Loan Modifications are dead!

Behind B. of A. olive branch – Bank launches lease option for delinquent borrowers

Mortgage-to-lease program may offer an escape hatch for homeowners facing foreclosure, but the primary beneficiary — perhaps unsurprisingly — looks to be Bank of America itself (First Take).

Here’s the direct article like to Cbsmarketwatch.com
http://www.marketwatch.com/story/will-b-of-as-mortgage-to-lease-help-homeowners-2012-03-23

Bank of America is now looking to save its own skin. Their internal mortgage recovery operations are a disaster. I can say this from recent and current first hand experience and from insiders that can not believe the chaos.

The bank is finally acknowledging that Loan Modifications don’t work on the expected proportional level to adequately address the housing crisis. With a recent notification from Core Logic, the national real estate valuation firm, that 28% of all properties nationwide are underwater, what else can be said? We are 5 years into a major mortgage crisis with no end in sight. I guess the Obama program spin to save the world and help all the homeowners is baloney. Who knew?

If this doesn’t get your attention as a call to action nothing will. You need to investigate a Real Estate Short Sale as a means of Foreclosure Defense. Just selling the property with a realtor is not enough. You need Debt Mitigation, Asset Protection, and Credit Guidance. If you do not act accordingly with proper representation your problems will be much bigger when the IRS steps back into the equation in 2013. Our Law Firm Tucker & Associates PLLC, our Brokerage, and our Negotiation Team help homeowners with permanent solutions. Come visit us and investigate the short sale solution at www.thenegotiatedsolution.com

Loan Modifications are dead. The banks will use the voluntary financial disclosure against you in the end. Don’t be a victim. We represent our clients as legal counsel. Bank of America as an example deserves what they get. Crooked and ambivalent shouldn’t be part of the business plan. Whether you are in trouble financially or want to find a constructive and legal way out of a bad investment there is a solution for you.

Avoid foreclosure, forgiven mortgage debt, 1099C, permanent solution to your personal housing headache.

Blogging from the front line of the housing crisis. GHunter

HARP stands for “Home Affordable Refinance Program” and not Hilarious Approach to Refinance Problem. We have to get this straight right from the start. HARP was created in the Spring of 2009 and it has been viewed much like most of the government programs as marginally successful. This has been the consensus but I don’t agree with this. My belief is that HARP and the newest 2.0 version are all part of the grander scheme of the Obama Administration to manage the real estate crisis. This makes the most sense to me.

Why manage the crisis and take the predecessor HARP program and add all the bells and whistles so we can help more underwater homeowners regardless of their LTV? It’s simple! The goal of the government is to lighten the carrying cost of the underwater debt and to provide an adequate incentive to blind the public of the real problem so they continue to service the debt. In other words, do the right thing. Keep paying and who cares if it no longer makes financial sense. Don’t think of it as a bad investment. Think of it as your home. Put another way, it’s like the government sending you up the mountain for the good of the people with a 200 pound pack on your back. HARP 2.0 seeks to lighten the load so now maybe you only have a 150 pound pack.

HARP 2.0 will reduce the cost of the interest for select qualified borrowers that currently reside with Fannie Mae and Freddie Mac as their investor. This is attractive in the short term but it does not fix the problem. The problem is that people are in denial but they are not stupid. Denial can blind even the best of us but at some point reality will kick in and a real solution will eventually be required. The HARP 2.0 program will be an instrument to help the government manage the crisis so fewer people seek a permanent solution, such as a Short Sale, to solve their problem. Manage the flow of homes and keep taking your money.

For those considering the HARP you should first outline the problem. The real problem is that you are 25-50 plus percent underwater on your home. Do you want this legacy risk to come between you and your kids going to college? This is just a tough question that most people don’t consider. If you are older and die do you want the lender feasting on your estate when you would really prefer to offer your children some form of inheritance. There are many questions that you can ask yourself. At the end of the day this crisis in our real estate market will not be over until the debt is addressed appropriately.

Here are some of the bells and whistles of HARP 2.0:

• No property appraisals required.
• No limit to the amount your home is underwater.
• Modified fees for the program.
• Deadline extension to 12-31-2013

What are my personal thoughts regarding HARP 2.0. To me and my team that specialize in Real Estate Short Sale and Debt Mitigation this is nothing short of a giant lily pad gift wrapped from Obama the great giver himself. We you finally wake up and realize that you will never be able to get out from under the debt you will then seek a permanent solution. Until then please come visit us at www.thenegotiatedsolution.com and investigate a short sale to see if it makes sense for you. However, if you are one of those believers that the real estate market is going to rally back overnight and that there really is no crisis that would require you to consider a real solution, other than another government plate of cookies (HARP 1.2.3..4.5.6.7), then I would recommend lots of prayer.

