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You've without doubt seen all of them or examine them. Glossy adverts or four-color spreads in publications and papers promising to teach you every one of the juicy details about successful property investing. And all you need to do to learn all these real estate investing surface encounters chuck russo secrets is to pay a rather high sum for a one-or two-day seminar.




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Successful real estate investment requires cash flow. That's the type of almost any business or even investment, especially real estate investing. You put your money into something that you wish and plan can make you more money.




Unfortunately too little newbies towards the world of property investing believe that it's the magical kind of business exactly where standard enterprise rules don't apply. Simply set, if you would like to stay in real estate investing for greater than, say, a evening or two, then you are going to have to come up with money to use and make investments.




While it may be true that buying real estate with no money down is simple, anyone who's even made a fundamental owning a home (just like buying their own home) understands there's a lot more involved in property investing that will set you back money. For illustration, what regarding any required repairs?




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When property investing in rental qualities, you'll want to be able to select only qualified tenants. If you might have no income when property investing in rental attributes, you may be pressured to take a much less qualified tenant since you need somebody to cover you money to enable you to take attention of repairs or attorney fees.




For almost any real property investing, meaning local rental properties or even properties you buy to resell, having funds reserved can permit you to ask for a higher value. You can require a greater price from your owning a home because a person surface encounters chuck russo won't feel financially strapped as you wait for an offer. You won't be backed into a corner and forced to accept just any offer because you desperately need the money.




Another downfall of many new to real estate investing is, well, greed. Make the profit, yes, but will not become so greedy that you ask regarding ridiculous leasing or second-hand rates on all of your real property investments.




Those not used to real estate investing have to see real estate investing as a business, NOT a spare time activity. Don't believe real est investing is going to make you abundant overnight. What enterprise does?




It will take about 6 months to figure out if real-estate investing set for you. If you might have decided in which, hey I love this, then provide yourself many years to actually start making money. It usually takes at the very least five years to become truly productive in real estate investing.




Persistence is the key to success in property investing. If you might have decided that real-estate investing is perfect for you, surface encounters chuck russo keep plugging away at it and the rewards will be greater than you imagined.

You wouldn't think Apple and Indonesia have much in common. On the surface, they don't, but they can still teach you a lot about investing. Let's start with Apple.

Apple made the news recently with two major events. It is locked in a battle with Exxon over which is the most valuable company by market capitalization -- a remarkable turnaround. Apple has a market value of over $344 billion. Then Steve Jobs announced his resignation at Chief Operating Officer for health related reasons.

According to a thoughtful blog by Weston Wellington of Dimensional Fund Advisors (not available online), it was not so long ago that the financial media was trashing Apple. In February 14, 2005, Robert Barker, in an article in BusinessWeek stated "...Apple doesn't tempt me..." I wonder what did. Maybe Lehman or Bear Stearns!

Steven Gandel weighed in with an article in Money on March 24, 2004. He quoted Transamerica portfolio manager Chris Bonavico who opined that Apple stock is "...crap from an investor standpoint."

Many analysts credit the remarkable sales of its Apples Stores as the key to Apple's success. In a quote attributed to David Goldstein, Channel Marketing Corp, which appeared in an article in BusinessWeek on May 21, 2001, Mr. Goldstein gave Apple "two years before they're turning out the lights on a very painful and expensive mistake."

What can you learn from these comments about Apple stock? Read the financial media if you find it entertaining. It's useless (and potentially harmful) as a source of reliable financial advice.

What about Indonesia?

The financial media was preoccupied with the downgrade by Standard & Poor's of the credit rating of the U.S, which lowered its rating from AAA status to AA plus. The new rating places the U.S. below the United Kingdom, Canada and even the Isle of Man.

Many investors viewed the lower rating with alarm and considered it a precursor of low stock returns for decades to come. The data tells a much different story, and may indicate there is no better time to invest in U.S. stocks and bonds.

In another blog, Wellington notes that Standard & Poor's rated the credit of Indonesia a "B" in July, 2001, which placed it in the "junk" category. Over the past decade, its credit rating has never risen to investment grade.

Investors in the Jakarta Composite have earned a total return of a whopping 29% per year over the last decade, ending June 30, 2011. According to Wellington, "If the Dow Jones Average had kept pace with Indonesian stocks over the past decade, it would be over 104,000 today."

Here's the lesson to be learned from Indonesia: A low (or reduced) credit rating on sovereign debt does not necessarily correlate to lower stock market returns. This is the opposite of what many investors and financial talking heads believe.

Most investors get their financial information from the financial media or brokers. As Dr. Phil would say: How is that working for you?

