According to First American Title's CoreLogic's Loan Performance Home Price Index (HPI), national home prices fell 5.7% in a one year time period between November 2008 and November 2009.

Nevada experienced the largest price drops within that same one year time period as home values dropped an average price of 22.5%. Arizona had the 2nd biggest price drop of 14.9%. Florida had the 3rd biggest price declines at 13.7%. Michigan was 4th with a 12.6% price drop, and Idaho dropped 11%.

The foreclosure wave continues to escalate in many of these same "bubble" states with many adjustable loans beginning to adjust this year and next. In addition, there are a high percentage of FHA loans which are now delinquent, and most of these loans were funded at a 97% LTV value range so many of these same FHA homes are now "upside down".

We continue to provide our clients with the best foreclosure investment opportunities for both individual homes or large REO pools. In addition, we may provide you or your group with some excellent terms to purchase these same residential or commercial properties.

The ongoing and worsening Credit Crisis continues at a rapidly escalating downward spiraling pace. The various bailout programs offered by governments and Central Banks worldwide have done absolutely nothing to help the everyday citizen on the street.

These bailout programs have only worsened the financial crisis worldwide, and have adversely impacted our once capitalistic ways of life by having more and more centralized government control over our various major industries such as the automobile, airline, and health "care" industries as well as the last remaining firms on Wall Street (both of them).

Most obviously, the banking and mortgage market systems have been dramatically impacted by the nationalizing of both Fannie Mae and Freddie Mac who purchase most residential mortgages nationwide. FHA continues to represent a larger percentage of the national mortgage market although the FHA insurance system (and SBA) themselves are close to being technically insolvent sadly.

The first major financial meltdown of this century was probably the 2000 Nasdaq meltdown. Do you remember when the Nasdaq index hit near 5,000 in March of 2000 just prior to the High Tech Bust? This was followed shortly thereafter by the Telecommunications Meltdown (i.e. Global Crossing, etc.). Few people may remember that the Telecommunications meltdown was actually a bigger financial disaster than the High Tech meltdown as the stock and bond losses were staggering.

The official start of the latest financial crisis officially called "The Credit Crisis" began back in August of 2007. However, major sub-prime lenders such as New Century Mortgage (based in Irvine, CA) and others were shutting down well before this official starting date. This mortgage collapse was also followed by a collapsing structured debt product meltdown.

As I have been saying and writing for years, the largest banks in America are all technically insolvent primarily due to their off balance sheet derivatives investments (Credit Default Swaps, etc.) which they seem to "forget" to calculate in their earnings reports each quarter. Sadly, their current losses may far exceed the entire value of their respective financial institutions (cash, stock value, interest income, etc.). Local credit unions and community banks may be a much safer place to put your money than in the largest banks nationwide.

The Credit Crisis, again, is primarily all about the unwinding of the derivatives markets worldwide which may include structured investment or debt instruments such as Credit Default Swaps (a glorified form of a bet which may be hedged or insured by a third party which is probably a shell entity based in the Caribbean as many of these "insurance companies" actually were shown to be in the past), Collaterized Debt Obligations (or Mortgage Backed Securities pools - a package of real estate mortgages in the hundreds of millions of dollars), Structured Investment Vehicles, or other complicated financial entities which are really only understood by a few Ivy League MBAs.

I personally expect the economy to get much worse in 2010. I hope that I am wrong. The more that I research these financial topics, the more concerned that I get in regard to the worsening financial markets and overall economy. Again, the word "crisis" in Chinese means both "danger" and "opportunity" so we all need to focus on the possible positive aspects of this worsening financial meltdown.

There will be some incredible real estate buying opportunities for literally "cents on the dollar" if you know where to look both in your local regions and well as across our nation. Banks will have to unload their non-performing properties and mortgages for much needed cash in the near term.

Coincidentally, our U.S. Dollar may also be worth "a few cents on the dollar" too as hyperinflation continues to escalate partly due to the U.S. Treasury's full speed printing presses which keep creating dollars "out of thin air". Many banks literally are completely out of cash since so few banks actually keep much of their cash reserves on hand.

In fact, some banks may only keep 1% to 3% of all of their deposits on hand primarily in the form of ATM money as they lend out the bulk of their deposits (real estate, business, auto, and consumer loans) via our highly leveraged Fractional Reserve Banking System at sometimes 10 to 50 plus times their total current deposit balances.

For example, your local bank may have $1 million in total bank balance accounts, but they may leverage those assets ten times (or $10 Million in this example) in the form of business, personal, credit card, or real estate loans to others. In the USA, only 3% of all money is currently in the form of actual hard currency (coins or dollars). The rest of the "money" is actually computerized, digital money.  