I have one last very important item for anyone that is interested. The IRS rules are changing. Yes indeed! If you do not complete your short sale in calendar year 2012 you may not get the full benefit. You will be required to deal with Uncle Sam regarding the little slip of paper you will receive called a 1099C. The forgiven and/or unpaid mortgage debt will be considered income. If you get suckered by HARP 2.0 and all its goodness or by some other means that does not provide you a permanent solution don’t say I didn’t warn you. It’s time and you have all of this year to make it happen.

In summary, the changes to the program represent the government’s newest efforts to manage the real estate crisis. We are a solid 4.5 years into the crisis and there is no end in sight, in my opinion, regarding the millions of homeowners underwater with properties. My solution is to avoid foreclosure or simply get rid of an investment with a short sale that includes debt mitigation. Rage against the machine.

Blogging from the front line of the housing crisis. GHunter

Fox News Article

http://www.myfoxdc.com/dpp/news/special_report/fox-5-investigates-short-sales-stick-homeowners-with-debt-111711

Many people are blindly hiring realtors or attorneys that are simply not qualified to offer them proper guidance or a comprehensive solution to their mortgage problem. This article clearly outlines the risks associated with not hiring a team that can mitigate the debt. The core to the solution is your representation must understand the recovery side of lending and have the experience to complete the short sale properly so all of the benefit can inure to the client. It does not make sense to close on a short sale transaction and not meet all the objectives that are important to the client. Having clients end up in bankruptcy after a short sale as a result of the lender coming after them is a sign of misguided and incompetent representation. This makes no sense and unfortunately if you do not do it properly and have all the legacy issues wrapped up before closing you cannot go back and change the terms. As you can see, all of the people that ended up in bankruptcy in this article have learned a valuable lesson and this could have all been prevented.

It bothers me that that article notes that one of the realtors stated that she informed the homeowners of the risk If the homeowners do not understand the business it’s frankly like trying to teach your dog algebra. All they hear is bla bla bla. The realtor earned a commission when the contract settled but the clients were sacrificed. This is bad business and any realtor that does not care to protect their client by getting a qualified team involved is doing their client a disservice. If realtors are expecting to perpetuate their business on the basis of happy customers and referrals they must keep their clients out of bankruptcy. If you need expert help to do this then put together a team. Please don’t try it alone and subject your clients to what has occurred in this Fox article.

I don’t want to come across as though I am picking on realtors. That would not be fair. I want to share one other shocking example of a case gone bad with a lousy attorney. I just found out today that a client of ours from 2010 went out and hired a bankruptcy attorney to help him with his short sale. We previously had successfully completed an out of state investor short sale for this client. He didn’t come back to us because we represented his partner’s legal connection and he and his partner were at odds with one another over financial dealings. Instead he hired a bankruptcy attorney that promised him the world. The attorney apparently said he didn’t need to make payments an they he would be able to stay in the property another year etc. The property was a 900K property that he owned 1.4 million on with no way out. A short sale with proper debt mitigation would have solved this individual’s problem and allowed him to move on with no legacy risk. Unfortunately the attorney that represented him had limited knowledge of the lender recovery process and did not make proper filing in time. The end result is a client that paid money to an attorney and finds himself in a state of shock that his lender just foreclosed on his home.

I just listened to his sad story this morning. He wishes he would have come back to us. Give me a break! If you do not complete the short sale properly your only solution will be bankruptcy. He acknowledged that we warned him of this but though his was safe. Unfortunately he admits he was dead wrong. There are a lot of unqualified attorneys that will take your money and tell you “No Problem”. When you hear this you should get another opinion. This particular client will now be forced to seek bankruptcy protection. I want you to know that this could have all been avoided. If you are interested in a loan modification that can keep you in your home or a short sale solution, come visit our site a www.thenegotiatedsolution.com before making a rash decision. If you would like to confidentially discuss your situation simply call our office direct at 703 319 TSSN to set up a free appointment. We will talk with you! Whatever you decide please INVESTIGATE or you will be sorry you hired an idiot whether it be a realtor or an attorney or both. Your problem can be solved. Prevention is the key. Prevent the bad stuff and solve the problem so you can live to fight another day.