Dan Solin is a Senior Vice President of Index Funds Advisors (ifa.com). He is the author of the New York Times best sellers The Smartest Investment Book You'll Ever Read, The Smartest 401(k) Book You'll Ever Read, and The Smartest Retirement Book You'll Ever Read. His new book, The Smartest Portfolio You'll Ever Own, will be released in September, 2011. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

The manic depressive market wildly swings up and down on each new news story: The Fed is meeting at Jackson Hole on August 27 possibly to discuss QE3 (or not), and that news may pump up the stock market. But China's banks seem to be using Enron's accounting manual, Europe's banks need liquidity and are loaded with bad debt, and U.S. banks only temporarily TARPed over trouble. Gaddafi's regime in Libya appears over, but Libya's oil output may not fully recover for years. Venezuela wants banks to open their vaults and send back its gold, but Wells Fargo says gold is a bubble. Pundits say gold is a barbarous relic, but exchanges and banks are now using gold as money. The U.S. is headed for hyperinflation with skyrocketing stock prices, but on the other hand, we seem to be deflating like Japan and doomed to a deflating stock market for another decade. Whom do you trust and what should you do?

No one knows where the stock market or U.S. Treasury bonds are headed tomorrow, but in my opinion, here are some fundamentals to consider.



The Bad News Isn't Going Away

Until we have real global financial reform and restrain the banks, we won't have sustained growth. The stock market hasn't hit bottom. There's a crisis of confidence in banks and all currencies. We haven't taken effective steps to tackle the U.S. deficit through productivity. We haven't examined spending to eliminate fraud and waste, and we haven't addressed our need for more tax revenues by eliminating the Bush tax cuts (for starters).

Savers are punished by "stranguflation:" negative real returns on "safe" assets, declining housing prices, and rising costs of food, energy and health care. The Fed touts the falling cost of I-Pads, but how often do you buy one of those, and how often do you eat?

Good News (for Now)

The USD is still the world's reserve currency. Even though we devalued the USD, there has been a global flight to U.S. Treasuries pushing down our borrowing costs (yields). No one in the global financial community feels the U.S. has done its best to correct our problems, but severe problems in Europe, China's inflation, and Middle East unrest has money running to the U.S. Since we've devalued the dollar, we appear to be a bargain for foreign investors, even though they are terrified by our money printing presses and the potential for inflating commodity prices in the long run.

How did I play this? My own portfolio is currently more than 20% gold with some silver, and I bought out-of-the-money call options on the VIX when it was in the teens with maturities of 4-6 months. This is "short" stock market strategy, one could have also done well buying puts on the S&P a few months ago. In the first big stock market downdraft in August, I sold the options when the VIX hit the high 30's, and I'll buy more options again if the VIX falls again. Many investors are not comfortable with options, and this strategy isn't appropriate for everyone. The rest of my portfolio is chiefly in cash or deep value opportunities.



What Happens Next?

No one knows for sure, and anyone who tells you he or she does is selling snake oil. The situation is fluid. We tried to reflate our deflating economy. Our massive dollar devaluation may encourage investment, because it's protectionist. It reduces our cost of labor, among a few other "benefits." The problem is that the Fed has printed money, and we haven't done anything to position the U.S. for greater productivity. We're trying to inflate our way out of a problem without investing in productivity. This is a very dangerous way of attacking this problem. Even more "stimulus" would just be an attempt to inflate our way out of our long-standing deep recession. That's the foolish and unsuccessful strategy we've adopted so far. That could lead to runaway budget deficits (our deficit already looks intractable) and bring us to double-digit inflation. Even the European flight to US Treasuries may not save us from a deeper recession in that scenario.

If we don't overreact -- and we may have already overreacted -- our dollar devaluation results in our foreign trade situation first getting worse (as it has now) before it gets better. Now is the time (actually, we should have started years ago) to spend capital to increase U.S. productivity. The dollar's plunge relative to other currencies will eventually make us more competitive. This will be good for blue chip companies, in particular those that own real assets and manufacture items. The Fed and Washington may do anything, however, so one must watch the news.

What does this mean for the U.S. stock market? In my opinion, it is currently not good value and feels like the 1970s when we experienced a recession followed by inflation. One should consider staying mostly in cash and expect stocks become cheaper. One might miss an interim rally, especially if the Fed announces QE3 (more "stimulus" and money printing) or more bank bailouts, but that is like using Kleenex laced with sneezing powder. We will see stock prices even lower than they are today. The old paradigm dictated that stocks were a buy when P/E ratios were 13 or less (and many are well above that), dividends at 4%, and book values at 1.3 or less. (This excludes oil companies, which tend to trade at lower P/E ratios in general.) I believe we'll see much better deals in coming months. In 1978/79 P/E ratios sank below 7 for blue chip companies.

Should one buy U.S. Treasuries with long maturities? The long end of the bond market doesn't reward investors due to the potential of rising interest rates. If interest rates spike to double digits, then one can reassess the situation.

Long term investors should consider buying commodities or companies that own physical commodities. We're running out of key commodities especially related to agriculture and fertilizer. Washington's brand of the latter isn't the type we need.

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We have been filing paperwork with first Wachovia and now Wells Fargo Financial since early 2010 and have not made a mortgage payment since December 2009 as we waited for our paperwork to be completed and our new loan to start. I have faxed and mailed over 30 pages of documents including bank account statements, Social Security payment statements, health care payments, income statements and house and credit card monthly bills for this year. We also had to get current with all our personal and business taxes and send in copies of 2007 and 2008 to show that we had not received any income from our business

The point of all of this was at no time during our discussions with Wells Fargo going back to at least February of this year were our 2009 taxes mentioned. Now we are being told that there is a new government regulation requiring that we have our 2009 taxes also done or an extension on file with the IRS. If we don’t have any extension for this year or our 2009 taxes completed we will lose our application for the HAMP and then possibly lose our home due to foreclosure.