Out of adversity, comes opportunity. We either stick our heads in the sand and believe that things will get drastically better in our economy, or we try to focus on the opportunities which may be just around the corner. Happy 2010!!!!!

*** Linked to this same blog is a graph which I created a few months ago to better illustrate my perceptions in regard to what the Credit Crisis is really all about worldwide.

According to the Standard and Poor's / Case Schiller Home Index, national home prices continued on a downward trend through their latest report released (end of October 2009). According to the same Index, home prices dropped as follows over a one year time period:

1.) Atlanta          - 8.1%.
2.) Chicago         - 10.1%.
3.) Detroit           - 15.1%.
4.) Las Vegas     - 26.6%.
5.) Los Angeles  - 8.1% (a very misleading number as many higher end West Los Angeles areas experienced a 30% + price decline over the past twelve months).
6.) Miami            - 14.0%.
7.) New York      - 7.7%.
8.) Phoenix        - 18.1%.
9.) Seattle         - 12.4%.
10.) Tampa        - 15.2%.

There are numerous investment opportunities nationwide. Specifically, the "bubble states" like California, Nevada, Florida, and Arizona offer the most distressed property buying opportunities of any region nationally.

We continue to offer our clients both access to the best real estate bargains as well as the best leveraged and affordable money to purchase these distressed residential or commercial real estate properties.

Happy New Year to All.

Of all of the residential mortgage loans existing today, approximately 75% were refinance or purchase loans funded during the "Bubble" years between 2003 and 2007.

The vast majority of these same funded loans (2003 to 2007) were highly leveraged refinance loans which typically provided the property owner with cash out via a 1st mortgage only, a stand alone 2nd mortgage or line of credit, or a combination of a concurrent 1st and 2nd mortgage.

There were approximately 500% more cash out refinance loans than new purchase loans (a 5 to 1 ratio) during this same "Bubble" year time period as well. In many cases, property owners used the cash to pay off consumer (i.e. credit cards), business, and school loans, or to use the cash to pay daily expenses or invest the money elsewhere.

During the same "Bubble" years ('03 to '07), there were an estimated 43 million residential mortgages funded. According to a recent Mortgage Banker's Association report, approximately 8.2 million of these 43 million existing residential mortgage loans (approximately 14.41%) were in some form of default, delinquency, or foreclosure status nationwide.

As property values have declined anywhere from 20% to 50% plus in various areas nationwide since the peak "Bubble" years, then many of these same properties funded have little, no, or negative equity right now. The hardest hit states in terms of value decline are the following "Bubble" states (those states that appreciated the most in the same "Bubble" years): 1.) California, 2.) Florida, 3.) Nevada, and 4.) Arizona.

Borrowers who currently are "upside down" in their homes (debt exceeds value) are more likely to walk away from their homes even if they can afford the monthly mortgage payments. As a result, we may sadly continue to see a much larger wave of mortgage defaults in 2010.

We will continue to keep our clients informed though about the best investment opportunities as the Credit Crisis continues onward.

According to Real Estate Econometrics, commercial mortgage default rates more than doubled to 3.4% in the 3rd quarter of this year. A year prior (3rd quarter 2008), commercial mortgage default rates for loans held by U.S. banks were close to 1.37%. In the 2nd quarter of 2009, commercial default rates were close to 2.88%.

Mortgage loans for commercial properties originated in 2006 and 2007 are experiencing the most significant shortfalls in current operating cash flow in relation to current debt-service obligations. Prices for most commercial properties nationwide have fallen close to 40% since the start of the ongoing Credit Crisis. Particularly hard hit are the regional retail shopping malls due to the drop in consumer spending.

Regional banks hold about 25% of all of their assets in some form of commercial real estate. As a result of price and rent declines coupled with increasing vacancy percentage rates, there should also be a lot less new commercial construction nationwide. The FDIC just released a report recently that noted that business loan requests had dropped to an all-time record low as fewer new businesses are starting up nationwide.

As a result of the ongoing and worsening Credit Crisis, lenders and property owners who wish to sell are discounting their prices significantly for much needed cash. We continue to search for the best bargain discounted prime commercial properties such as retail centers, hotels, office buildings, and other prime properties for our clients who are interested in buying and holding for the long term.

Commercial Real Estate sales are off now an incredibly scary 82% in 2009 (as compared with 2008). Two years ago, the total combined value of all commercial real estate nationwide was about $ 6.5 Trillion. Back then, the total estimated combined commercial loan balances were estimated to near a 3.5 Trillion dollar range.

