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

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 high court in Mass has apparently ruled against some foreclosures being valid on the part of some big lenders. Here is a yahoo finance link:

http://finance.yahoo.com/tech-ticker/mass.-high-court-ruling-means-foreclosure-mess-just-got-much-worse-535795.html?tickers=BAC,JPM,WFC,XHB,C,USB,XLF&sec=topStories&pos=9&asset=&ccode=

I wouldn’t get excited thinking this is going to help you. If you note my last blog and how it illustrates how the big firms really are not subject to the law of accountability this will provide context. This is clearly going to hurt the economy and you and me representing the 90% of people that are employed and current on our home mortgages. By allowing the courts to jam up the ability for the market to clear out the properties through the foreclosure process everyone is at risk.

The primary risk may very well be to the economy. I am not saying that housing is going to recover in 2011 anyway but this just adds to the systemic nature of the problem.

Having said this there may be a positive spin. This may hold back inventory and once again act as a catalyst to draw out the problem thereby allowing the big lenders to mark losses to current earnings. To me it could all be part of the governmental scheme to keep the train moving but not allow the banks to get into serious financial trouble again.  In other words, find a somewhat legitimate means of slowing the inventory of homes to the market that is already depressed and in danger of a forecasted double dip.   It sounds very legitimate to me for a press release but realistically the MERS registration system was a good system and I clearly do not see any basis for the courts claim. 

Am I suggesting free market manipulation? Absolutely! From the creation of the mortgage sham to present it hasn’t been free market governed. Don’t think for a moment that the big lenders are going to suffer much from evisorating a homeowner by virtue of an improperly documented foreclosure.

What is the government going to do? Let the courts break bad on the lenders and watch them say, “government fix it or no more new mortgage money”. Better yet the will lend mortgage money to everyone they feel is qualified at 10% with 5 points up front. How is that for a solution? They lenders aren’t going to lend if they can fairly recover. If you stack the deck against them everybody loses big.

We have seen this before. Heaven forbid the government or a big lender might suffer. You know what happens when this occurs.. Reboot. Here’s a couple million and you’re good.  Even better yet, after the media runs with this and the market pauses, watch the documentation for the foreclosures suddenly appear.  We are talking about “assignments of interest” for the mortgages.  The mortgages are valid. 

That is what I have to add to the foreclosure mess. If you’re a homeowner and you want to stop or avoid foreclosure, or maybe you have too many properties or just want out of a house that is underwater you need to find a solution that works. Try a real estate short sale. Don’t think your government is going to bail you out. Remember you are a law abiding citizen. The people that must follow the laws don’t get a hand in the big game. Get even with a short sale at www.thenegotiatedsolution.com  and insure your family’s balance sheet looks tidy in 2011

Blogging from the front line of the housing crisis.

GHunter 

 

As the new headlines announce major lenders like Bank of America, Chase, and PNC halting foreclosures in several states where does that put you as the mortgagor.  Many people may be cheering or even gasping that they just dodged a bullet and avoided a pending foreclosure this month.  Don’t be fooled.  There are different types of foreclosures and the lenders are required to follow the law.  This may be a pause but don’t assume that the war has been won by the people.  This is not a give away nor is it the lenders responding to pressure from the Democratic liberal leaders to be easy on the homeowners. This is what happens in a crisis. The lenders have been overwhelmed with distressed properties in the form of foreclosures and short sales for a solid three years now.  Unfortunately I can not say I see an end in site.  The lenders must follow state law and have their paperwork in order.  Obviously there are questions of impropriety on account of staff at the lenders regarding foreclosure procedures.  This happened with the paperwork on the mortgage issuance side of the equation for years.  The forgeries, the fraud, the no doc loans, come on.  This isn’t anything new.  The lenders wanted loans in the door so they cut corners.  That doesn’t mean the chameleon has changed.  The lenders want to take the properties back to obtain recovery.  This is ironic isn’t it?  Regardless, the paperwork will get straightened out and foreclosures will resume.  Don’t think for a minute you are off the hook and no longer have to pay the lender.  Think of it as a bar tab that will ultimately have to be dealt with. The longer you wait the tougher it is to face the issue.  You may not have to pay now but without a real solution and a plan you will pay in some form of money, flesh and blood, etc. 