It was a busy week ...

Existing Home Sales lowest since 1996, 12.5 months of supply

The NAR reported:

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
...
Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June.

Click on graph for larger image in new window.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in July 2010 (3.83 million SAAR) were 27.2% lower than last month, and were 25.5% lower than July 2009 (5.14 million SAAR).

The next graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Inventory is not seasonally adjusted, so it really helps to look at the YoY change.

Although inventory increased from June 2010 to July 2010, inventory decreased 1.9% YoY in July. The slight year-over-year decline is probably because some sellers put their homes on the market in the Spring hoping to take advantage of the home buyer tax credit.

Note: Usually July is the peak month for inventory.

A normal housing market usually has under 6 months of supply. The following graph shows the relationship between supply and house prices (using Case-Shiller).

This graph show months of supply (through July 2010) and the annualized change in the Case-Shiller Composite 20 house price index (through May 2010).

Below 6 months of supply (blue line) house prices are typically rising (black line).

Above 6 or 7 months of supply, house prices are usually falling. This isn't perfect - it is just a guideline. This is a key reason why I expect house prices to fall further later this year as measured by the Case-Shiller and CoreLogic repeat sales house price indexes.

New Home Sales decline to Record Low in July

The Census Bureau reports New Home Sales in July were at a seasonally adjusted annual rate (SAAR) of 276 thousand. This is an decrease from the record low of 315 thousand in June (revised down from 330 thousand).

This graph shows New Home Sales vs. recessions for the last 47 years.

And another long term graph - this one for New Home Months of Supply.

Months of supply increased to 9.1 in July from 8.0 in June. The all time record was 12.4 months of supply in January 2009. This is still very high (less than 6 months supply is normal).

The 276 thousand annual sales rate for July is the all time record low (May was revised up a little). This was another very weak report. New home sales are important for the economy and jobs - and this indicates that residential investment will be a sharp drag on GDP in Q3.

MBA Q2 2010: 14.42% of Mortgage Loans Delinquent or in Foreclosure

Here is my post on the MBA Q2 delinquency report: 14.42% of Mortgage Loans Delinquent or in Foreclosure . This graph (from the earlier post) shows the delinquency rate by "bucket" (30 days, 60 days, 90+ days, and in foreclosure process):

The total percent of loans delinquent or in the foreclosure process declined only slightly in Q2 from Q1 - and the rate is the second highest on record.

Loans 30 days delinquent increased to 3.51%, and this is about the same levels as in Q4 2008 (slightly below the peak of 3.77% in Q1 2009).

Delinquent loans decreased in all other buckets - especially in the 90+ day bucket. MBA Chief Economist Jay Brinkmann suggested the decline in the 90+ day bucket was because of some successful modifications - since the lenders reported the loans as delinquent until the modification was made permanent.

The second graph shows the delinquency rate by state (red is seriously delinquent: 90+ days or in foreclosure, blue is delinquent less than 90 days).

Clearly Florida and Nevada have a large percentage of loans delinquent or in foreclosure. But the delinquency problem is widespread with 36 states and D.C. all having total delinquency rates above 10%.

With house prices falling - and growth slowing - the delinquency rate will probably increase later this year.

CoreLogic: 11 Million U.S. Properties with Negative Equity in Q2

Here is my post CoreLogic: 11 Million U.S. Properties with Negative Equity in Q2

This graph shows the negative equity and near negative equity by state.

Although Nevada, Arizona, Florida, Michigan and California, have the largest percentage of homeowners underwater, there is a negative equity problem in most states. In 33 states and the D.C., 10 percent or more of homeowners with mortgages have negative equity.

Other Economic Stories ...

From Fed Chairman Ben Bernanke: The Economic Outlook and Monetary Policy

BEA: Q2 real GDP revised down to 1.6% annualized growth rate

Estimate of Decennial Census impact on August payroll employment: minus 116,000

From Jon Hilsenrath at the WSJ on the debate at the August FOMC meeting: Fed Split on Move to Bolster Sluggish Economy

From the Richmond Fed: Manufacturing Growth Continued to Ease in August; Expectations Drifted Lower

Kansas City Fed: Manufacturing activity slowed in August

From MarketWatch: S&P downgrades Ireland on financial sector cost

The Department of Transportation (DOT) reported that vehicle miles driven in June were up 1.3% compared to June 2009.

ATA: "Truck freight tonnage has essentially gone sideways since April 2010"

Unofficial Problem Bank List increases to 840 institutions

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<b>News</b> of the World deserves no praise for John Higgins entrapment <b>...</b>

Paper's sting operation on naive John Higgins was a disgrace.

The <b>News</b> Corp. Coverup : CJR

The Guardian reports today that former News of the World senior editor Paul McMullan says ex-editor Andy Coulson, now the prime minister's spin doctor, is lying when he says he didn't know about the illegal phone tapping that was ...

