Welcome to James Smith, International Real Estate Investment Trainer

The James Smith Investor Lawsuit, Robert Paisola Reports for CNN

2009-11-08T05:00:00.001-07:00

To our friends and clients around the world:

Many of you have contacted our offices asking about the current lawsuit that has been filed by people who state that they are "Victims" of The James Smith Real Estate Organization. As members of the national media, we are compelled to provide you with the raw information that is available on this site and many others. In the interest of justice we present the original filing that was filed in the Third Judicial District Court in Salt Lake City, Utah.

We are going to provide you with the legal filing data, however, we are not going to comment on the current legal proceedings because of a confidentiality agreement that we have with this company. Please understand that we know and have known many of the defendants in this lawsuit, and as a media organization, it is our obligation to simply provide you, the American Public, with the facts of the current case.

To your Success,
Robert Paisola
CEO
www.RobertPaisola.com

Download the full case here:

Home Foreclosures Hit Fresh High , Posted by James Smith

2007-08-24T08:49:00.000-07:00

Foreclosure Rate Hits Historic High

By Dina ElBoghdady and Nancy TrejosWashington Post Staff WritersFriday, June 15, 2007;

The percentage of U.S. mortgages entering foreclosure in the first three months of the year was the highest in more than 50 years, according to the Mortgage Bankers Association.

As the association released its numbers, the Federal Reserve held a hearing to determine whether regulators could do anything to crack down on abusive lending practices, which have exacerbated the problem

The problems arose last year as the housing market softened, driving down home prices and making it more difficult for cash-strapped borrowers to sell their homes or refinance their way out of trouble.

The most dramatic fallout took place in the subprime market, which caters to people with blemished credit or other factors that make them a risk to lenders.

Those borrowers entered foreclosure at a rate of 2.43 percent, up from 2 percent the previous quarter. The percentages seem small, but they are far above norms, particularly in a healthy economy. The concern is that the mortgage industry's troubles could damage the economy if they are not contained.

For more credit-worthy, prime borrowers, foreclosures rose slightly, to 0.25 percent, in the first quarter from 0.24 percent in the previous one.

New foreclosures for prime and subprime borrowers combined hit record highs. They rose to 0.58 percent on a seasonally adjusted basis, compared with 0.54 percent in the previous quarter and 0.41 percent a year earlier.

The high translates into about 254,591 mortgages, or one in 172 loans, the association said.
The problems weren't uniformly spread around the country. Doug Duncan, chief economist for the mortgage bankers group, said the rate of new foreclosures would have dropped had it not been for big jumps in California, Florida, Nevada and Arizona. He said high rates in Ohio, Michigan and Indiana also drove up the overall percentage of loans in foreclosure.
Some who track the industry say the worst is yet to come.

"We think we're just starting to see the tip of the iceberg," said Karen Weaver, global head of securitization research at Deutsche Bank Securities. "We believe more and more [subprime borrowers] will default, and that's a process that we think will happen over two years."
Others disagree. Among them is Michael D. Youngblood of FBR Investment Management, who said the deterioration of subprime loans has slowed significantly in the past four months. He predicts "a slow upward drift" of default rates for the next nine months, before the rates recover to current levels, absent sharply higher joblessness or interest rates.

Many borrowers fall into the subprime category because of a one-time setback such as job loss or illness, Youngblood said. But with time, they repair their finances, which means that not everyone who is missing payments will necessarily lose their homes. "It's wrong to assume that once you're a subprime borrower, you're always a subprime borrower," he said.

One major issue is what happens with adjustable-rate mortgages. These mortgages gained popularity during the housing boom, especially with subprime buyers. They often have low introductory rates that later spike, sometimes doubling a monthly mortgage payment and creating payment shock.

A study released this year by First American CoreLogic concluded that the jumps in monthly payments would result in 1.1 million foreclosures in the next six to seven years, assuming average home prices stay the same as they were in December.

The study, which analyzed 8.4 million loans made from 2004 to 2006, said that while the fallout will hurt the affected borrowers, it most likely would not break the economy.