Today, the total combined estimated value of all commercial real estate in America is now valued to be near the same $3.5 Trillion dollar combined outstanding commercial mortgage debt value. This now means that there is essentially NO NET EQUITY for all commercial properties combined in America as the current mortgage debt levels equal the current combined value levels.

Since commercial real estate values have plummeted since the start of the global financial meltdown in 2007, many of these existing commercial properties nationwide are now completely "upside down" with negative equity just like a high percentage of residential properties are right now.

If banks nationwide had to admit and acknowledge how bad their existing loan losses are right now, then there would be few (if any) large banks left. Since the 20 largest banks in America are now ALL technically insolvent partly due to their hundreds of trillions in off balance sheet derivatives investments (i.e. Credit Default Swaps, etc.), this worsening commercial real estate meltdown will only hurt banks even more along with their worsening residential portfolios.

We are actively working on numerous commercial property work-out transactions (hotels, apartments, construction, etc.) in which the existing lenders are slashing their loan balances, and selling their prime assets for a fraction of their outstanding loan balance values.

There are some incredible buying and brokerage deals (i.e. listings) for many of our affiliate clients and real estate brokers. For more information, please contact me direct.

As many readers may remember, I accurately forecast the global stock meltdown (began the week of September 29th, 2008) last July 2008. I warned readers, friends, family, clients, and co-workers that I was absolutely certain the world's stock and financial markets would either freeze, collapse, or that the U.S. Dow Jones index would drop at least 20% in value during a two (2) week time period beginning the week of September 29th, 2008.

Several readers and friends took my advice to heart, and sold many of their financial stocks (especially Washington Mutual which collapsed during that same time period). I was also concerned about the implosion of various Wall Street firms like Lehman Brothers, Bear Stearns, and Merrill Lynch. I also suggested that both Fannie Mae and Freddie Mac would collapse or be taken over by the government several years ago as well.

Why did I pick the week of September 29th last year as the official start of the stock and banking meltdown (or really the acceleration of the Credit Crisis meltdown which officially began in August 2007)? I knew that the next scheduled derivatives exchange date was on September 30th, 2008 at the Bank of International Settlements (BIS - in Basil, Switzerland).

Since the Credit Crisis is primarily due to the melting down of derivatives like Credit Default Swaps, Collaterized Debt Obligations (CDOs - effectively pools of mortgage securities), and other complex financial derivatives which may be leveraged 30 to 50 times their true face amounts, I didn't think there would be any big buyers for these non-performing assets last September 30th.

I also knew that September and October tend to be the two worst months for stocks. If you remember Great Depression I, it began on October 29th, 1929. "Black Monday" was in October as well back in 1987. I am VERY CONCERNED about another major stock meltdown during this upcoming month of October (begins tomorrow).

What happened to the $750 billion in bailout money which was supposed to save the financial markets and help the end consumer? Why haven't the trillions of dollars in "emergency & anonymous loans" provided by the various lending facilities like the "Term Auction Facilities" helped banks lend more money to the borrowers who really need it?

The millions of properties currently in foreclosure nationwide continue to provide potential investment opportunities for those individuals who have the funds (direct or via 3rd party) to buy these properties. We continue to provide the most up to date foreclosure information in Southern California so if you would like some more information, please send me an email or call me today.

Excess liquidity over the past decade is probably the main reason for the on-going and worsening derivatives meltdown worldwide. There was too much money chasing too many quality deals worldwide as well.

In addition, bank and Wall Street regulations were almost non-existent partly due to the repealing of The Glass-Steagall Act which had been in place since after end of The Great Depression (1929 - 1939). Glass-Steagall kept banks, insurance companies, and Wall Street investment firms separate in order the keep the financial markets healthy.

Once Glass-Steagall was repealed, the same firms (i.e. JP Morgan Chase, Citibank, Wells Fargo, etc.) were allowed to offer banking, insurance, and investment banking services. The once protective "divider" of potential financial implosions occuring simulataneously in insurance, banking, and Wall Street were sadly removed once Glass-Steagall was voided. This, in turn, increased the likelihood of a "daisy-chain" financial "house of cards" potentially hurting the banking, insurance, and Wall Street industries at the same time.

Also, the bond ratings agencies (i.e. S & P, Moody's, etc.) provided absurd AAA ratings for sub-prime and prime mortgage bonds leveraged up to 100%. These high credit ratings (AAA is the equivalent of a U.S. Treasury Bond - considered the safest investment in the world) were improperly given to these risky prime and sub-prime mortgage pools.

These AAA ratings attracted investors from around the world to buy this mortgage paper which later ended up being almost worthless. Many European, Asian, and American investors believed that the risks were "minimal" in the mortgage pools since they were rated as AAA. Also, the high rates and yields offered (8%+) were very attractive to individuals, hedge and private equity funds, mutual funds, and even governments around the world.