<b>News</b> Roundup: Showtime Renews &#39;The Green Room,&#39; Casting Intel and More

Showtime has renewed its comedy series 'The Green Room with Paul Provenza' for a second season. According to Deadline Hollywood, production on the 6-

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Superman (Comic) Rescues Family (Home from Foreclosure)

A family facing foreclosure discovered a copy of Action Comics #1—the first Superman comic—in the basement. It's worth $250,000, and will help them repay debts. The best part? They found it while packing to move out.

Send an email to Max Read, the author of this post, at max@gawker.com.

Demand: fewer new households

Household creation depends on the state of the economy. The combination of high unemployment, weak wage and salary growth, and tight credit has led to a decline in household growth over the past few years. The two main surveys of household formation from the Census Bureau – the Housing Vacancy Survey and Current Population Survey – show that about 500,000 households were created annually over the past three years compared to an annual average of about 1.2 million during the first half of the decade (Figure 6). How can we explain such a notable drop in household formation?

Moving in with the folks

The obvious answer is to look at homeownership rates, which have tumbled to 66.9% from a peak of 69.2% in 4Q04. This translates to a loss of nearly 2.5 mn homeowners. Most of these homeowners became renters, which means they remain a household, but not all. As can be seen by the surge in the rental vacancy rate to 10.6%, it seems that there was not a perfect shift from homeowners to renters (Figure 7). This begs the question: what happened to these former households? There was doubling up among economically stressed households; in other words people moved in with friends or family. Many of these former homeowners were probably foreclosure victims (Figure 8).

As Figure 8 shows, household formation can also decline if there are fewer young households created to replace the aging homeowners. Given the nearly 10 point surge in the unemployment rate among 16 to 24 year olds from the trough to peak during this cycle, it seems like this was a considerable factor. A recent paper sponsored by the Research Institute for Housing America estimates that the probability of a young adult forming a household declines by 4% during a recession, and up to 10% if unemployed. In addition to the slowdown in “headship rates” domestically, there was a drop in household formation from immigration. According to the Office of Immigration Statistics at the Department of Homeland Security, the number of unauthorized immigrants decline by 1.0 million from 2007 to 2009 compared to a net gain of 1.3 million from 2005 to 2007.

Household growth to improve, but with a lag

Household formation will naturally pick up as the economy improves, but if our forecast for a sluggish recovery is realized, household growth will also be lackluster. The main factor influencing household growth will be the state of the labor market. The above-referenced paper finds that the unemployment rate must fall by 2pp from current levels to return to normal rates of household formation of about 1.2-1.4 million a year. We do not expect the unemployment rate to reach the mid-7% range until 2013, implying another two and a half years of sluggish household formation of about 800,000 a year. This is also when we expect the pace of foreclosures to slow notably, which means that fewer households will have to double-up.

Looking ahead to 2013 and beyond, we use forecasts from the Joint Center for Housing Studies at Harvard University. They present two possible trajectories for household growth: 1) an average of 1.48 million annually through 2020 assuming net immigration returns to the 2000-05 pace and headship rates at 2008 levels; and 2) an average of 1.25 million annually through 2020 assuming the same 2008 headship rates but slower immigration. We believe the latter is more likely and use this as our baseline forecast (Figure 9).

Renters will take market share

Although we expect household formation to start to improve in 2013, the homeownership rate should still fall further, suggesting that most of the gain in households will be due to an increase in renters. This is because there is still a considerable number of homeowners with mortgages in some stage of delinquency that are likely to end in foreclosure. Based on data from the Mortgage Bankers Association, there are about 5.5 mn seriously delinquent mortgages currently outstanding.

A recent paper by economists at the NY Federal Reserve (Haughwout, Andrew, Richard Peach, Joseph Tracy. “The Homeownership Gap”, Federal Reserve Bank of New York Current Issues in Economics and Finance, Volume 16, Number 5, May 2010) attempts to quantify the effective lower bound for the homeownership rate. They make the assumption that underwater borrowers (negative equity), who currently account for about a quarter of mortgage holders, will transition to renters over time. Subtracting these underwater borrowers yields an “effective homeownership rate” of 61.6% (Figure 10). This would be a record low in the data which goes back to 1965. We do not expect such a precipitous drop because not all underwater homeowners will become renters. Indeed, a recent study by Trulia.com and RealtyTrac found that 59% of respondents would not go into foreclosure simply because of negative equity. We believe it is more likely that the homeownership rate will bottom at 65%, returning to mid-1990s levels.

It is plainly obvious why the demand-side is so often ignored in polite conversation: it is the consumer-driven aspect of the house price variable, over which neither the Fed, nor the Treasury, nor the FHA has any authority, and which is a function purely of expectations of the future. Alas, those right now are lously and getting worse. We expect that Demand-side housing economics will take on progressively more importance in the future, as it becomes obvious that no amount of Supply-side tinkering will prevent another 20% drop in prices.

And speaking of Supply, this is also a critical factor, if much more prevalent in the daily media. Alas, that in itself does not make the problem any easier to resolve.