As the problems deepened over recent months, legislators and regulators have weighed in with proposals on how to curb the damage.

Democratic lawmakers have blasted the Federal Reserve for a "pattern of neglect" that fostered the crisis. Yesterday, the Fed invited consumer groups, lenders and other experts to weigh in on how it can rewrite its rules to prevent predatory lending.

"We must determine how we can weed out those abuses while also preserving incentives for responsible lenders" so that risky borrowers still have a chance of homeownership, said Randall S. Kroszner, one of the board's governors.

The board focused on whether to crack down on the use of prepayment penalties and loans that require little or no documentation of salaries. It solicited opinions on whether escrows for taxes and insurance should be required. It also questioned whether loan officers should be required to make sure potential borrowers are capable of paying back the loans they are applying for.

No consensus was reached on any of the topics, and Fed officials declined to comment on yesterday's foreclosure numbers.

Miami-Dade, Broward and Monroe counties home sales and price trends by zip code*

2007-04-17T07:46:00.000-07:00

Click on the link above for the most recent Real Estate Data for the State of Florida.

The Richest Zip Codes—and How They Got That Way

2007-04-11T10:26:00.000-07:00

The Richest Zip Codes—and How They Got That Way

As the ranks of the super-rich grow, they are increasingly grouping in tighter—and wealthier—communities. Find out where by Peter Coy Search the Internet for luxury real estate across the U.S. and you might be surprised by the results.

Just because a neighborhood has a rarefied Zip code, it's no guarantee that all the houses listed within it will be equally opulent. Some may even be downright modest. Take, for example, Greenwich, Conn.

There in 06831 is a house selling for just $575,000. For the Wall Street and hedge-fund crowd who have flooded into town in recent years, a price that low is a rounding error. Far from a palace, it's a 672-square-foot cottage with two bedrooms and one bath, and it sits on just a tenth of an acre. Why would anyone build such a dinky house in a place like Greenwich? Today, of course, no one would.

The explanation is that the house was built way back in 1926, when Greenwich was a more or less normal country town with a handful of large estates. And therein hangs a tale about the transformative power of money. Into the StratosphereHere's what's happening: The rising tide of wealth in the U.S., and the growing concentration of that wealth in relatively few hands, is being reflected in the tiering of the U.S. real estate market. Across the country, there are communities such as Greenwich that were once home to the merely affluent but have been gradually transformed into magnets for the growing class of the super-wealthy. In some of these towns—like Newport Beach in California's sunny Orange County, or Paradise Valley, Ariz.—the golden transformation is recent.

Others, like Greenwich and Glen Head, N.Y., have been gilded for years. In each of them, though, the same pattern is occurring: The very rich replace the well-to-do. The very rich, in turn, are displaced by the super-wealthy. Eventually, these towns levitate into the real-estate stratosphere, with anachronistic houses such as that little Greenwich cottage as the only reminder of what once was. (Interestingly, even in wealthy areas like Greenwich; Paoli, Penn.; or Manhasset, N.Y., more modest dwellings once were common.

These were, after all, home to the mechanics, teachers and servants who worked for their richer neighbors. Today, even these homes, assuming they aren't torn down by a new owner and replaced with a much larger edifice, are priced well beyond the reach of ordinary taxpayers.) In 2006, the nation-leading median sales price for a single-family house in 06831 was just a hair under $3 million—a figure that was pulled up by the big country estates and down by relics like the 672-square-foot cottage. Short-Term FallMore evidence that the top of the market is becoming detached from the rest: During the five-year boom in housing prices, from the third quarter of 2001 through the third quarter of 2006—the last period for which data is available—overall housing prices rose rapidly, but prices in the nation's richest Zip codes went up even faster.

For the U.S. as a whole, the five-year increase in the Case-Shiller Home Price Index was 63.7%, while the increase was 79.5% for those Zip codes with a median sales price of $750,000 or more, according to Fiserv Lending Solutions, a unit of Brookfield (Wisc.)-based Fiserv that supplies data and software to lenders.

