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Economic News

Lenders Making Bank: Bush, Obama & the FDIC



bush_obamaAnyone ever have the short sale deal that makes sense collapse, only to see it go to sale via the foreclosure process and sell for less?

OK, that was a stupid question. But have you ever looked into why it didn’t work out when there was no apparent reason for it not to close? You know, the deal where even the contestants on “Are You Smarter Than A 5th Grader” could do the math and conclude that it is in everyone’s benefit for it to be approved and close?

While the White house continues with the “you ought to be ashamed of yourselves” lecture, they are still cutting backroom deals with the financial world via the FDIC every time they take over a failed bank. This means that its possible the owner of the note, which isn’t likely the loan servicer you are negotiating with, may have a financial incentive to let it go to foreclosure. The foreclosure may end up with a lower net to the lien holder, but what you may not know is the guarantee from the FDIC can mean a huge windfall.

Denver real estate broker Larry Hotz had one such situation. His clients wrote a full price offer. They ended up getting the property, but not via the short sale route, and for less money than they originally offered. Here is his account of a short sale gone sideways, where the lien holder made a profit of over $150k, and one reason why the FDIC estimates that bank closings will cost the taxpayers an estimated $100 billion from 2009 through 2013.

“If you had any doubts at all about the primacy of Wall Street over Main Street, your doubts should be laid to rest.”

Former Clinton Secretary of Labor, Robert Reich, November, 2008

The talking heads keep on talking, but at the end of the day, those living within the Beltway and those living on Main Street are still at the mercy of Wall Street. It isn’t a partisan thing as some on both sides of the aisle claim, while pointing at the other. It is just the way things are. Wall Street permeates politics. We all know how Wall Street made bank under Bush, but as Matt Taibbi of Rolling Stone illustrates in the article “Obama Big Sellout“, it isn’t changing under the current administration either.

A real estate vet, 2009 marked the beginning of Bob's 20th year in the real estate biz, with the last 10 years spent online. Bob practices in San Diego, California and is well known for his expertise in online real estate marketing, SEO and lead generation strategies.

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  1. Paula Henry

    December 14, 2009 at 1:29 am

    Bob – You have hit on a “sore” subject with me and I’m certain many more agents. I read this article yesterday and just shook my head. While the government is telling homeowners they are ready and willing to make the banks help them, they make deals behind their back to make it most difficult and trying to get past the person answering the phone.

  2. BawldGuy

    December 14, 2009 at 12:49 pm

    I explained this exact dilemma to a client over the weekend, whose sibling was in trouble. When folks see this explanation, (yours btw was much mo betta than mine) there are several ‘aha’ moments. When I told him his brother was negotiating with the wrong folks, he was livid, but happy to at least understand.

  3. Glenn in Naples

    January 6, 2010 at 7:36 am

    Bob and Larry – good articles however there are questions on the seller side that could impact why the potential short sale never got an approval.
    – Was there a BPO done and the estimated market value come in higher than the full price offer?
    – Was the seller offered a settlement by the investor, which was rejected? There are strategies that do allow the seller to be in a better position than the settlement offered.
    – Did the seller have resources to cover part or all for the short?
    – What income does the seller have and where is it going?
    – Were there other liens against the property and the lien holders not able to agree to their piece of the pie? In one case I found 7 lien holders on a property and 2 were superior to the first mortgage.
    – Did the lien holder of this property communicate with the attorneys handling the foreclosure?

    There are just too many questions on the seller’s side which may not have been answered to result in this situation.

    Just my 2 cents.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.



gas tax


Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.


Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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