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Foreclosure Mediation Programs Succeed Across The Country — Will Pawlenty Give Minnesota’s A Chance?

Today, across the country, mortgage mediation programs aimed at helping struggling homeowners stay in their homes are getting underway. Programs are launching in Maryland, as well as Florida’s 6th and 10th judicial circuits — encompassing Pasco, Pinellas, Hardee, Highlands, and Polk counties — while Cook County, Illinois is beginning a huge round of outreach for its burgeoning program.

In all, “the number of jurisdictions with foreclosure mediation programs is nearly double the number a year ago, with jurisdictions in 21 states now offering foreclosure mediation or negotiation programs.” Not on this list, however, is Minnesota, where Gov. Tim Pawlenty (R) saw fit to veto a program last year.

The Minnesota state senate recently passed the bill again, sending it to the state House, so Pawlenty could very well get a second shot soon. And there’s simply no reason for him to oppose the program, as mediation — during which a bank meets face-to-face with a borrower, often in the presence of a judge and housing advocates, to try and forge a mortgage modification or other arrangement that prevents a foreclosure — is one of the most successful methods of helping struggling borrowers stay in their homes.

Connecticut’s mediation program, for instance, has kept 60 percent of its borrowers out of foreclosure. Philadelphia’s success rate is also 60 percent, while Nevada claims an 85 percent success rate:

About 80 percent of homeowners at risk of losing their homes don’t engage in any efforts to negotiate with their lender. And those who do so on their own often run into a bureaucratic mess, including hours on hold, lost records, and customer service representatives who know nothing about the borrower’s situation. Mediation helps to ensure that situations like that don’t happen.

“These new protections empower our fellow Marylanders, putting them on a more equal footing with mortgage companies that too often can’t be bothered to pick up the phone before beginning a foreclosure proceeding against a Maryland family,” said Governor Martin O’Malley (D). And lest Pawlenty think this is a purely partisan issue, it has also won the praise of Gov. Jodi Rell (R-CT). “Clearly, mediation is an effective tool homeowners can use to ward off foreclosure,” she said. “This program is a beacon of hope for hard-pressed homeowners and a real alternative for lenders.”

In mediation, there’s no requirement for a lender to accommodate a borrower, but it’s often the case that preventing a foreclosure is in the best financial interest of both the borrower and the lender. As CAP’s Andrew Jakabovics and Alon Cohen wrote, “the simple act of participating in mediation consistently yields solutions short of foreclosure that are acceptable to both sides.” Hopefully, should the Minnesota legislature do the right thing and create a program, Pawlenty will allow it to stand.

America was built on a cycle of real estate bubbles. Every region has its history of boom-to-bust towns, or towns that never actually came into existence, though rubes back east paid good money for lots in what was sure to be the Next Big Thing, only to see their money vanish along with the town when the bubble burst.

Twenty years from now, we'll be hearing the old chestnuts, "Real estate only goes up!" and "Buy now before you're priced out forever!" while real estate mania pushes the prices beyond reality once again.

We never learn.

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Shakesville: Today in Not <b>News</b>: The Afghanistan War Blows

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[Ed. note: This post is authored by Evan Jowers and Robert Kinney of Kinney Recruiting, sponsor of the Asia Chronicles. Kinney has made more placements of U.S. associates and partners in Asia than any other firm in the past two years. You can reach them by email: asia at kinneyrecruiting dot com.]

** Check out our new daily Asia biglaw blog at THEASIACHRONICLES.COM! **

Evan here. While PRC firms, Korean firms and Japanese firms have for years successfully recruited US biglaw associates, in ’09 such recruitment was more successful than usual. There are two reasons for this trend: i) most top US firms in Asia were on hiring freeze throughout ’09, making it extremely difficult for even the most impressive US associates to lateral to a US practice in Asia in ’09 (such lateral moves did happen, most with Kinney involved, but not in great number, relative to ’06, ’07, ’08 and ‘10); and ii) there has been a feeling in the market in the past couple of years that some local firms in Asia, especially PRC firms, are catching up to US practices there.

We know a number of US associates who made the move from top 10 US firms to PRC firms in ’09 (some with Kinney’s help). We also know a handful of US associates from top tier US firms that moved to Korean and Japanese local firms in ’09. This type of lateral move has been a good one for those looking for more of an entrepreneurial role early on in their career, especially if they have very strong personal connections at banks and other relevant entities in the target country. However, this type of move has been a bad one for those who are focused on keeping their technical skill set at a top US practice level of sharpness (in order to open up career doors now and in the future).

Unfortunately, most lawyers realize at some point that the skill set is paramount in importance in a legal career, typically coming ahead of even client control when working at top-tier firms. Having joined a local firm, it is very difficult to move from a local firm back to a top US firm, even within the same market where the associate has been getting unique major domestic firm experience. This is true, even if (in that market) US associate lateral hiring has picked up tremendously (which is the case in HK / China this year).

In fact, just in the past month, five mid-level to senior associates, whom I had worked with in the past, over a period of years, contacted me in order to try to move from their local firm back to a US firm. This year, we have taken numerous such calls from associates at Japanese, Korean and especially PRC firms. Some of these associates did choose a local firm offer over a US or UK firm offer when they moved from US to Asia last year. Others took a local firm offer after not being able to land a US or UK firm offer during last year’s very slow hiring market in Asia.

