Legislature Passes 90-Day Foreclosure Moratorium

The California Legislature, as part of the recently-passed budget package, approved SB2X-7/AB2X-7, which provide for a 90-day foreclosure moratorium. The bills do, however, allow servicers to be exempt from the moratorium if they have an approved loan modification program in place. Details and requirements for such approved programs have not been issued yet. The bills cover specified loans recorded between Jan. 1, 2003 and Jan. 1, 2008.

Expect An Increase in REO's

Mortgage lenders are likely to put their growing supply of repossessed homes up for sale in the months to come. According to the Mortgage Bankers Association, 10 percent of home loans was either delinquent or in the foreclosure process at the end of September; and Fannie Mae and Freddie Mac saw repossessions grow nearly 25 percent to 15,196 homes from the second quarter to the third quarter of 2008. Lenders may have to reduce the principal balance on loans to do more than slow down the foreclosure process for many borrowers.
Sent via BlackBerry by AT&T

SB 49 - Up to $10,000 Tax Credit

SB 49 has just been introduced in the California Senate and would allow for the purchaser of a qualified principal residence, after March 1, 2009 and before March 1, 2010, to obtain up to a $10,000 credit against state net taxes. The principal residence must be new or previously unoccupied. This bill is supported by builders and would create incentives to purchase newly constructed homes.

How Much Lower Can We Go

Home prices are not close to turning around, according to the risk index of mortgage insurer PMI Group. More than 25 percent of U.S. metropolitan areas are likely to have lower home prices two years from now, and the risk of lower prices in the third quarter of 2010 has risen in 97 percent of the 381 markets. California's Inland Empire, the greater Miami area, Lake Havasu City-Kingman, Ariz., and Cape Coral-Fort Myers, Fla., are most likely to have lower prices in two years; while the Dallas-Fort Worth area, greater Houston and Pittsburgh are l east likely to see declines.
Sent via BlackBerry by AT&T

50% of loan modifications fail within 3 mos.

Foreclosure Mitigation Makes Little Headway Wall Street Journal (12/23/08) P. A4
Holzer, JessicaA joint Office of the Comptroller of the Currency and Office of Thrift Supervision report, based on data from nine national banks and five thrifts, shows a 2.6-percent drop in newly initiated foreclosures to 281,298 in the third quarter from the prior three-month period. Beefed up modification efforts by servicers and foreclosure moratoriums in several states are responsible for the slight decline. However, the report also shows an 11-percent jump in loans in the foreclosure process to 617,642 and an 8-percent gain in completed foreclosures to 127,738 over the same period. Additionally, it reveals deteriorating credit quality among all types of mortgages and a more than 50-percent redefault rate for modifications undertaken in the first quarter.

Surviving A Rough Economy

Be understanding to your perceived enemies.
Be loyal to your friends.
Be strong enough to face the world each day.
Be weak enough to know you cannot do everything alone.
Be generous to those who need your help.

Be frugal with that you need yourself.
Be wise enough to know that you do not know everything.
Be foolish enough to believe in miracles.
Be willing to share your joys.
Be willing to share the sorrows of others.

Be a leader when you see a path others have missed.
Be a follower when you are shrouded by the mists of uncertainty.
Be first to congratulate an opponent who succeeds.
Be last to criticize a colleague who fails.
Be sure where your next step will fall, so that you will not tumble.

Be sure of your final destination, in case you are going the wrong way.
Be loving to those who love you..
Be loving to those who do not love you; they may change.
Above all, Be yourself.
Just Be Yourself.

Sent via BlackBerry by AT&T

Time To Start Budgeting for 2009

Many Companies Report Flat or Deteriorating Working Capital

Only 37 percent of companies had a working capital improvement program in place during the past five years.Two-thirds (67 percent) of senior financial executives said their company's working capital is flat or has deteriorated as compared to three years ago, with little relief in sight, according to a global survey by KPMG LLP, the audit, tax and advisory firm . According to the survey, which polled more than 550 companies across the United States and Europe, 83 percent of executives said managing working capital was the highest or a high priority at their companies, yet only 37 percent of those surveyed had a working capital improvement program in place during the past five years. And of those respondents who did not have a working capital improvement program, 70 percent predict their working capital will stay the same or decrease. In addition to deficient working capital management programs, an overwhelming number of companies fail to produce reliable cash forecasts. Although almost all respondents (95 percent) report forecasting their cash flows, only 14 percent of respondents report achieving accurate forecasts in the last 12 months."In turbulent times, when access to credit is curtailed, effective cash and working capital management practices can be essential to stay competitive or simply afloat," said Brad Hillier, a managing director in KPMG LLP's Advisory Services practice. "There's no doubt that companies have heightened cash management concerns today as compared to just a few months ago. Companies that have a disciplined approach to cash and working capital management are in a better position to take advantage of opportunities available in a tumultuous market–such as making acquisitions or strategic investments."Addressing forecasting, Hillier noted that accurate forecasting is critical to effectively managing a business in a difficult economy. "Not only is forecasting a necessary tool for improving working capital performance, it is especially critical in times like these for making strategic business decisions," Hillier said. "Many companies do not gather the right data to produce accurate forecasts, nor do they have the right people involved in the process. In addition to improving the forecasting and reporting processes, executives should consider using other best practices, such as targeting metrics and establishing dashboards and controls that offer better visibility into cash performance."Despite the fact that studies have shown that the best performing businesses tend to be those that link working capital performance to managerial incentives, the KPMG survey found that almost a quarter of respondents (24 percent) had not correlated working capital with compensation.