26% in Oregon and 13.65% in Washington, the MBA reported.
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The NCREI Team
Sam Sadat - President and Founder
Peter Apostolos - Director WIN!
Claudia Topete - Club Director
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Contact Us
National Club of Real Estate Investors
16200 Ventura Blvd. Suite 220
Encino, CA 91436
support@ncrei.com: Email
818-905-6105: Office
818-905-6215: Fax
NCREI
16200 Ventura Blvd., Suite 220
Encino, CA 91436
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