Even the most expensive Zip codes aren't immune to the current market downturn. Prices have fallen in most of them. But the increase in the ranks of the very well-to-do almost guarantees that demand to live in exclusive areas will continue to drive prices upward over the long run. (Last year's third quarter is the most recent for which Fiserv has complete data for its index, and last year's second quarter is the most recent for which it can calculate a reliable median price for each Zip code.)

The Lure of ZoningMoreover, despite commanding lower values, the majority of homes have only fallen beyond the already inflated prices of recent years. Very few indeed have actually fallen below the price for which they were bought. In the case of homes that were bought prior to the real estate boom of this decade, their values still have seen significant, if not astronomical, appreciation.The role of wealth in elevating certain areas was explained last year in an academic paper called "Superstar Cities" by economists Joseph Gyourko and Todd Sinai of the University of Pennsylvania's Wharton School and Christopher Mayer of Columbia University. The authors focus on entire metro areas, such as San Francisco and Boston, but in an interview, Sinai says that it's true on the Zip code level as well. Says Sinai: "High-income people are essentially outbidding low-income people for the more desirable suburbs." Critical to the authors' argument is the limited supply of land in "superstar cities."

Most of the Zip codes at the top of the list have either no developable land left or extremely restrictive zoning. So the only way people can get in is by buying from someone who's already there. That fits with the experience of Daniel Bowerstock, a broker in the barrier-island beach community of Avalon, N.J., which is the Garden State's most expensive Zip code. Says Bowerstock: "We have some of the most stringent zoning that I've seen. That, I would say, is the No. 1 draw." No Poor PeopleThe top Zip codes by state aren't all alike, reflecting the fact that the rich have varying tastes just like the rest of us. Glen Head is a glacier-sculpted, old-money town on Long Island's North Shore.

Newport Beach is sun-baked and buzzing with the energy of high tech and other expanding businesses. Cambridge, Mass., is the home of both Harvard University and the Massachusetts Institute of Technology. Hinsdale, Ill., outside Chicago, is quiet. "The paper has, you know, if a cat's stuck in a tree," says John Eyen, a Coldwell Banker broker who lives in Hinsdale. Some places can trace their surge in property values to the presence of booming local industry. A good example is the 98004 Zip in Washington state, which covers upscale Bellevue. Long a haven for executives who worked at Boeing (BA) or local lumber companies, beginning in the 1980s employees from tech companies such as Microsoft (MSFT), Amazon.com (AMZN), and Real Networks (RNWK) have used their lucrative stock options to drive up local real estate prices.

Even within Greenwich, there are distinctions, says Tamar Lurie, a Coldwell Banker broker. Some people migrate to the big estates of 06831 for peace, quiet, and horses, while others move to the shoreline Zip of 06830 (No. 3 on the national list) for water views and a livelier lifestyle. One commonality, though, is that you will be rubbing elbows with people who, like you, don't have to worry much about where their next meal is coming from.

That in itself is a powerful lure for people who have finally made it to the top. Click here to see the U.S. Zip Codes with the highest median home prices in 11 states, along with their appreciation in property value since 2001. Click here to see the 275 Zip Codes with the highest median home prices.

Near-campus real estate good (or great) investment

2007-04-11T10:23:00.000-07:00

Dear James, I am looking to purchase a property very close to a university -- probably to rent out. Slightly more than half of the owners there are renting out their homes. What long-term effect on value and resale do all these rentals have and what other potential issues are there to consider?

A: The long-term effects in this case are generally good -- if not great. In fact, if you buy right, you may be purchasing a hedge of sorts against the rocky housing markets of the present and future.

Statistics seem to favor investment potential for homes in college communities at present, particularly with oversupply issues still dogging the housing sector and average times on the market ballooning to months instead of weeks. College enrollment is expected to rise 15 percent over the next decade, according to the National Center for Education Statistics. And yes, some institutions are responding to increased housing needs by building new dorms while developers are hustling to construct apartments in nearby infill sites -- if they can find them. But the housing stock in mature college communities will always be limited, especially if there are such elements as medical schools or research labs or technology facilities that draw additional non-student employment.