 

There are a couple different types of foreclosures.  The one that is being talked about the most is the Judicial Foreclosures.  There are 23 states where foreclosures have to be sent before a judge.  It appears that the lenders must have put some pertinent forms up on the glass window for proper signatures.  That is why the lenders have offices in buildings with floor to ceiling windows.  Did you think it was just for the view?  The other type that I am most familiar with is the Deed of Trust Foreclosure.  This type does not require a judge and simply allows the lender certain rights of recovery under the terms of the mortgage instruments.  It is very easy to be confused and assume that stoppage or the general halting of foreclosures is a good thing.  I don’t believe it is good for anybody or our country as a whole.

 

In my last blog I posed the question about free market principle and if the Fed and the Treasury should enact policy that would let the market clear as it pertains to the real estate crisis. I general halting of foreclosures on some idiotic rumored Pelosi mandate to stop foreclosures would crush the real estate market and hurt us all.  You we really want to work hard to support what are deemed a bunch of losers or speculators squatting in homes on our tab.  Congress reenacted the bankruptcy laws in 2005 because they saw the debt burden and they didn’t want to see a dead beat nation evolve.

 

Here is what is going to happen.  The lenders have the legal write to recover the property and kick you to the curb is they wish if you are not paying the mortgage.  You do not have the write to not pay the mortgage and stay in the home indefinitely.  That is the law.  The law protects people that know and understand the law.  Alternatively the law can be used as a weapon against people or entities that do not know it.  This is part of our crusade that we unleash against lenders with real estate short sales every week.  At the end of the day if you are a homeowner that is underwater with a mortgage your tab is growing daily if you’re delinquent.  Unless the law in your state specifically dictates that the lender can not seek personal liability remedies against you the tab is running.  Every dollar due by these foreclosure delays could end up in the form of a deficiency judgment against you.  If the real estate market is locked up with lenders not being able to efficiently foreclose on properties where they do not have other credible constructive options like a short sale, what do you think is going to happen to your local market?  The prices will crater thereby yielding less recovery and a higher deficiency amount.  Not a fun scenario. 

 

If I may briefly interject with something that is fun, I think that fact that Bank of America has capitulated in fear to temporarily stop all foreclosures is great.  If one lender had to receive the highest award for being such a “Swine” against the people they would be the sole choice. 

 

At the end of the day most people should desire an orderly market whereby the lenders can exercise their legal right to foreclosure on a property or loan gone bad.  If one day the lenders wake up and say that there is too much pressure to allow delinquent borrowers to take advantage of them they may decide not to issue more loans. Think of this and how it could affect you.  If you want a real life example just take a peak at the State of Florida on the beautiful beaches.  We have sold short many beach front condos that were originally purchased for 500-650K for a measly sum of $150K.  This is the devastation that can occur when the lender says that are simply not going to lend on these units. Now you have a 75% loss market that is salvation only to the buzzards willing to pay cash to buy.  This is Florida and many areas up the coast line today. 

 

The problem with the lenders will be solved and foreclosures will move forward. This is an absolute necessity for our economy.  In the meantime, if you are over exposed to real estate that is underwater you need to come visit me at www.thenegotiatedsolution.com and see if a short sale is a good solution for you.  There is only one fair way out whereby you can benefit.  You either pay the lender in full and eat pork and beans while your children skip college in favor of a job a the local auto parts store, or you eventually end up in foreclosure after dissipating all your assets hoping the market will recover.  Your only real option is a short sale in my opinion.  This is the weapon of choice. Ignore the false sense of security. The lenders will prevail because the economy needs them and their critical mass more than you.   The call or the visit to the website is free.

 

Blogging from the front line of the housing crisis.

 

GHunter

One of the important things to note with a Short Sale is that one of the primary objectives is to Avoid Foreclosure.  If you fail, or if your team fails you, then you lose and end up in foreclosure.  The ramifications of a failed Short Sale and Foreclosure can be found throughout our various blog entries over the past couple of months.

 

When you have decided to present a Short Sale Solution to your lenders it is important to have a plan and the right team.  A licensed real estate agent is many times an integral part of your team.  It is very important to choose the right agent and have a mechanism to ensure that the realtor is doing their part to help you with your short sale.