The complaints have been the same. They knew going in that the local firm would pay much less than the NYC market, but the expectation was that they would be promoted to income partner very quickly (in most cases, even a 3rd or 4th year can be on a very short non-equity partner track), albeit at still lower than US biglaw pay for same class year. However, once on the ground at their new firm for several months, these people often realized that, while they are working on the biggest deals in the market, their local firm is tasked with a far less sophisticated part of the deal than their counterparts (and friends) at the top US practices working across from them on the same project. They also find that many of the junior income partners at their firm who came from a top US firm are not so happy, due to their skill set dulling and the need to bring in clients in order to have further advancement.

Now, with that said, for some US associates that have made the move to a local firm, things could not have gone any better. Yes, for the most part (especially at PRC firms) the promise to quick promotion to non-equity partner comes through. Further, for those with great personal connections in China, Japan or Korea, being at such local firms allows such connections and entrepreneurial drive to be rewarded much sooner than would be the case at a top US practice.

Thus, for some, this type of move is a very rewarding one. Unfortunately, though, for many US associates that have made this type of lateral move and regret it, it can be very difficult to get back on board the top US firm career track, where technical skill sets are constantly sharpened and where great exit options to in-house or business positions are available if need be.

Frankly, hiring partners at top US practices in Asia consider it a red flag that a candidate left US biglaw for a local firm recently, simply because it is strong evidence that the candidate is not at all focused on a US biglaw career and may not be sophisticated enough to recognize the quality differences in legal work product. For example, some of my candidates who had multiple interviews and offers in ’09 from US or UK firms in Asia, but chose a local firm, now have trouble even getting a screen interview from the same US and UK firms that pursued them in ‘09. This is somewhat remarkable considering that the number of openings for US associates in Asia at US and UK firms have increased more than 10 fold this year, compared to ’09.

Further, if a candidate has been at a local firm for more than a year, hiring partners at US practices consider their skill set no longer sharp and thus a risky hire (especially when, as is the case today, there are so many well qualified US associate candidates on the market in Asia).

In the top US firm practice track in Asia, there no doubt will be opportunities to be entrepreneurial and this type of character trait is very important at US practices overseas (much more so than in US markets or London, for example), but it is not the same level as in local firms.

If you are at a top US practice in Asia, you can always make the move to local firms, but it will be very hard to make the opposite move. So our suggestion is that you think long and hard about what is the best timing for you to make such a move if you are seriously considering it at this time. For some it is a great move, but for many it should have been delayed for a number of years.

If you value most your biglaw skill set being sharpened and thus opening career doors, then stay in US practices while overseas, but if you value more getting out there and opening doors through your contacts and entrepreneurial skills, then it may be time for a move to a local firm.

Before making such a move, listen to all the warnings you will get from well informed and experienced people you talk to. You will get the warnings, but when someone is making an exciting career move, to their home country and with new fancy title no less, it can sometimes be hard to listen to anyone that has less than a positive reaction. Usually, family members and friends (who are not in biglaw) will strongly recommend going with the big title at the local firm, whereas US partners and former US biglaw associates who made similar moves will give words of caution.

US associate candidates for Asia often discount the advice of their current biglaw partners on the theory that they are not neutral, but they fail to recognize that they are leverage and marketing material at the local firms, and thus the advice they get from those local partners should also be discounted.

Parents and friends, most of whom are not in biglaw and many are not highly educated or experienced to begin with, will often say what they think you want to hear. Family and friends not experienced in biglaw will only see the surface – you are working long hours and have title of associate instead of vice president or partner. Also, family and friends native to your home country will likely believe that their local firms are rapidly catching up to US and UK firms and will within a few years take most of the international and US related work from foreign firms in their market (could not be further from the truth, unless you are looking decades down the road).

Try not to let your excitement and enthusiasm cloud what should be an informed decision. After all, choosing the local firm route in an informed way is a great move. There are pluses and minuses after all and you need to look at both, not just the former. When you stare the negatives of a move in the face and choose to go through that door anyways, you will have more mojo entering your new firm and will have no regrets.

The Senate showed strong support for the Dodd-Frank Wall Street Reform and Consumer Protection Act by passing it with a 60-39 vote. It will be sent to the White House where President Obama is expected to sign it into law next week.

This historic bill represents a principled effort to bring financial fairness to all Americans and to ensure that lending transactions be both honest and transparent. Any policy that protects those consumers who do not have the means to protect themselves is a step in the right direction.

Many urban communities in America today are in a state of emergency, requiring the highest and most urgent attention of the private and public sectors. Passing the Dodd-Frank Wall Street Reform and Consumer Protection Act opens the way for a system that oversees the practices of participants in the financial markets, rewarding those who conduct business in the spirit of honest free trade and holding accountable those who continue predatory and abusive practices.

Certain provisions of the bill go a long way toward addressing the needs of the roots of our economic tree. In particular, this bill effectively addresses the root causes of the predatory lending induced mortgage meltdown that ultimately triggered the global economic crisis.

