Article on RealtorMag.Realtor.com regarding Shadow Inventory – My Commentary

Regarding the article posted on RealtorMag.Realtor.com:

It’s Not Over: Report Warns Shadow Inventory Threat Remains

DAILY REAL ESTATE NEWS | MONDAY, JUNE 03, 2013

Foreclosures have been falling in recent months, but two government watchdogs warn that the foreclosure crisis isn’t over yet. About 1.7 million borrowers have missed more than one payment on their government-backed mortgages, according to a newly released report by the inspectors general of the Federal Housing Finance Agency and Department of Housing and Urban Development. 

The shadow inventory is made up of loans that have been delinquent for at least 90 days. If these delinquent loans become foreclosures, they could pose significant financial challenges to mortgage giants Fannie Mae, Freddie Mac, or other federal housing agencies, the report notes. 

“Not only are current REO inventory levels elevated … they may rise over the next several years depending on the number of shadow inventory properties that are ultimately foreclosed on,” the report stated.

According to the report, the shadow inventory is more than seven times the inventory of REOs that Fannie Mae, Freddie Mac, and HUD currently own. 

“Even a fraction of the shadow inventory falling into foreclosure could considerably swell … inventories of REO properties,” the report notes. 

My Response:  

I work with large institutional buyers wielding, in some cases, billions of dollars in investment capital. I am told by the “smart money” that not all is as it seems and that the US is only about 1/3 or so of the way through the “shadow inventory” glut. There is a widely held belief that the government has brought the flow of these properties to the market down to a trickle in order to boost home prices and stage a recovery. I am also told, and this could simply be hearsay, that Fannie Mae is still sitting on over 3 Trillion USD in bad loans (i.e.: assets, essentially) and the banks, using the wide berth the Generally Accepted Accounting Principals give them, have been shifting tons of these bad mortgages around while they scramble to recapitalize. This, however, can only go on for so long and I expect at least one major bank to either fail (or have a serious problem) within the next 12 months. My sources of information are generally people who are 60+ years of age and been in the real estate investment & brokerage business for 30+ years. They cannot ALL be wrong…

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Commentary on Recommended Reading: Investors Business Daily, Tuesday April 16th 2013

On page A3 of yesterday’s edition of Investor’s Business Daily, there is an article I recommend reading. It is entitled “President Reagan Joined Top Substance With Style“.

It is amazing how quickly a culture can change, how short sighted we are as a collective species, and how easy we forget the past. After making many mistakes in the “Age of FDR”, what I like to call “The Age of Entitlement”, it took a powerful communicator; and honest man, to take charge and reverse the damages created by the excesses of Liberalism. Now here we are again, 25 years after Reagan left office, and all of the gains & progress we made under his administration are eroding under a constant siege of Liberal Idealists who believe that printing more money is the solution to everything. To quote Reagan, “Inflation – that is the price we pay for those government benefits everybody thought were free.” The Federal Government can massage, and then publish all the numbers they like citing that Real Inflation is actually quite low. This is deceptive. I am not sure how many of you do your own shopping, but I can tell you that not 3 years ago I could buy 10 Yogurts at Publix Supermarkets for about $5.00; $4.00 when they were on sale. The SAME yogurts are now $8.00. Milk is also almost twice as expensive as it was just a few years ago. The problem is not isolated to dairy products either. At Costco, not 2 years ago, I was buying frozen fish (salmon, cod, mahi-mahi) bags for between $10 and $20.00. The same bags of fish are now 50% more expensive! Has anyone else noticed that a large number of products have gotten more expensive while the portion size has decreased? My typical Costco shop used to be $300-$400 dollars; now it can top $600, and I buy the exact same stuff I always have. Lets not forget fuel prices! Our country is actually quite rich in terms of fossil fuels; too bad Liberals consistently stand in the way of developing those resources further; instead preferring to transfer some 750 Billion Dollars per year to other oil rich nations, many of whom flirt with the idea of causing a nuclear holocaust on American soil.  It goes without saying that their are alternative methods of generating energy both cleanly and efficiently; however, the dominant special interests of our era will always seek to stand in the way of such progress so they can further exploit out-dated, wasteful, and even harmful technologies.

Today’s regime spent the first two years of their administration traveling the world and apologizing for America’s success. Then, to make things worse, they decided to implement a lot of legislation that could not be better designed to create a hostile business & investment environment. To quote Ronald Reagan again, “Government Programs, like Old Soldiers, never die, but neither do they fade away.” I do not believe his intent was comical, but rather an ominous warning.