Unlike some neighborhoods, where a disproportionate number of homes that are converted to rentals may signify an impending downturn, that's generally not a worry in college neighborhoods. In fact, you are placing yourself in a community where there is constant churn of demand every semester. But you'll most likely pay a premium for your house. While there's little hard-and-fast data on the subject, Realtors estimate that homes in the immediate vicinity of colleges fetch an average of 25 percent more than like homes in non-college communities.

There are some potential negatives of being a landlord to college kids as you might well expect. Even the most fastidious college students have little motivation -- other than the anticipated loss of a damage deposit -- to keep the place orderly, especially if they are moving on next term. There are often issues with noise, parking and parties (beer busts and, umm, beer recycling) that could attract unwelcome attention to your house. If you don't plan to live in the area and check on the place regularly, hire someone who can. You might find your place packed full of unauthorized "subleases" if you're not careful. And of course, screen your tenants thoroughly.
But that's not always easy to do with college kids because they have no rental history.Before you buy, know that some communities and neighborhood associations try to keep the percentage of for-rent homes at bay or place special restrictions on new owners. Discuss this thoroughly with your agent and even city zoning officials.

As for resale potential, the law of supply and demand is generally in your favor. No matter how bad the overall market is, someone will likely want your home, ranging from instructors to school administrators to staffers to visiting professors to other home investors who know they'll have a captive rental market.

And here's more heartening demand data: a National Association of Realtors survey of second-home buyers last year showed that 8 percent bought a home for their college children to live in while at school.As always, proceed with caution. Good luck to you.
Visit James Smith on the web at http://www.meetjamessmith.com/

Traps that First Time Home Buyers Fall Into

2007-04-11T10:13:00.000-07:00

First-time home-buyers face an unfamiliar road and risk purchasing the wrong place at the wrong time.

Here's a guide to the potholes.

Buying your first home is an exercise in faith. You don't really know what you're getting into, you're awash in unfamiliar terminology and everyone you meet seems to have strong (and utterly contradictory) ideas about which way the housing market is headed.

You may not be able to avoid every home-purchase mistake, but you can keep your regrets to a minimum by avoiding the following traps:Blindly using your agent's inspector Your agent may recommend a home inspector because he does a good job -- or because he keeps his mouth shut about problems that could torpedo the sale.

Yes, it's terrible to have to be so suspicious, but this is a big investment you're making. A good home inspection can keep you from buying a money pit. You can ask your agent for a recommendation, but get referrals from other recent buyers and try to interview at least three potential candidates before making your choice. Few states regulate home inspectors closely, so real-estate columnist Ilyce Glink recommends you choose someone who belongs to the American Society of Home Inspectors, which requires its members to complete at least 250 inspections (or 750 if they don't have other licenses and experience).

Ask about fees (which typically range from $300 to $700) and whether the inspector is licensed, bonded and insured, said Glink, author of "100 Questions Every First-Time Home Buyer Should Ask." Make sure you get a detailed, written report and, if at all possible, accompany the inspector so you can discuss the findings while they're still fresh.

Taking advice about what you can afford Your agent, your broker and your lender don't know what you can afford. At best, they know the underwriting guidelines for various loans, which are designed to minimize the lenders' losses, not ensure that you'll maintain your financial health.As I wrote in "8 big mortgage mistakes and how to avoid them," lenders know that you'll do whatever it takes to pay your mortgage, even if that means shortchanging your retirement, forgoing vacations and piling on credit card debt.

You need to be the one to set limits on how much you want to borrow and how you borrow it. In general, limiting your housing costs -- including mortgage, property taxes and homeowner's insurance -- to 25% of your gross income will ensure you have enough money left over to cover other goals, like retirement savings.

