The following is a list of planned retail closures. After reviewing this list, you may want to ask yourself what CAP should we be underwriting these loans. If these firms are failing, you can only imagine what is happening to the single-tenant, mom and pop retail owners.
The following is an initial list of planned retail closures:
1. Ann Taylor is closing 117 storesnationwide.
2. Eddie Bauer to close more stores.The company has already closed 27 shops in the first quarter and plans to closeup to two more outlet stores by the end of theyear.
3. Cache is closing 20 to 23 storesthis year.
4. Lane Bryant, Fashion Bug, andCatherines are closing 150 stores nationwide.
5. Talbots, and J. Jill are closing all78 of its kids and men's stores. Now the company says it will close another 22underperforming stores. The 22 stores will be a mix of Talbots women's and J.Jill.
6. Gap Inc. will be closing 85stores.
7. Foot Locker to close 140stores.
8. Wickes Furniture is going out ofbusiness and closing all of its stores.
9. Levitz, the furniture retailer, isgoing out of business and closing all 76 of its stores in December.
10. Zales, Piercing Pagoda plans toclose 82 stores by July 31. It has also announced that it is closing another 23underperforming stores.
11. The Walt Disney Company subsidiaryChildren's Place filed for bankruptcy protection in late March. Walt Disney, ina news release, said it has also obtained the right to close about 98 DisneyStores in theU.S.
12. Home Depot has 15 store closings.
13. CompUSA clarifies details on itsstore closings. Any extended warranties purchased for products through CompUSAwill be honored by a third-party provider, Assurant Solutions.
14. Macy's is closing 9stores.
15. Movie Gallery is closing 160 storesas part of reorganization plan to exit.They plan to close 400 of 3,500Movie Gallery and Hollywood Video stores in addition to the 520 locations thevideo rental chain closed last fall.
16. Pacific Sunwear is closing 153 Demostores.
17. Pep Boys is closing 33stores.
18. Sprint Nextel is closing 125 retaillocations.
19. J. C. Penney, Lowe's, and OfficeDepot are scaling back.
20. Ethan Allen Interiors announcedplans to close 12 of 300+ stores in an effort to cutcosts.
21. Wilsonsthe LeatherExperts is closing 158 stores.
22. Sharper Image: The company recentlyfiled for bankruptcy protection and announced that 90 of its 184 stores areclosing.
23. Bombay Company: The company unveiledplans to close all 384 U.S.-based Bombay Company stores.
24. KB Toys posted a list of 356 storesthat it is closing around theUnited Statesas part of itsbankruptcy reorganization.
25. Dillard's plans to close morestores.
26. Steve and Barry’s Clothing, whichhas 240 stores filed for bankruptcy.
27. Starbucks is in the process ofclosing 600 stores.
Thursday, August 28, 2008
Tuesday, August 19, 2008
Thursday, August 14, 2008
Financing For LLC's Getting Tougher
I just came across this article about Freddie Mac's new lending changes making it more difficult for LLC's to obtain financing. This is just another reason why NextGEN Lenders will become more important within broker's product offerings. It is becoming more and more evident that the credit crunch with the collapse of Alt-A and Subprime financing is creating enormous opportunities for NextGEN Lenders (aka Hard Money).
Holding Property in an LLC Just Got Tougher
by Diane Kennedy, RealtyTimes
Chances are, as a real estate agent, some of your clients are real estate investors. If that's the case, they may have been rocked recently, to learn about Freddie Mac's new lending changes going into effect on August 1, 2008. This rule change could mean hundreds of thousands of real estate investments are now in the wrong business structure.
Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months.
Conforming loans are typically used for single family homes and four unit properties (also known as four-plexes or four family homes) that fall within certain loan limitations. It's the backing of Freddie (and Fannie Mae, the other major underwriter) that keeps the loan rates for these type of loans so much lower than the rates for stated income, jumbo loans and any other loan that doesn't fit within their criteria. In other words, if you've got a great deal on your loan, chances are it was underwritten by Freddie or Fannie.
With this change (and potential change, in the case of Fannie), that means if you have a conforming loan, you have 3 choices:
(1) Never refinance. This is not my favorite strategy because you end up losing the velocity of your money.
(2) Go bare. Don't put it in a business structure to protect the asset. This is definitely NOT recommended. You put all of your personal assets at risk with this plan.
(3) Use a Trust SandwichTM. The Trust Sandwich puts a Single-Purpose Trust in place to hold the asset, the LLC owns the beneficial interest and there is then a Main Trust to provide estate planning as well. It's the best of all worlds. I've got more information about it at, www.trustsandwich.com.
Since I broke the news to my clients and TaxLoopholes.com members about the changes, one of the biggest questions I've been getting is why isn't anyone else talking about it. To be honest, I don't know. The press release issued by Freddie Mac was pretty clear. It said (in part):
"We are revising our requirements for Investment Property Mortgages to reduce the number of financed properties in which a Borrower who owns more than one financed Investment Property may have an individual or joint ownership interest (including the subject property) from 10 to 4. Also, effective for Mortgages with Freddie Mac Settlement Dates on or after August 1, 2008, the Borrower on a cash-out refinance Mortgage must have owned the subject property for at least six months prior to the Note Date of the new refinance Mortgage."