 

Why is this so important and why does the title of this blog include a reference to “The Freight Train to Foreclosure”.  In plain English, if you do not have a realtor that is capable by themselves or as a compliment to a team, your realtor will simply be the conductor on your personal freight train to foreclosure.  This happens all the time and the distressed homeowner suffers immensely while the realtor has virtually no accountability.

 

I am not going to criticize realtors.  I am going to tell you what they must do and what you must require of them to win.  I am then going to give you some examples of problems realtors have created that were very harshly judged by their peers, other realtors.  The fact of the matter is that there are many more bad realtors by a multiple then there are good ones that will get the job done for you with a short sale.  Again, the judgment of the faults, the ignorance, and negligence is going to be voiced in my examples by other realtors.  Realtors have been protected too long by their lobby and their proprietary MLS system.  I am going to make a motion that this also be addressed by the new administration.

 

With The Negotiated Solution we have a strict protocol that all realtors must follow.  At times we are forced to provide them assistance.  At other times we give them a gentle push and in the extreme at certain intervals we sick the client on them like a rabbit dog.  It is a personal choice, but in the end we are here to protect the distressed homeowner and help them Avoid Foreclosure with our program.

 

What should you expect from your realtor with a Short Sale?  You realtor must review the most recent comparable sales that are most representative of the characteristics to your property and in close proximity to your property.  They must also review the most recent comparable listing trends to determine how new properties that are just coming onto the market are being priced. This will enable them to determine the real bid of the market in this environment. After the property has been marketed for a couple weeks if you don’t have a contract you must demand that they do the basic follow up and track down the interested parties for comments on price and condition of your property relative to competing properties. This is very straight forward and common sense oriented, however don’t be fooled, many realtors don’t have a clue.

 

Often realtors do not spend much time pricing a property.  Many realtors will put a property on the market at what they perceive it should sell for and it will sit and sit and guess what…. you will lose.  Choo Choo.. your on the train going right where you don’t want to go.

 

If you are not watching out for your own best interest, or if you do not have a competent team, your efforts with a short sale solution will often fail miserably.  Why do realtors hate short sales as reflected in many national publications?  The reason is that they do not understand what it takes to succeed and many of the frankly are lazy and not willing to invest the time to learn. 

 

I am going to provide a couple recent examples. Before I do I want to tell you that the ignorance and the examples of futility on the part of the realtors with no plan is at epidemic levels.  Things have been good for so long that many realtors just want the commissions.  Their brokers and their governing bodies provide squat for education.  The real estate and residential lender industry is pathetic when it comes to real education and accountability.  For this reason you must protect yourself and keep your eye on the ball if you are to Avoid Foreclosure and succeed with a Short Sale.

 

I could elaborate on literally tens of examples of clients that have come to us that have ridden the bid of the market with their homes down for as much as two years to financial wreckage only to seek refuge with a short sale.  It would be unfair for me to bore you with what could be hearsay from a homeowner before I was directly involved.  The evidence or our success for this group of people lies in the fact that we obtained contracts for their homes in short order after they became clients.  Looking back past 15 months it would be fair to say that the belligerent homeowners shared the blame with their realtors in many of these improper pricing incidents.  I would like to share with you one of my recent picture frame cases of realtor arrogance and incompetence with complete disregard for the distress family facing foreclosure. 

 

Recently one of our clients had a property that was valued at $900K based on two very recent comparable sales on the same street.  Anyone with half a brain and the common decency to respect the position of the distressed homeowner would have priced this home accordingly.  Not this realtor.  This particular realtor was not from our network but was referred to us and sent us the client.  This realtor decided to price the home for $ 1 million dollars because she noted that the two comps that recently sold on the same street were short sales.  In other words, distressed sales, so they shouldn’t be counted in the pricing analysis.  I am waiting for someone to tell Mr. Market that this is a rule that better be followed.