Blogging from the front line of the housing crisis. GHunter

If you ask this question to Congress or the current administration the answer will be up for the real estate market. Everything is going to be fine…just keep paying your mortgage. Call your local realtor and “buy buy buy” a house is the mantra. In their mind there is no better time than the present. Let’s get serious and be real. The current state of housing needs a historical comparison for you to really understand how to proceed. I am going to provide this to you. If you call a local realtor they are not necessarily going to be in a position to communicate this to you. Many of them need to sell you a house regardless of the market conditions and many of them were probably home watching Big Bird and the Sesame Street Gang in the early 1990’s.

Where are we in this crisis? Let’s travel back to 1990-94 to the Savings & Loan Crisis and draw a parallel as it pertains to markets. In the early 90’s we had a massive crisis with the banks. Banks were taken over left and right and the loans and properties all ended up in a big bin called the RTC or Resolution Trust Corp. The government cut construction lines to builders in spite of their contractual obligations. If Uncle Sam took your bank over your contacts were null and void and your loan was now due in full. It was a real “like it or lump it” event with the government. I witnessed this with my own eyes and had real clients that lost millions. If asked to reflect back on individual government acts that I witnessed I would have to say that I saw communism at work in America. To draw a parallel to today’s crisis what did I really witness?

It’s simple. Today the crisis in real estate and mortgages is being managed by the government. The process is being drawn out over time. Back in the early 90’s the government took a different approach. They saw the risk to the economy and they took aggressive action to address the problem. They were determined to force the market to clear and deal with the problem banks and properties quickly. Chicken Little did come in the early 90’s and I saw properties, both commercial and residential along with unfinished communities and land, going for fire sale prices of ten –fifteen cents on the dollar. The government was in charge and on a mission. The market was being forced to clear by the government. The weak banks were being dissolved by the RTC and the properties were being forced into stronger hands. It was extreme but a very healthy process. This is much different that we have today.

What do we have today? We have a managed crisis. We are four years into the crisis with no end in site. Supply and demand is way out of whack. There are millions of homeowners underwater and thousands of homes in REO vaults within the banks and GSE’s. Makes you want to run out and buy a house doesn’t it. On top of that demand is being hurt by tight lending parameters. The banks are scared to lend. Can you blame them? The market is stagnating and prices are slowly sagging. This is what happens when the market does not clear. Why would a lender want to lend on a property that may end up underwater or as a foreclosure or short sale 18 months out? On this note, I just spoke with a 2010 client this morning that mentioned that the people that bought his house are now seeking a short sale. The risk is high and it is unwise to trust an artificially government supported market. The government wants the banks to lend but if they do not allow the market to clear and become healthy they are creating a derivative level of risk in my opinion. Its not self serving and I don’t understand why or who benefits.

Let me give you another example of the government’s wishes so you don’t think I am making a political argument to serve my self interest.

Let’s look at the new HARP refinance program. This is an add on to the old one in the past two years that is now going to encourage people to refinance regardless of the loan to value. If you owe 300% more on your property then current value, but it meets the general criteria and you have a job, then you can lower the cost of your debt burden. Sounds great doesn’t it? What about all the mortgage debt that the homeowner has well above current market value? How long it is going to take for someone to see that they will never get out of this debt burden? The debt has to be dealt with or the market will not be healthy. The government wants to keep people in the clutches of moral character and keep them in the homes paying regardless of the debt. This is the exact opposite of the S & L Crisis of the 1990’s. We have had many recent inquiries from potential new clients for short sale’s that have gone through the previous HARP program only to say “how the hell am I ever going to get out of this”

The effect on real estate values will be a draw out gradual sagging of values. People in denial will be able to stay in denial. The neighbor renting across the street paying $1500 in rent will face off against the homeowner with the same house paying twice as much with several hundred in personally debt liability over their heads. The cycle will continue until the debt is dealt with.

I believe the government belief is that once the economy gains better traction that the housing market will get pulled up in a vacuum. This is flawed and I do not believe this can happened due to the extreme levels of debt. Although it is equally flawed to forgive trillions of debt for homeowners across the board because this would wipe out your secondary mortgage market investor base, the current do nothing manage the crisis is also unhealthy. The only answer is to reflect back on history and force the market to clear. Drive the delinquent properties to workout with short sales or foreclosures and put them in stronger hands. The S & L Crisis took four years but the pain wasn’t that bad. The longer we wait for the ultimate clearing of the debt the harder and more painful it is going to be.

Having said all of this, I think you would be foolish to go out and buy a property today. Watch the headlines for unemployment and assess the mortgage lending climate. These will be early clues for a potential turn to the positive. Let the watershed moment occur when the market is forced to clear by virtue of the thousands of underwater owners capitulating their over price debt burden properties. This will overwhelm the government’s management strategy and move us closer to a healthy real estate market down the road.