We are relieved and grateful that the final conference report addresses the crucial issue of foreclosure prevention. While 2.5 million families have already lost their homes to foreclosure, well over 5 million more are in imminent danger of doing so, and potentially as many as 13 million could lose their homes before the end of this crisis if they do not get some kind of assistance.

Overall, homeowners in America will be much safer as a result of the new mortgage standards. More effective foreclosure prevention will not only help homeowners, but also will help stabilize the economy and contribute to a strong recovery.

Again, we very much appreciate the act of congressional leadership shown by passing this historic legislation.

nonetheless

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foreclosure agents

From a report emailed to me over the weekend:

At the core of the foreclosure-prevention strategy is ignoring delinquencies. The percentage of older delinquent loans not yet in foreclosure is startling: 60% have at least 12 missed payments, and 35% have at least 18 missed payments. Add to this that three-fourths of delinquent loans are not in foreclosure, and we see that hidden losses well exceed those in the open.

Uh, they're not being "ignored" - this is systemic and intentional fraud.

Remember, these loans are either being held by someone or securitized into some sort of package.  When you have a loan that has no chance of "curing" (to cure a loan with 12 missed payments the borrower would have to come up with the 12 payments to bring it current!) that loan should be carried at its recovery value - that is, the value of the collateral that can be seized and sold, LESS the cost of eviction, remediation and resale.

Does anyone recall all the entries I've written about getting competent legal and accounting (tax) advice before proceeding with any sort of action regarding walking away, short sales or foreclosure?  This same report says:

Many homeowners would be better off going into foreclosure, than doing a short sale. Short sales are fraught with potential legal, credit, and complicated tax issues. For example, someone who refinanced could owe capital gains taxes, which are not forgiven under federal and California temporary debt relief acts. In the foreclosure route, borrowers can live in their house mortgage-free for at least one year, maybe two years. Both short sales and foreclosures are reported as “account not paid in full”, and are equally damaging to a credit score. An exception exists if short sellers can negotiate better terms with their lender on recourse liens. The other possible advantage to a short sale is the ability to get a mortgage again in 2 years (Fannie, Freddie), rather than having to wait 3-5 years after a foreclosure.

Homeowners pursue short sales, unaware of the problems they are creating for themselves. Their agents never warned them of deficiencies, ruined credit, taxes due on forgiven debt, or legal consequences. Agents made flowery promises to get listings, and now the lawsuits are starting.

No, really?  You mean that people in the real estate business are less than truthful with their clients?  That would never, ever happen with licensed professionals, right?

Then there's this, which I also have written about:

Another gray area is junior lien holders asking buyers for additional payments. As the market improved, juniors were no longer content with $3k thrown to them from the senior. They now want 10% of the junior note. They argue the additional payment is legal practice because the payment is made to escrow and appears on the HUD-1. However, they are actually hoping the senior lien holder does not read the HUD-1. The California Association of REALTORS® position is that all payments made by the buyer or agent in the purchase of a short sale must be part of the written short sale agreement signed by the senior lien holder. Concealing payments from seniors is loan fraud, and omitting these payments from the HUD-1 closing statement may violate RESPA. Some seniors reinstate their security interests because of the fraud. It’s surprising that the biggest banks are responding, when pressed on the fraud of their request, “just do it if you want the deal done”.

Right.  Big banks saying "just do it"?  Why would they do that?  Is it so they can re-instate their security interests?  No, nobody would ever do anything that hoses the consumer, would they?  Naw.....

Few people understand that the bank that gave them their mortgage turned around and sold it into a mortgage bond, and the “bank” on their mortgage statement is actually a servicer.

Actually, it's a bit more complicated than that.

As I've been working on (and writing on) for a long time, and as a few attorneys are now starting to understand, the entirety of this process was corrupted and is rife with outright fraud from top to bottom.

Let's go through a (partial) list of the problems:

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  Mike Fuljenz Mike Fuljenz
  
  

  

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

foreclosure investing

About-Face by Rosalyne Shieh and Weatherizing by Catie Newell.

It's no secret that houses can be acquired for cheap in Detroit—as low as $500 if you attend the Wayne County Tax Foreclosure Auction. With property so easy to acquire, a new question surfaces: what should be done with them? Many are dilapidated from disuse, burnt-out with no plumbing or electrical wiring to speak of, despite being located in partially occupied neighborhoods. Prior 'cheap-house' projects have made polemical, visual statements that call out the urban blight in Detroit. Five teaching/research fellows from the University of Michigan's Architecture Department have approached their $500 house a little differently, using it as a testing ground for their ideas about architecture and domestic space.

The house was purchased at the above-mentioned Wayne County Auction, and is located near Hamtramck, in the same neighborhood that community-focused Design99 built their recently blogged Neighborhood Machine. Over the past year, Ellie Abrons, Meredith Miller, Thomas Moran, Catie Newell, and Rosalyne Shieh have been rehabilitating the property, rewiring it for electricity and investing in new windows, for example. At the same time, they've tested their own ideas about new ways to experience and occupy this house, building them right into the existing architecture, reflected in the title of the project: Five Fellows: Full Scale. Now that their fellowships are over and the project is complete, the deed has been turned over to Design99 for further development and use.