Critics will argue “So where is the hyper-inflation Conservatives have been touting would be coming?”.  Aside from the fact that prices have increased significantly over the past decade for a great number of things; it is very hard to have hyperinflation in an environment where the workforce & workforce participation continues to decline, and job openings are still scarce. Furthermore, the very thing that would create more jobs would be the extension of credit to smaller companies. As it turns out, there is an article on the front of the IBD Newspaper, (entitled Builders Sell Off On Sentiment, Broad Stock Market Retreat) also Tuesday’s edition, that discusses the stock price declines some of the larger, publicly traded home builders took yesterday as the market begins its often predictable Summer decline and/or correction. It specifically goes into the facts that your larger corporations have the capital, and access to credit, yet the smaller home builders do not. It was a no brainer to read that the vast majority of home builders do not have the most positive outlook about the future, however and quite obviously, the larger companies do see more of a rosy picture of the future. With that said, it is small business that, historically, employs 65-75% of the workforce. No credit & no jobs equals no inflation. To boot, certain new Healthcare “reforms” will create a lot of additional pain and suffering for small employers. You gotta love this…not only is all the entitlement spending “spreading the wealth”, but our current regime has. via a healthcare law, found a way to “Spread the Jobs”. We are on tract to becoming a nation of Part Time Workers as a result of all of this.

The Punch Line:

One final quote from the great Ronald Reagan; “Every time the government shifts to the left, the decimal point in taxes shifts to the right“.  This reminds me of a story my broker told me last week about his grand daughter.  Her elementary school class was assigned to write a speech and each of them would get up in front of the class and present their argument to be elected President of the class.  Several kids got up and touted better lunches, longer recess periods, better books and more interesting activities.  His grand daughter got up and said “If I am elected President of this class I promise Ice Cream will be served EVERY day”.  She won by a landslide.  When asked by the teacher “How will you pay for the Ice Cream?” she simply responded “I don’t know”; when asked additional questions about the logistics of having ice cream served in class every day, she simply smiled and said “I don’t know”.

This sort of idealism is adorable in a 7 year old, but in a President of the United States?  I say this because unless I was watching a different channel than the rest of you, this is precisely what happened in our last election.  The President has promised the American Public their fill of ice cream, but does not have a clue how to pay for it.

Cheers,

Christopher Lazaro

Unbelievable Incompetence at Best, Criminal at Worst and Dishonorable Regardless

Amidst all the lip service our politicians spout regarding “Saving Our Homes” and having created “Programs” to assist over the past 4 years; it is amazing what OBVIOUS things were overlooked during the whole debacle.

1)  http://therealdeal.com/blog/2013/03/04/mortgage-settlement-uncovers-further-bank-misdeeds/

If the banks are not incompetent, then they are criminal (I believe both), an regardless of which is true, dishonorable.  Surely common sense of any executive at any bank should have dictated an order, long ago, to hold off foreclosing on ANY military personnel, especially those deployed; but this obviously did not happen.  I am quite sure there will be claims that “Amidst the market turmoil we were overwhelmed and did not know”..or something to that effect.  However, having worked for two financial institutions myself, I assure you that at least ONE phone call, message, “heads up” had to have made its way up to even middle management, let alone upper management; and they did nothing.  Wells Fargo is quoted as “regretting” the harm they have done to these people, but I question whether the settlement will truly cover these families abilities to get back their homes (like or better…and the banks certainly owe them BETTER), let alone make up for the pain, the fear, the uncertainty, the struggle, they put these brave men, women and their families through.  Whats more, “the banks, which include Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, argue that the wrongful evictions make up an insignificant proportion of the millions of foreclosures under review.”…as if the act of downplaying it in any way could possibly cast the subject matter, let alone THEM, in a better light!?

Common Sense is unfortunately not that common…even for the Wharton, Harvard, Yale and other primo-school graduates that are running our largest financial institutions.  Lets not forget that the banks are not alone in this.  Not ONE Politician sought to put and end to Foreclosures on Military Personnel serving overseas???  Unless I am mistaken, a simple stroke of the pen of the President could have prevented this from continuing for as long as it did.  While our Politicians played their game of Chess with each other (given the stalemate, i should stand corrected and say Checkers…Chess would be too complicated for those idiots), spending vast sums of money that, lets face it, We (the People) will never actually pay back; people continue to lose homes, businesses, savings etc even as I write this “flame”.