There are recent voices saying that there is a 50% chance that FHA will need a bailout. This is an example of the derivative level of risk that is being piled on that I am talking about. It’s going to get a lot worse if the crisis continues to be managed. Let it happen and then go shopping for a property you want to own. The people that followed this plan in the S & L Crisis made out so be patient. Properties are still overpriced and if you’re smart you won’t get taken by the siren songs of the realtors and the government. It’s not ok. Housing has structural problems that are not being fixed with Obama’s band-aid. That’s the problem and my solution is let the market clear.

Yes, I am advocating kicking the people out of their homes and foreclosure or workout of the debt through short sale. It’s inevitable. True capitalism has winners and losers. That is what makes our country so great. A loser today can learn from their mistakes and be ambitious so they can be a winner tomorrow. A managed crisis will not provide this opportunity in my opinion and this process is important for the financial health and prosperity for every one of us.

As a parting thought, if you’re stuck underwater in a property get educated or contact my team for a short sale at www.thengotiatedsolution.com . Avoid foreclosure and mitigate the debt with a short sale. Drop kick the bad situation and start over without the unnecessary step of going broke in the process. Good Luck.

Blogging from the front line of the housing crisis.

GHunter

“You have shown me the manure now show me the pony”. I believe this was a favorite saying of Ronald Regan. The manure is clearly visible with just a glance at the state of the current mortgage/housing environment. This is what a non free market approach looks like. It’s a managed crisis. Now it’s time for me to introduce to you the pony.

Welcome Mr. President Obama. That’s right. If you voted for him well then you have to own it for now. He is loaded with manure. Today the announcement of a new mortgage program is in the offing. Am I supposed to be impressed or should I play stupid like most people and jump for joy over progress? Is it a new program or just a tweak of an old failed program? I can’t wait! Sorry, the word is already out. It’s the old HAMP refy program whereby the appraisal is no longer required.

This is going to entice people stuck significantly underwater on homes to stay in denial and continue to manage the debt service and do nothing about the problem. As Americans should we really care if the property is underwater fifty percent or more? Should you really do the right thing and just keep paying the mortgage, the taxes, the insurance, and all the upkeep on a property that you may never see the light of day on? It’s a question that you have to ask yourself.

Managing the crisis is good for the big lenders and the government. I have blogged on this issue many times in the past. Dragging out the crisis allows for earnings of the companies to cushion the blow and it also allows the real estate markets to gradually deflate. Unfortunately a solution without a free market fix will also resemble the banking system of Japan form the late 1980’s. Japan’s markets have been stagnant for years because the problem was “managed” much like our housing crisis is being handled today. Go look at a chart of Japan’s stock market from 1987 to date and tell me I am wrong.

The homeowners are going to seek to achieve a reduction in debt service but they will still be personally liable for debt that way exceeds the home value. You can call the new refinance process a reaffirmation of the debt as well. This will have other legal ramifications that will aid the lenders and the government. Should I say Beware or maybe just that this is another way Obama is going to show you some love baby! The end result for the tax payer will be more contingent liability for the GSE’s to shoulder as the underwater properties are refinanced.

To help clarify this issue further we cannot mark time and we must consider the consequences of a further real estate market decline of 15-20% over the next couple years. There is clearly a supply and demand imbalance in our RE market. We all see this. What is the reaction going to be when further home value erosion pushes the folks excited about carrying the debt to the true realization that they can never get out from under it?

This is already happening with past HAMP refinance applicants. The phone has been ringing and all you have to do is listen to your customer. They will tell the story. We have had many people over the past several months call that have stated that they went through a HAMP refinance. The overriding message has been that they now want to do a short sale because even with the reduced payment from the refy they see no way out of their predicament. A recent client in his thirty’s told me he wanted to get married and start a family and didn’t want this baggage with him when he turns forty. Again, it’s a personal choice of how to solve the problem.

Personally I would love it if everybody signed up for a refinance and paid the debt to eternity. My investments would rise and well who cares. The reality is that a managed problem can only be managed for so long. I would caution anyone that is underwater on a property to do their homework. Consider a short sale. We welcome you to visit our site and check out our free video at www.thenegotiatedsolution.com .

Expert attorney let solutions with permanence do exist.

Blogging from the front line of the housing crisis.