Across the United States, newspaper headlines lead with stories about
financial reform. Members of Congress want to better regulate Wall
Street and to take on the fat cats at the big banks, with their golden
parachutes and big bonuses, who took our hard-earned tax dollars in
the form of a federal bailout, despite the fact that they got us in to
this mess in the first place. And Congress is right to take on the
big banks - reform at the national level is long overdue and obviously
needed. But in the hubbub that is the national overhaul, the seeds of
this reform, the work done at the state and local level, cannot be
overlooked nor can we let up on this work. True reform of our banking
and financial systems will take pressure and action at every level and
across the nation.

Americans are fed up with billionaires who are bilking us for all we
are worth, making the middle class the biggest losers. Our friends
and neighbors have lost their homes, found out that the pensions or
retirement savings they worked for are gone and are struggling to find
work in the worst economy of our lifetimes. In the meantime, Wall
Street is back to business as usual, posting new profits, while those
on the other side of the deals have lost their homes, their jobs, and
their retirement savings.

With all of the anger and distrust of Wall Street, we have hit a place
where we are ready for a basic cultural shift - one that turns away
from looking at our investments and banking solely on the basis of
short-term profits, and toward the production of true long-term
growth: by investing our funds in economic growth opportunities that
directly impact our communities.

We cannot let this historic opportunity pass us by. We must channel
our inner Howard Beale and scream from our windows, "I'm
mad as Hell, and I'm not going to take it anymore" - our outrage must
be heard, not just in words but in action.

At the City level, leveraging this cultural shift means investing our
money in banks that are helping grow Main Street by offering small
business loans, working with homeowners to renegotiate mortgages when
they're faced with foreclosure, and opening up bank branches and the
cycle of credit in under-served areas, by creating local versions of
the Community Reinvestment Act standards. After all, what good does
it do Los Angeles if the banks in which the bulk of our tax dollars
sit in are reinvested in another City, far away?

That's why the Los Angeles City Council unanimously supported my proposal to create Responsible Banking Standards in Los Angeles,
based on a Philadelphia model put in place in 2002. Los Angeles alone
has a cash and pension portfolio of over twenty-five billion dollars,
which allows us to leverage these investments in such a way to benefit
the residents of our city - not just through the rate of return, but
by looking at how the banks and financial institutions reinvest in our
community. The ordinance will require that any bank looking to do
business with Los Angeles would have to submit a report to the City
Treasurer who, in turn, would grade the banks based on their
investments in Los Angeles.

And we're not the only ones - cities including Boston, Carson,
Charlotte, Dallas, Denver, Independence, Muskegon and Watsonville are
all looking into creating similar standards for Responsible Banking.
And this week, Boston City Councilor Felix Arroyo is hosting a
Council hearing to examine how the Boston City Council can hold big
banks accountable in their city. The States of California,
Massachusetts, Minnesota, New Mexico, Ohio and Washington are also all
considering or have implemented sweeping financial reforms, including
looking at the creation of State-run banks or investing only in
State-chartered banks.

The anger is palatable and the time for reform is now.

We've lost our trust in the banks that took our bailout money, and let
hundreds of thousands of homes fall into foreclosure.

We've lost our trust in Wall Street, where companies gained enormous
profits, betting on the demise of investments.

We've lost trust in the rating agencies, when 93% of the
subprime-mortgage-backed securities issued in 2006 for which they gave
AAA ratings are now "junk" status.

The only way that trust is going to be restored is with sweeping
reform. That's why Congress must pass substantive financial reform,
so that Americans can begin to believe again. But at the same time,
reform - just as powerful - must come from the cities and states.
Collectively, our leverage is enormous. I introduced a resolution at
the National League of
Cities in support of local reform, because I know the power we
could have if we banded together. Local and state officials know the
pain of our constituents, and know the benefit that can be derived
from holding banks and financial institutions more accountable.

The notion that we can create real change is not just pie in the sky.
The City of Philadelphia has had their policy in place since 2002, which has resulted in
increased consumer and small business lending to historically
under-served areas of that city. And on April 16, Massachusetts State
Treasurer Timothy Cahill announced that the State of Massachusetts
will begin divesting $243 million in taxpayer dollars from three of
the nation's largest banks - Bank of America, Citibank, and Wells
Fargo. The decision came after the banks were asked, and refused, to
voluntarily comply with an 18% interest rate cap on credit cards and
other consumer borrowing for Massachusetts residents. The cap, which
is required of all Massachusetts state-chartered banks, does not apply
to federally-chartered banks.

These actions are just the beginning of our cultural shift. More
Cities and states are needed to create real pressure on the banks. I
urge every City to create standards for how tax-payer dollars are
invested and find ways to ensure that the dollars are going to banks
and financial institutions that are behaving well.

Shouting may not get what we want - but you can bet that billions and
billions of dollars taken elsewhere will get banks' attention.

We are mad as Hell - and we don't have to take it any more.

penis enlargement patch