I often wonder how much Washington might change if every voting citizen of the country, by default, would spend the next six years voting exclusively for non-incumbents.  Maybe that might send a clear message that this, amongst vast numbers of other things I cannot wait to write about, is unacceptable?

Cheers,

CJL

Response to a Response: Defining 21st Century Real Estate – On Purpose Magazine

On the wonderful website On Purpose Magazine, I just replied to a response by a Keller Williams Realty Associate (but I have no way to truly confirm that they are indeed working for Keller Williams) and it seemed more promotion; but also the person indicated that, in a nut shell “all we do is real estate”; and I believe the antiquated models of the Old World of Real Estate are becoming increasingly difficult to survive in.  I published this response:

Christopher Lazaro | February 27, 2013 at 9:08 pm 

We are more of a boutique brokerage than Keller Williams and as such have expanded our interests to finding sources and buyers of hard/physical commodities such as Iron Ore, Sugar, Gold, Silver & Oil. We have repeatedly come across the opportunities while working with investors seeking to sell/acquire large commercial real estate assets.

We also have no problem brokering legitimate business opportunities and joint ventures regardless of whether they are real estate related. We are more than simply real estate agents; we are trusted business consultants with decades of expertise in banking & finance, information technology, commodities, and energy as well as residential & commercial real estate.

The global nature of the market place has shown us new avenues for growth both personally and commercially speaking and in our view we can provide our clientele a greater scope of opportunities and possibilities by having this flexibility.

It was for this reason that our group came together to form Metro International Realty (and the DBA, Metro International Investments). Our transition to the new company/venture from TM Realty Associates. Inc is nearly complete and we are very happy that our fearless leader & commercial broker, Mark Moldoff, a 42 year veteran of real estate development and brokerage opted to partner with us and continue leading the group 

Cheers,
Christopher Lazaro

It is about time….

Hello and welcome to RealtorOfMiami.com.  If the link http://www.RealtorOfMiami.com does not yet work; it certainly will soon enough (DNS Propagation takes time).

As my subject line says: “IT IS ABOUT TIME”; and by that I mean it is about time that I finally got around to doing what I have been meaning to do for a VERY, VERY long time; WRITING.  One would think that a person who has an excellent command of the English language and a significant collection of credentials would have leveragedit  into quite an amazing blog by now; especially if that person has more than 30 years experience on a computer system and a noteworthy career in Information Technology.

I am originally from New York and have been living in the Miami/Fort Lauderdale area for 10 years.  I hold a Bachelors degree in Computer Science and a Masters degree in Business Administration with specializations in Economics and Global Management.  Given that more than 80% off all real estate transactions begin on the Internet; Real Estate is a natural fit for me as a career.

I believe Real Estate is one of the few ways both institutions and the private individual can build true wealth; especially in light of what I am certain will be an unprecedented wave of inflation in the future due to the fiscal irresponsibility of our government and the entitlement culture it has established.

My chosen specialization within the field of Real Estate is Off Market Commercial Real Estate.  This is not to say that I will not take a residential listing or sell a home; however, experience has taught sophisticated Buyers & Sellers are the only worthwhile candidates to work with.  Hence, I will only work with institutional buyers & sellers, and private investors & groups of a net worth exceeding 1 Million USD, preferably more than 5 Million USD.  The vast majority of opportunities my firm holds in our inventory require the ability to prove funds in excess of 30 Million USD, with some of our assets carrying 300 to 600 Million USD Ask Prices.  If you are a representative of an institution or a high net worth individual who meets my criteria, contact me and I will be happy to show you our unique way of investing in the global market.

I have begin two blogs.  This blog, RealtorOfMiami.com, will have a primary focus on topics of interest within the Miami-Dade, Broward & Palm Beach counties; occasionally extending outward to cover the State of Florida.  My other blog, InternationalRealtor.WordPress.Com will be more global in scope and have a more macroeconomic scope.

There are innumerable opportunities in the real estate market and it is to the advantage of any potential investor of any size to have as many knowledgable and discerning eyes working on their behalf as possible.  We are clearly, at the time of this writing, in a Sellers Market and there is absolutely, positively no shortage of qualified buyers.  What there is a shortage of are unlisted assets and opportunities; and I am thankful to have been able to partner with skilled brokers & professional networkers to build our new company, Metro International Realty PLLC.  The corporation itself may be new, but between our two brokers alone there is more than 80 years of professional experience in the real estate world.

Cheers,

Christopher Lazaro