GHunter

Foreclosures are on the rise and what you need to know. I originally blogged on the Freight Train to Foreclosure in 2009. Since then the major lenders have hit the pause button several times regarding foreclosures solely as a means of self preservation. At first the concern was to protect their current inventory and to slow the pace of foreclosures so as not to generally adversely affect property values. Then came the Robo Signing Scandal. This was where the lenders got caught illegally foreclosing on homeowners without the proper paper work as required by specific state law. The fifty state attorney generals came after the lenders. Laws were clearly broken and the lenders once again are being required to get out their check books. Now that the headlines for all of this has passed its time for the Freight Train to Rev Up.

Lenders are exercising their legal rights to take back control of the properties. It’s is strictly a business and not personal. What is important that you must know to avoid being foreclosed upon with all of your moral character and family on the line is that a credible plan is now more important then ever before.

All major lenders will start with the loan modification process. I have discussed this at length many times since 08. They lure you in with a false sense of security. You are either involuntarily delinquent or you are told quietly on the QT from the representative that you need to be delinquent at a certain level before they will consider you for a loan modification. Here is where the fun begins. The lenders will imply that you are eligible for a loan modification and your perception will always be that your payments will be permanently adjusted to your desired level of affordability. I am sorry but this almost never happens. You will get a short term adjustment in your mortgage payment or in most cases a flat out rejection. From here after a couple months you will receive an acceleration letter from your lender and your case will be loaded up on a flat bed rail car waiting for the “Cho Cho” sounds as the Freight Train revs up. You are now at risk of foreclosure in spite of what the nice lender representatives promised or implied to you.

So many people experience foreclosure after venturing down the path of the loan modification. You have to be very careful. The lender will always suggest that you enroll in the modification program again and again. So many people end up down the linear time line facing an ultimate of payment or foreclosure. I believe the statistics of foreclosures and failed loan modifications over the past four years underscore the credibility of what I am telling you. It’s sad but true just don’t let it be you.

If you decide to venture towards a solution with a Short Sale credibility is very important. You many find that simply hiring a local realtor will leave you deficient of financial strategy and more exposed to the risk of foreclosure than you would otherwise think. The fairest way to put it is simply that realtors in general do not have the capacity, the experience, nor are they eligible to represent you in financial negotiations according to FTC rules as compared to licensed attorneys. Caveat Emptor!

There is something else you need to be aware of that is a new development on the subject of realtors and short sales. Major lenders are sharpening their focus on credibility with Short Sales. I have been told recently by upper management at a major lending institution that they have noticed a pattern that has led them to expedite properties to foreclosure much more rapidly then they would have in the past. They have noticed that many independent realtors have been initiating short sales with contracts in an effort to have foreclosures cancelled only to have the contracts consistently die at the 10-12 day mark. The direct comment was that they felt there was sufficient evidence that the realtors were manipulating the process only to forestall foreclosure at the expense of the lenders. Credibility is key. Absent a credible alternative the lender is much better served to foreclose on the property and go it alone. This is a key reason many large lenders are now expediting many properties engaged in the short sale process to foreclosure. The investors and major GSE’s like Fannie Mae and Freddie Mac are on board with this plan. The investors behind the servicers have made the decision to take the losses and get rid of the bad loans. Realtors are now being viewed as potentially part of the problem and not the solution.

Having said this, lenders are going to really focus on foreclosing on homes. Your objective whether you have a real hardship or simply just want a way out of a bad investment should be to avoid foreclosure at all cost. We welcome you to come visit and find a better way at www.thenegotiatedsolution.com .

Know that the lenders are allowed to break the law because they are “too big to fail” and deemed critical financial infrastructure to the economy. They will foreclose on your property and before you know it you will be looking at an immediate wage garnishment at your job. They will come before your groceries and affect your family ….if you let them. Smarten up! This is a huge crisis in real estate. Mortgage rates are down into the mid 3’s but mortgage applications are also down. That means people don’t have equity or simply can’t qualify for a new loan. All of this pressures housing based on supply and demand. You can stop and avoid foreclosure with a short sale.

You have options to focus on just selling the property or you can expand your objectives to credit and asset preservation and debt mitigation. Whatever you decide just get out of the way of the Freight Train. Property appreciation is not going to solve your house and mortgage problem. I think you know this by now with the calendar about to close out 2011. Good Luck. Cho Cho…..

Blogging from the front line of the housing crisis.

GHunter

The economy doesn’t look so bad when you look at the auto figures. In July auto sales also did quite well. What does this tell you given the gloom that has overcome the housing market?

Car makers see big September sales gains.

SAN FRANCISCO (MarketWatch) — A sketchy economy didn’t stop more new car buyers from taking the plunge in September, with early indications showing double-digit improvements in vehicle sales across the industry.