As few independent firms now remain on Wall Street since the financial implosion last September (2008) as well as far back as August 2007 (the "official" start of The Credit Crisis), we now are in the midst of the traditionally "scary" Wall Street months of September and October (traditionally the 2 worst months on Wall Street).

As the S & P 500 index is up an insane 70% over the past 7 months during this on-going worldwide depression, I suggest that investors consider taking their phantom gains now before the Wall Street meltdown begins literally any day.

We can offer foreclosure investments for literally cents on the dollar as an alternative investment option. For more information, please contact me through this same website.

What has been the total return to investors in the S & P 500 Index (the broadest measure of the U.S. stock market) over the past 12 years? The answer is ZERO.

Amazingly, the same S & P 500 index is up almost 70% over the past six (6) months in spite of the on-going global depression happening worldwide. How can the stock market be up so dramatically in such a short period of time especially since unemployment numbers keep worsening, retail sales keep collapsing, and the overall real estate market numbers don't seem very inspiring either here in California or nationwide?

The answer, my friends, is that the stock market is rigged. It is not a true capitalistic exchange entity as many of us were lead to believe. The government and a select few of private entities are actually the bulk buyers and sellers of stocks these days.

For example, five (5) stocks (according to Kitco) currently account for 40% of all trading activity these days on the NYSE (New York Stock Exchange). These stocks include Citigroup, CIT Group, Fannie Mae, Freddie Mac, and AIG. Essentially, each one of these companies is bankrupted as their debts far exceed their current overall assets.

Also, computerized trading via the controversial High Frequency Trading Programs (HFTP) control almost 70% of all current stock transactions as well. Once these manipulated computer trading programs stop buying and selling stocks on Wall Street, then I expect the Dow Jones to plummet in the very near term (i.e. September through the end of October).

A wise investor may consider liquidating their current stock investments in these primarily worthless companies NOW before the traditional September and October stock meltdown begins. My long-time readers may remember that I predicted the worldwide stock meltdown EXACTLY during the week of September 29, 2009 several months before it actually happened thanks to a lot of research.

The best investments these days are foreclosured properties for cents on the dollar. A savvy investor may consider selling their overvalued stocks now before the Dow plunges to 5,000 or 6,000 in the very near term as the numbers make no sense whatsoever to remain heavily invested in stocks.

Would you rather own a stock for $50,000 (which may plunge to ZERO), or a foreclosed home for $50,000 which was once valued at $300,000? You can always live in the home, or rent it out as opposed to owning potentially valueless stock certificates.

As I have written for years, the FDIC has been underfunded and bankrupt for too long. Sadly, the FDIC (Federal Deposit Insurance Corp.) was set up shortly after the end of the last Great Depression (1929 - 1939) to "insure" bank accounts for customers throughout our great nation.

Since our banking system is actually considered a "Fractional Reserve System" as banks lend out up to 20 to 50 times the actual amount of their deposited funds via leveraged consumer, business, and real estate loans, the safety of our money in banks throughout America is potentially at greater risk than ever before in the history of American banking.

Remember, most banks maintain at or near ZERO PERCENT cash reserves in their respective bank branches. Sadly, most of these cash reserves are held in the form of ATM or minimal bank vault money. Historically, most banks used to maintain anywhere between 3% to 10% of their funds as "cash reserves" (or cash on hand).

Today, the FDIC may release their 2nd Quarter report if they don't delay it for "special reasons" (i.e. the report is so negative that they don't want to cause a massive run on the banks for deposits). Within this anticipated FDIC report, they may list numerous banks which they deem as "bad banks". Many financial analysts are predicting over 100+ banks may be taken over by the government in the near term as they are technically insolvent.

In addition, the Federal Reserve must release (based upon a Federal Judg's ruling) the list of all of their anonymous loans to big banks, investment banks, and other businesses since last Fall via their eleven (11) different anonymous lending "auctions".

These emergency lending facilities include The Term Auction Facility and The Term Securities Lending Facility. According to the Federal Judge, the Fed must release their billions or trillions in emergency loans by the end of this week or early next week.

As a result of both the release of the Federal Reserve's emergency loans to lenders as well as the anticipated negative FDIC report, I expect many banks to be taken over in the near term. I also expect many banks to be forced to liquidate or sell off their prime assets (i.e. real estate properties and mortgages) for whatever price they can get for the much needed cash.

We will continue to search for the best upcoming foreclosure deals for our clients as banks may be forced to take just about any price possible in the near term. How does 5 to 10 cents on the dollar for a prime Southern California home sound to you?