Getting a 'temporary' loan I'm hearing this potentially dangerous advice more often now that so many markets are spiraling out of the reach of first-time home-buyers: Get a mortgage with a low payment now, then refinance in a few years when your income is higher. This is the way some brokers and lenders are hawking adjustable-rate mortgages as well as their more exotic cousins, interest-only and flexible-payment loans.

There are a couple of problems with this advice. The first and most obvious is that no one can predict where interest rates will be five years from now. If they're substantially higher, you will have just passed up the opportunity to lock in rates when they were near generational lows. If your payment has been rising with those rates, you may not be able to afford your home even if your income is higher.The other problem if you opt for one of the exotic mortgages is that you may not be building any equity in your home.

If prices drop, you may owe more on your house than it's worth, which is going to make refinancing pretty tough unless you can come up with a ton of extra cash.More experienced homeowners who are disciplined about money might be able to handle a trickier mortgage.The better advice for first-time home-buyers may be to opt for a loan that will remain fixed at least as long as you plan to be in the home.

If you plan to move after five years, for example, a good choice might be hybrid loan that remains fixed for five years before becoming an adjustable-rate mortgage. If you'll be in the home for a decade or more, or aren't sure how long you'll be there, you might want to opt for the security of a 30-year fixed-rate loan."You're locking in your housing costs for the next 30 years," said real-estate investor Gary W. Eldred, author of "The 106 Common Mistakes Homebuyers Make (and How to Avoid Them)." "If interest rates go up, your payment stays the same, and if they go down, you can refinance."

Before you decide on a mortgage, spend some time in MSN Money's Home Financing Decision Center and educate yourself about the options.Opening or closing credit accounts Both can hurt your all-important credit score, the three-digit number lenders use to help gauge your credit-worthiness. That can result in your getting stuck with a higher interest rate or losing the loan you want all together. (Read more about credit scores at MSN Money's credit rating Decision Center.)Real-estate columnist Tom Kelly knows how important credit scores are, but didn't think much about the ramifications when he applied for a new credit card while in the process of applying for a home-equity line of credit. That, plus his wife's closure of a few other accounts, shaved more than 30 points off the couple's credit score.It was "really bad timing," Kelley said. "The lender for our proposed line of credit basically said, 'What have you guys been doing?' after our application had been filed and the new FICO scores had arrived.

"Failing to investigate the neighborhood "One common mistake is not looking at the property and the neighborhood at various times," said Dick LePre, senior loan consultant for RPM Mortgage in San Francisco and author of the RateWatch newsletter. "Look at it during the day, the late afternoon when kids tend to cluster, at night and on both weekdays and weekends."This ongoing inspection can reveal good news, bad news or both.

You may find your home is on a popular shortcut for commuters or near the gathering place for local kids, but only for a few hours a day."Something which you construe as a problem might only happen one day a week or at a certain time of the day," LePre said.He also recommends quizzing a few neighbors about what they like and don't like, and about which direction the neighborhood seems to be going.

"Find out if there are any 'crazies' on the block," he said. "If there is empty space nearby, ascertain what the zoning is for that empty space. Is the next block over ... zoned commercial? Do you want a McDonald's as a neighbor?"Buying when you're not ready Buying a home is a great way for the average person to build wealth over the long run, but it's not for everyone in all circumstances. If your finances are uncertain or your job prospects are up in the air, you might want to wait. Renting is also a better option if you're planning to move in a year or two.Not buying when you are ready

All that said, you shouldn't let fear or uncertainty keep you on the sidelines if you're otherwise ready to buy a home. Eldred notes in his book that the media have been decrying the high cost of housing and predicting price peaks at least since the 1940s. Although prices have fallen in various cities at various times, the overall trend has been upward.

Eldred recommends being cautious if your market is showing signs of weakening, such as:Properties staying on the market longer. A widening gap between the costs of owning and the costs of renting.Even then, don't put off a purchase if you're able to stay put for several years -- long enough to ride out any downswings."In five or 10 years, prices will be higher than they are today," Eldred predicted.