What is going on?  Why such a dichotomy?  People are buying cars and they are also going on vacation.  Although many people are stuck underwater on homes they are not putting their lives on hold or sacrificing enjoyment with the children over the housing crisis.  The key here that we have seen with our short sale clients is that they have chosen in many cases not to make the mortgage payments on the properties where they are stuck.  They have concluded it’s a bad investment that needs to be worked out but they are not willing to continue to throw good money down the proverbial rat hole.  Instead they are buying cars and yes, going on vacation to places like Disney World.

When you consider the percentage of income that is no longer going to pay for the underwater home or investment property, you can see that it is very easy for people to splurge on a new vehicle.  We have seen this as the trend over the past year.  Many of our clients will ask us about this very point right out of the gate in preliminary discussions over strategy.

Where does this lead us as it relates to the housing crisis?  The bottom line is the lenders are going to end up absorbing the majority of the losses either through foreclosure or short sale negotiations for the properties that are severely underwater with debt. There is no way the consumer can pay off the debt given many properties have declined in value more that fifty percent since 2007.

Debt has clearly consumed our housing market.  Four years into the crisis and there is no end in site.  If you are in a similar situation of a property map out a solution and solve the problem by the end of 2012.  Please visit www.thenegotiatedsolution.com .  Stop or Avoid foreclosure with a Real Estate Short Sale. Expert Attorney Negotiations!  Maybe we can help you with a comprehensive strategy that allows you to solve your personal housing crisis and buy yourself a brand new car without foreclosure or more residual debt.

Blogging from the front line of the housing crisis.

GHunter

It’s just like calling your buddy up after work. Hey Lender, I am your customer! Remember me? 

So if you are underwater on your home the first thing you will want to do is call you lender so you can reminisce with them about how you have been such a great customer and now need to call in a favor for some help.  From there you simply follow their instructions and your mortgage crisis has resolution.

Of course now your lender will want as much information about you as possible.  Let’s call this discretionary disclosure.  There will be many forms and lots of promises. Remember you are a distressed homeowner and we as the lender want to help you through all of this.  Please exercise patience throughout the revolving door of lender representatives and their assortment of promises during the process.

After completion of your modification you will receive a reduced payment and any unpaid debt from your delinquency and the adjusted payments will be added to the back of your current mortgage balance.  This should make you very happy.  You will now be in a position to return to the roll of being a “renter” in your home that you legally own with the full responsibility of home ownership.  You will now also have additional covenants to your lender that will require you to ask permission before attempting to sell you home.  You will also be reaffirming the mortgage debt if you decide to finalize the modification with your lender.  This probably doesn’t matter to you because the miniscule reduction in payment level has allowed you to avoid any immediate pending foreclosure action.  What a great strategy!  Sounds like a great plan doesn’t it?

This process will take several months to achieve.  Many clients will be rejected multiple times for a loan modification before actually achieving an approval.  There is no guarantee that the terms of the final approval for your loan modification will meet your expectations.  I can pretty much guarantee you one thing.  After all the effort you have to go through you will ask yourself this question:  Who is this such a great strategy for… me or my lender?

I am making this damming assessment not based on my opinion but on the basis of so many clients that tell us the story of their loan modification efforts.  In the end it is truly a great strategy but unfortunately not for you but for you lender.

Let’s look at the macro landscape as it pertains to real estate.  There are millions of homes that have already been taken back by the lenders and GSE’s and millions more in the hands of homeowners that are significantly underwater.  The lenders as a whole cannot afford to have everyone clamor for a permanent solution at once.  The system as we know it would be insolvent.  The strategy backed by the banks and the Obama Administration is to create a manageable flow.  By keeping millions of homeowners wrapped up in moral character and mentally distant from the reality that they are stuck in a bad investment the problem in real estate is manageable.  Lenders earn income and offset charge offs as a normal part of business.  The key to a manageable flow is you taking the loan modification bait.

Throughout this process the lender will position themselves to get as much money from you over a several month period and find out as much about you financially as they can so they can pursue you in “recovery” at a later date.  Don’t fret, it’s a business. You owe them money and the collateral on their books has no equity to protect them so they need a better plan.  From this perspective the loan modification is a winner.

The capitulation point for you is the point after the lender is satisfied but you are not with the terms of the modification solution.  This is where you are given an ultimatum to accept the modification or an expedited foreclosure.  Many ultimatums will require a down payment of sorts if you disclosed the ability to pay.  Its reality and it frankly sucks but it’s a great strategy and good business for your lender.