 

My team disputed this adamantly but the realtor rose up like an ambivalent dictator and bellowed that she has sold lots of homes and that she has been in the business for 30 years.  Well, we decided to sit back and not make waves until our client was in jeopardy.  We waited six weeks and there was no contract and no offers on the property.  We began to tighten our grip on the realtor with pressure regarding the client’s position and the pricing.  The bellowing and the egotistical comments from the realtor continued.  At the eight week mark we called our client and turned them on the realtor.  The property was grossly over priced.  Between our client and the salvos of attack my team unleashed on this realtor she capitulated and quickly reduced the price to 900K.  The problem was not solved.  As we all know the markets were very volatile in Sept and Oct of 2008.  The value of this home was no longer 900K.  To sum it up the realtor was on the defensive.  She had done a major disservice to the client.  When the realtor continually repriced the property she was merely trailing the real bid of the market down.  Why not do the research and price it properly up front?  This is a question you really have to ask.  Let’s see what her peers had to say about her conduct. 

 

After another two months the clients, after continual consultations with our team, decided to dump the realtor for better representation.  A new realtor we assigned from our network that followed our pricing model and our protocol.  After checking the recent data and the listing history the new agent was appalled at the level of incompetency the previous realtor had demonstrated by the initial pricing of the property at the 1 million level.  The new realtor further commented that this property would have easily sold for 900K based on the comps in August of 2008.  Today the property has been listed by the new realtor based on the real bid of the market at 750K.  Within 3 weeks we have secured a contract for the homeowner and we are moving forward with our solution. 

 

I would also like to note that we do not employ realtors, we only choose them to participate in our network to compliment our program.  There is no financial incentive for us to use one realtor over the other if all are willing and capable to perform. In the above example the distressed homeowner suffered unnecessarily both emotionally and financially.

 

I don’t enjoy giving people the play by play but I thought it was very important in this example because we see this happen all the time.  The realtors are driving “The Freight Train to Foreclosure” and your family could be on board.  Keep in mind that many realtors see the state of their business and often admit openly that it is rife with ignorance and incompetence.  The realtors that actually care about succeeding for the clients don’t like this either.  The question we need to address is what do we do about it other then individual police work as described above.

 

I would like to give you one more example that is a bit more sobering.  Last week a realtor that has 25 years experience called me to discuss a new client.  We had gotten the client situated with our program and she was very pleased of the financial blueprint and strategy that we had put in place.  Before the conversation ended she asked me if I could answer a question for her.  This was a very nice lady and I was happy to oblige. She mentioned that she had a family recent go to foreclosure.  She didn’t note the reason but she asked me what the two big things were on their credit.  Before I could answer she asked if they were from the former lenders.  I told her yes that they were deficiency judgments on a Virginia property and that it was game over as far as having them as renewed clients for a long time.  She quietly but solemnly said, “Oh my”. 

 

Now I really like this realtor.  The fact that she asked a very good question and simply did not know is perfectly fine with me.  This realtor may have unintentionally victimized her clients by not understanding the importance of a qualified team and comprehensive plan with her clients.  This example was a short sale that didn’t make it.  I can assure you from this point forward this realtor will be seeking help because she now knows the cost of ignorance.  She simply did not know but she is going to make it right with future clients facing foreclosure and we all have to respect this.

 

The homeowner must beware and know that a hand shake and hope do not automatically win with short sales.  Short sales or any workout situation with lenders are difficult.  The problem is complex and you didn’t get into it in the past 48 hours so be realistic and don’t expect to get out of it that soon as well.  If you are going this alone with a realtor I have given you what you need to keep your eye on the ball and your foot on your realtor.  If you want to learn more we welcome you to visit our program at www.thenegotiatedsolution.com

 

In summary, our real estate industry is broken.  As the government moves to stabilize the banking sector it should also address the regulation and core competencies that direct and govern the realtors. Personally, it is my view that the MLS system should be nationalized and made available to all the people as a contiguous federal platform of property distribution for our citizens.  Further, when the scholars review the state of the realtors they are going to see a pit full of warriors with tattoos that say, “Every Man and Woman for Themselves”.  It is high time that the residential real estate lobby suffer the same accountability as Wall Street for their part in the housing crisis.  It’s time for real education, accountability and efficiency that will result in reduced commissions.  Yes there are good realtors out there, however, the stakes can be high if you don’t find one of them and end up with a rotten one.