The last statement is the key -- transferring title into your name before applying for a cash-out refinance will be considered a change in ownership and the 6-month trigger will apply. This change won't affect most homeowners, but it has caused a major ripple in the investor community, as has the reduction of properties an investor can own and still get Freddie Mac refinancing.
As a real estate investor myself, I think the timing of this announcement is lousy. Smart investors are positioning themselves to take advantage of our current market. House prices vary wildly throughout the country -- some areas are seeing growth, while others are flat and others are still depreciating. But I've been through many real estate cycles and one thing is absolute: prices won't stay low forever. As they begin to rise again investors will once more be looking for ways to leverage their equity as beneficially as possible. It will be interesting to see if the private mortgage companies will rise to meet the needs of investors when the market rebounds.
Holding Property in an LLC Just Got Tougher
by Diane Kennedy, RealtyTimes
Chances are, as a real estate agent, some of your clients are real estate investors. If that's the case, they may have been rocked recently, to learn about Freddie Mac's new lending changes going into effect on August 1, 2008. This rule change could mean hundreds of thousands of real estate investments are now in the wrong business structure.
Freddie Mac, one of the two largest underwriters of conforming loans on the secondary market, have changed their internal rules to state that they will no longer refinance a property that has been inside of a Limited Liability Company (LLC) for any time within the past 6 months.
Conforming loans are typically used for single family homes and four unit properties (also known as four-plexes or four family homes) that fall within certain loan limitations. It's the backing of Freddie (and Fannie Mae, the other major underwriter) that keeps the loan rates for these type of loans so much lower than the rates for stated income, jumbo loans and any other loan that doesn't fit within their criteria. In other words, if you've got a great deal on your loan, chances are it was underwritten by Freddie or Fannie.
With this change (and potential change, in the case of Fannie), that means if you have a conforming loan, you have 3 choices:
(1) Never refinance. This is not my favorite strategy because you end up losing the velocity of your money.
(2) Go bare. Don't put it in a business structure to protect the asset. This is definitely NOT recommended. You put all of your personal assets at risk with this plan.
(3) Use a Trust SandwichTM. The Trust Sandwich puts a Single-Purpose Trust in place to hold the asset, the LLC owns the beneficial interest and there is then a Main Trust to provide estate planning as well. It's the best of all worlds. I've got more information about it at, www.trustsandwich.com.
Since I broke the news to my clients and TaxLoopholes.com members about the changes, one of the biggest questions I've been getting is why isn't anyone else talking about it. To be honest, I don't know. The press release issued by Freddie Mac was pretty clear. It said (in part):
"We are revising our requirements for Investment Property Mortgages to reduce the number of financed properties in which a Borrower who owns more than one financed Investment Property may have an individual or joint ownership interest (including the subject property) from 10 to 4. Also, effective for Mortgages with Freddie Mac Settlement Dates on or after August 1, 2008, the Borrower on a cash-out refinance Mortgage must have owned the subject property for at least six months prior to the Note Date of the new refinance Mortgage."
The last statement is the key -- transferring title into your name before applying for a cash-out refinance will be considered a change in ownership and the 6-month trigger will apply. This change won't affect most homeowners, but it has caused a major ripple in the investor community, as has the reduction of properties an investor can own and still get Freddie Mac refinancing.
As a real estate investor myself, I think the timing of this announcement is lousy. Smart investors are positioning themselves to take advantage of our current market. House prices vary wildly throughout the country -- some areas are seeing growth, while others are flat and others are still depreciating. But I've been through many real estate cycles and one thing is absolute: prices won't stay low forever. As they begin to rise again investors will once more be looking for ways to leverage their equity as beneficially as possible. It will be interesting to see if the private mortgage companies will rise to meet the needs of investors when the market rebounds.
Tuesday, August 12, 2008
Uncommon Solutions for Common Issues
How many times in your broker or lender career have you come across a
family that is equity rich, but cash poor? This is a common occurrence
when individuals don't adequately plan their estate for their heirs.
family that is equity rich, but cash poor? This is a common occurrence
when individuals don't adequately plan their estate for their heirs.
NextGEN Lenders are able to meet those needs for estates currently in
probate that has the equity but not enough cash to cover monthly
expenses. Unlike Alt-A and subprime lenders, NextGEN lenders are able
to look outside the box and make common sense deals work. While most
lenders will only lend to natural persons, NextGEN Lenders are able to
lend to Estates, Trusts, Corporations and Partnerships.
By incorporating NextGEN Lenders into your daily product mix can open
the doors to opportunities with probate attorneys that weren't
available to you in the past.
To learn more about my probate lending solutions, please feel free to
contact me at 877.NOFICO.8 (877.663.4268).
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