If you have seen empty retail space in your local mall, it may be symptomatic of what is occurring in certain geographic areas throughout the country.

“Mall landlords are increasingly walking away from struggling properties, leaving creditors in the lurch and posing a threat to the values of nearby real estate. As competition from online retailers batters store owners, some of the largest U.S. landlords are calculating it is more advantageous to hand over ownership to lenders than to attempt to restructure debts on properties with darkening outlooks. That, in turn, leaves lenders with little choice but to unload the distressed properties at fire-sale prices.”

“In the period from January to November 2016, 314 loans secured by retail property – totaling about $3.5 billion – were liquidated, 11% more loans than in the same period a year earlier, according to data from Morningstar Credit Ratings.”

Read the whole story at the Wall Street Journal, January 25, 2017, front page, by Esther Fung.

Rates for home loans fell for the third consecutive week following nine weeks in a row of gains, Freddie Mac says in its latest survey.

The 30 year fixed-rate mortgage averaged 4.09% in the week ending January 19, down from 4.12% a week earlier, and the 15-year fixed averaged 3.34%, down from 3.37% last week.

A year ago, the 30-year and 15-year fixed rates averaged a respective 3.81% and 3.10%.

Source: Seeking Alpha, January 19, 2017, Carl Surran.

Note: These rates are for prime borrowers. I spoke to two note holders this morning who agreed to 3% interest rates when they sold their properties. One of them sold the property with no down payment and mentioned his buyer had bad credit. If you agree to sell a property and carry the note, you don’t give a prime interest rate to a non-prime borrower! As I say over and over again, you must be compensated for your willingness to accept installment payments rather than cashing out. One of the ways is to negotiate an interest rate that recognizes the risk you are willing to take, and 6% to 8% would be much more reflective of that risk.

                                           You phoned a total stranger                                                                                                                                                   and I became a friend                                                                                                                                                               for just a little while                                                                                                                                                                  ‘Till our business came to an end.

                                            It can be stressful                                                                                                                                                                       selling off a note                                                                                                                                                                         until you get to closing                                                                                                                                                             Then a smile – it’s all she wrote.

                                             I send you some words                                                                                                                                                            in a Blog and Newsletter I write                                                                                                                                            try to teach a little                                                                                                                                                                      Make it fun, keep it light.    

                                             So let me say Thank You                                                                                                                                                          for my success and your support                                                                                                                                          I  appreciate what you’ve given me                                                                                                                                      From the bottom of my heart.

Merry Christmas and Happy New Year!

However You Celebrate, Enjoy Your Holiday!                                                                                                                                                                                                                                                   

One of the most frustrating experiences for note buyers – and note sellers – can be document gathering.

Once you decide to sell your note, I will ask you to provide copies of documents associated with your transaction. The frustration comes when you are not sure where all your documents are, and perhaps you don’t even have the documents you are supposed to have.

So, if you sell a property and carry back the note, you need to have a file in your home or office dedicated to the transaction. Here is what you will have to provide me when you decide to sell:

1. Copy of the Signed Promissory Note
2. Copy of the Final Signed Closing Statement
3. Copy of the Lenders Title Policy showing you as the insured in the amount of your note
4. Proof of Current Insurance on the property you sold, with you listed as the Payee
5. Copy of the Recorded Deed of Trust that was mailed to you a few months after the transaction closed
6. Proof that you have received the monthly payments – bank receipt or bank statement

Ronald Reagan famously said “Trust but verify.” Note buyers trust what you tell us but you have to verify it with documentation. And, when we close, you will have to provide the Original Signed Promissory Note and Original Recorded Deed of Trust.

It’s a simple process. Make sure you have all your documents readily accessible.

The average foreclosure time in the US is still over 600 days. But, there is a wide disparity state to state, and whether a particular state uses a court system – judicial – process to oversee the foreclosure.

Take a look at this map of the US with average foreclosure time shown for each state. You may see why many note buyers don’t like Florida and some other Eastern states.

realtormag.realtor.org/daily-news/2016/10/18/average-time-foreclose-getting-faster.

“In all, Morningstar Credit Ratings LLC predicts borrowers won’t be able to pay off roughly 40% of the commercial mortgage-backed securities loans coming due next year. Suburban office properties and shopping centers are being hit particularly hard, said Edward Dittmer, a Morningstar vice president. ”

“We’re seeing a lot of stress,” Mr Dittmer said.

Read the full story here: https://papersourceonline.com/defaults-rising-commercial-real-estate/

Home builders pulled back on construction for a second straight month in September. Building activity was weak nationwide except in the Midwest.

Construction sank 9% in September to a seasonally adjusted annual rate of 1.05 million units. It was the slowest pace in 18 months.

The weakness reflected a 38% drop in construction of apartments, which overshadowed an 8.1% rise in single-family construction.

U.S. Commerce Department

Bank of America Doubles Down on 3% Down Mortgages without Insurance

According to Housing Wire, earlier this year Bank of America, in partnership with Freddie Mac and Self-Help Venture Fund, began offering mortgages that only required consumers to put down 3% and did not require the consumers to obtain mortgage insurance either. The program, called the “Affordable Loan Solution” mortgage, is a conforming loan that provides low and moderate income home buyers access to a responsible lending product with counseling at affordable entry prices.

Several articles have been written recently about this program. What caught my attention was that Bank of America was immediately selling these loans and that they have 3 or 4 parties involved in these transactions. Is this “deja vu” all over again?

You can judge for yourself. Read the entire article here:

www.housingwire.com/articles/38336-bank-of-america-doubles-down-on-3-down-mortgages-without-insurance?eid=311699753&bid=1564779#WAvKQ…

Anyone who has been in business has probably made a mistake that was a big lesson learned. It is so true that we learn more from our mistakes than our successes.

I have made my share and felt stupid and embarrassed as a result. Thankfully, none of them resulted in a big or catastrophic financial loss.

Tracy Z Rewey of Diversified Investments shares a story that makes me shutter . If you, as a potential note seller, have wondered why we do the due diligence we do in a note sale transaction, here is a perfect example:

“Once upon a time I bought a mortgage note without proof of property insurance on the collateral. It had been in place, then lapsed on the Friday closing date. Rather than pull funds or  delay closing we finalized the deal, intending to renew the insurance on Monday. The house burned down over the weekend.”

Source: Tracy Z Rewey, 21 Tips For Real Estate Note Investing, www.DiversifiedInvestments.com.

CoreLogic is a leading global property information, analytics and data-enabled services provider. The company just released its 3rd quarter 2016 report on the potential for mortgage fraud risk in mortgage applications received by major lenders throughout the United States.

Briefly, the cities with the largest increase over Q3 2015, all over 25%, were:

1. El Paso, Texas
2. Buffalo, NY
3. Springfield, MA
4. Scranton, PA

The report also listed the Top 25 Metro Areas with the Highest Application Fraud Risk. 9 of the top 14 areas were in Florida.

To read the full report, go to www.CoreLogic.com and register to download the 17 page report.