Alternatively, if you are wise, research the benefits of a Real Estate Short Sale at www.thenegotiatedsolution.com with our free video before you do anything.  At the end of the day you need a permanent solution. How the hell are you going to ever get out of a house that is several hundred thousand underwater?  It’s a good question. Remember if you buy a stock and it drops 50% it has to rise 100% just for you to get back to even. 

We would love to see you stop and avoid foreclosure but we want you to do it the right way.

Blogging from the front line of the housing crisis.

GHunter

I read today that Obama is going to strike down hundreds of regulations to save business ten billion dollars over the next five years.  This is good news.  Why is he making this effort so deep into his term as President?  This is clearly a tough economy and many people are suffering financially.  I will be very happy when the day arrives where there are simply no more real estate short sales or distressed families trying to avoid foreclosure.  That will be a day to rejoice.  I am sure my stocks will be much higher then as well.

The President needs to understand the basics of human incentive.  Establish a pro growth platform and let the private sector create the jobs.  I begin to wonder if anyone in the current administration even had a paper route growing up.  I don’t understand the concept of growing government and entitlement as a solution.

When you see the reaction in the markets recently it is clear that the country was shocked by the lack of leadership over the debt crisis.  Shocked is a nice word.  

I saw on the news that President Obama was riding a bike with a helmet on vacation over the weekend. My advice to the president would be to take off the helmet and keep your eyes on the path so you don’t fall off the bike or hit a tree.  The same advice can be taken as the president of this country regarding the economy.  Let the businesses create the jobs.  You first have to shut the hell up and stop ranting about big business and rich people with private jets.  These people are the ones that will help create the jobs.

 I don’t understand why so many people in this country with Ivy League degrees end up having very little common sense.  I know several of them and they are dumb as hell and many not well off financially.  Don’t worry they have masters and doctorate degrees and I am sure they will be just fine.

Obama is going to get thrown out of office unless he gets smart very quickly.  Can he do it?  I believe anyone in his position can do it if they focus and get away from trying to single handedly control the economy.  What can President Obama do today to hit a home run and get the people like me that are completely disgusted with his demonstrated incompetence as a leader?

Do something the American people will respect and step back in awe over.  Killing Osama was cool and I will certainly give him credit for that.  However, what about the economy?  What about a means of putting the pedal to the metal and sending a message to the people and all the leaders in business that you are now on the team. How should he do it?

It’s simple. President Obama is a great speaker and he is very likeable.  The problem he has is that he simply lacks experience and substance.   Here is what I recommend.

Dear Mr. President.  Call the networks and announce to the world that you have decided today thatAmericais going to create millions of jobs by transforming our economy by means of our abundance of natural gas.  We are going to immediately create tax incentives and mandate that all vehicles from heavy industry to the regular automobile are converted to natural gas.  Build the infrastructure and send the signal thatAmericais taking the lead once again. Create several million new high paying jobs on the God given gift of shale gas that floats beneath our soil.  This is something Obama can make a speech on and never do a thing and he will change the world. Although following this initiative would be grand. No one with a care for this country given our problems can dispute this.  There are many other benefits to this that I have also blogged on in the past. How about its effect on terrorism?  Hit them in the wallet….Hello!

Its show me time or Obama is going to be shown the door.  People are losing their homes.  The financial crisis and the deficit can really only be solved with growth in the economy.  Nothing is just solving itself if you haven’t noticed.  Take a peak at Bank of America stock.  Oh, by the way, please don’t forget they told you in 2009 that they didn’t need to raise capital then either.  Sold to you my friend!  We have real structural issues that need growth in the economy to solve.

In my opinion, the leader that takes the initiative with our shale gas and transforms our economy will solve many of our financial problems through growth and stability that will come with such an initiative.  This president will go down in history with the likes of Regan and one of the greats.  “Peace through Strength” was the mantra. 

Come visit me at www.thenegotiatedsolution.com as the housing crisis war over debt rages on and the sword and the shield to protect the homeowners are tested everyday.  Bank of America in the image of Goliath is being taken to its knees on the merit of how is has conducted its affairs.  There is nothing unfair about this.  Good always prevails over evil in the long run. Rage against the machine. 

Blogging from the front line of the housing crisis.

GHunter

If your in anyway surprised by the general disposition of the housing market they you missed your 8:30 am Economics 101 course.  It was ok to miss the class but you had to read the basics in the book.  If you missed the class and missed out on “Supply vs. Demand” then you need to read this blog.  I won’t criticize you.  I didn’t make many of those early classes but I did read the book.

Check out this link along the way. Robert Shiller says housing is harder to predict than the weather. Sorry Robby, I am going to make a prediction with pretty much pinpoint accuracy on the housing market. Read on!

