Archive for September, 2009

Cure Rate

When a mortgage holder gets behind on payments, they often "cure" the deficiency -- well, at least they used to. The cure rate in early 2007 was 45%; It recently fell to 6.6%. The cure rate is the ratio of the number of loans cured divided by the number of delinquent loans in the system. It is a measure of the percentage of loans each month that leave Shadow Inventory. It is a direct measurement of one of the methods of exiting the system -- the other being foreclosure. When a property goes delinquent, what isn't cured is a foreclosure. Cure rates are very low right now because there is so much shadow inventory in the system that has no chance of curing. This makes the denominator of the calculation larger than it should be (Loans Cured / Total Delinquent) because delinquent loans are not becoming REO on time.[READ MORE]

Now that the high-flying real estate market of the Great Housing Bubble has crashed, let's look back to an investment style of yesteryear to provide for retirement. Cashflow investing is the idea that stable inflows of money can be captured and diverted to you for a price. If you accumulate enough cashflow, you can retire.small_investors

Stable Sources of Cashflow

In retirement, what determines the amount of money available to enjoy for lifestyle expenses? Is it your wealth? Is it the equity in your home? Not really. It is the stability of the sources of cashflow you control. Many are obsessed with being rich when what they really want is unlimited spending power. People who have attained great wealth may have amazing spending power, but they seldom use it. If they did, they would not be rich. Being rich is about forming a habit of saving[READ MORE]

  Some say the world will end in fire, Some say in ice. From what I've tasted of desire I hold with those who favor fire. But if it had to perish twice, I think I know enough of hate To say that for destruction ice Is also great And would suffice. Robert Frost In order to discuss Shadow Inventory, we must define it. Shadow Inventory is the total of Preforeclosure Inventory, REO and some other sources. Preforeclosure Inventory includes all mortgages currently 60 days or more behind on their payments that are likely to become foreclosures but not yet REO. To understand these distinctions, review the foreclosure timeline below. ARM Reset to Final Sale     When a mortgage holder gets 60 days behind, they become part of the preforeclosure inventory. Once a property is in preforeclosure inventory, there are two possible outcomes: (1) cure or (2) foreclosure. Curing the deficiency involves one of three[READ MORE]

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