Title-Shiller: Housing Could Fall Another 25% But It’s Harder to Predict Than The Weather.

http://finance.yahoo.com/blogs/daily-ticker/shiller-housing-could-fall-another-25-harder-predict-112122844.html?sec=topStories&pos=8&asset=&ccode=

Where is housing going? Down! Why? Too much supply and limited demand adversely affected by high unemployment and tight credit issuance.

If you are thinking about buying a house right now you need to really negotiate on price so you have a margin of safety. Let me know how these statistics from Freddie Mac’s May report make you feel.

The report was thirty pages long cover to cover. Now I was too lazy to read it myself because the message is the same over and over again. We are in a crisis.  However, my partner and head legal counsel Lawrence Tucker, being the attorney he is, read it word for word.  He shocked me with a summary that really got my attention. 

Freddie Mac apparently has 153K homes on the market as REO listed for sale nationwide. At first this doesn’t sound so bad.  For those not familiar, REO’s are properties listed for sale that have already been foreclosed on by the lenders.  When you continue in the report Freddie noted that the 153K figure only represented 12% of current REO inventory.  Now it gets chilling because that leaves 88% more just hanging around on the shelves.  What about Fannie Mae’s inventory, the FHA, the VA program, and the entire private mortgage market.  Now add in the approx. 11-14 million homes that people are underwater on.  Do you still want to run out and buy a house hoping that prices are going to rebound. You know there is a realtor just salivating to tell you things are going to get better real soon. 

The current inventory of REO’s is close to four years based on normal annual sales rates.  These numbers don’t have to be that accurate as long as you are clear on the trend.  There are a tremendous number of homes in the channel that need to be disposed of or otherwise put in stronger hands.  The US government is now the largest owner of residential real estate in the country by virtue of its sponsorship of Fannie and Freddie.  How about a Shout Out to our best bud democrat Barney Frank! Thanks pal for rolling the dice with the GSE’s (FNMA & FREDDIE Mac).

The problem the market has is not just the inventory.  The millions of homeowners that are underwater on homes are slowing coming around to the distinction that they made a bad investment.  We are getting calls even from people that have recently gone through government sponsored above equity refinances and loan modifications.  Some have been in the loan modifications for two years. Others have completed up to three separate loan modifications over the past several years. What is the message?   The message is help!  I don’t have a way out.  I am stuck.  Where do these properties end up?

These properties will come to market through additional REO’s as people give up and walk away or through more short sales. The magnitude of supply will create a pile on effect. This is going to take years to work through the system and in the interim principles of Economics 101 will apply.  Prices of supply will gradually levitate down to reach a level of congruence with demand.  If your over exposed to real estate what should you do?

The sooner someone in this position faces the mirror and accepts that they have made a bad investment and seek a fair permanent solution the better off they will be.  Welcome to renter-ship in your underwater property with full ownership responsibility. Hey, hot water heater or AC broken? Get our your check book!  Your lender could care less. You legally owe them the money. 

Why do I tie this in with the Freddie Mac statistics?  I want to be clear that sitting on the fence hoping for the market to come back and save you is futile.  It’s not going to happen. Shiller can’t predict the weather but I can.  You are in the eye of the worst storm in real estate in our lives.  You need to seek shelter.

Throw on some cold water and get a move on with a Short Sale.  Don’t be an idiot and get suckered into a loan modification.  Rather call someone you know and trust and ask them how great the loan mod was.  You will get the answer.  With the proper legal representation and mitigation team it is feasible for you to get out from under a property and preserve the majority of your credit, remaining assets, and mitigate the unpaid mortgage debt.  This also has the lender paying the majority if not all of the general selling expenses.

Now, what do you want to do?  Do you want to wait for the market to save you and go for loan mod number two or do you want a permanent solution?  It’s a hard decision because you are scared and insecure. You don’t know the laws. You have no idea of the capacity of your lender to pursue you or even remotely what their recovery strategy will entail.  Your independent realtor friends talk like they are experts.  They are experts on earning a commission regardless of which way real estate values go.  Watch out for the realtors that are property flippers evangelizing a solution for your predicament.

Given all of this you choose to do nothing.  That is not a solution. Educate yourself.  Avoid foreclosure or stop an existing foreclosure proceeding with a real estate short sale.  Do not allow a property to go to foreclosure if it can be avoided.  We welcome you to come visit our site at www.thenegotiatedsolution.com and watch our free video.  It runs approx. two hours but it is guaranteed to fill many voids that are causing you sleepless nights and help you make a decision. Good Luck!

Blogging from the front line of the real estate crisis.

GHunter