 

Blogging from the front line of the housing crisis at blog.thenegotiatedsolution.com

 

GHunter

It is now clear that many people outside of the traditional subprime borrower are facing the loss of their home through foreclosure.  In 2007 the implication was that the subprime borrower was irresponsible and for the most part solely to blame for the epidemic of delinquency.  This has proven to be false.  In society we are always looking for a scapegoat.  That always makes us feel better and separates us from the cause.

 

Today we are facing realty.  Many people, and the majority of our customers, are not in the subprime category and they didn’t buy a home with the intentions of walking away from it.  The majority of people put as much as 25% down from savings or from the sales proceeds from another home that they owned for years.  How did all of these people get pulled into the epidemic?

 

It’s really quite simple. You can sum it up with the word ”Greed”.  Wall Street was greedy and they continued to put out loan programs that allowed people to push the limit of traditional home affordability.  The borrowers wanted it as well.  For every homeowner that is stuck in a mortgage that signed up for an Alt-A Loan Program or any fancy Option Arm or Interest Only Program it began with greed.  Where are we now?

 

Let’s first be clear and honest with ourselves.  Alt-A and Subprime etc loan programs were not created yesterday.  Wall Street is certainly to blame for the evisoration of the lending guidelines accompanied with the abundance of 100% LTV programs.  However, the fancy loan programs have been around for years but the older versions had guidelines, otherwise terms thresholds, governing loan eligibility.  For example:  In 1988 I purchased my second home with a 75% loan-to-value 3 year adjustable rate program with a Stated Income feature.  This meant that I have to put down 25% in the form of a qualified down payment and my income had to correlate to others in my employment field.  It had to be my money, gainful employment was required, etc.  It was all very sensible.  We even had option arms in the late 80’s.  They were great as the loan program of last resort.  My nickname the Option Arm at that time was “The Trashcan”.  It took a lot of time to sell one of these in the 80’s.  Realtors looked down on you if you even mentioned it to their client.  You really had to wait until the client brought it up or the realtor pushed you for whatever was available. It is simply appalling that they became such a hit during the recent frenzy in real estate.  Maybe the realtors pretended not to remember the negatively amortizing loan programs.  Maybe they just looked the other way.  I will let you answer that question.

 

The best way to sum this entire episode up is with “Greed”.  If you are in trouble with a home, whether it is a primary residence or an investment, you are “Guilty” of being greedy.  The lender is not responsible for your well being.  If you lose your job or the economy turns south you still owe them the money.  The realtor is not responsible for you either.  If you were too stupid to question their mantras like, “It’s different this time”, or “You better act now or you will be priced out of the market”, or “you better put a triple whammy auto escalator into your contract or you may not get the property”.  Does anybody remember this or are we all so convinced that we are ritcheous and victims of the economy or someone else’s actions?   It is frightening to read the papers and see all the distressed homeowners with an attitude of entitlement. It’s everybody else’s fault and I should be let off the hook.  

 

Let’s talk a bit more about the word “entitlement”.  I personally don’t like this word.  People that show up for seminars or meetings with their lenders with a presumptuous attitude that the lender is going to roll out the red carpet and fix everything are dead wrong.  Let me tell you what is going to happen.  Your lender is not going to forgive your debt.  They are going to listen to your pleas and if you are lucky they may restructure your mortgage by a small amount to assist you with affordability.  There is a high probability that your expectations during the process of negotiation will not be met.  You will become frustrated and very angry.  In the end you legally owe the money to your lender and they have the absolute right to literally beat the hell out of you in any manner they see fit.  This means that they will harass you by phone at work and at home whenever they please. They will send out nice letters and then nasty ones.  They will sick the foreclosure attorneys on you and you will get letters that you don’t understand.  You will be scared and generally bothered all the time.  You lender is going to exact a toll on you because they can.  How does it feel being a desperate beggar?  I am sure it sucks!

 

How many more Loan Modifications and government programs that fail is it going to take for you to become realistic and help yourself?  Maybe the new administration will stroke a couple trillion dollars out to get everybody out of their personal real estate hell.  If you think this will happen please stop reading this blog and never return to this site again.  If you are in this category you are a “loser”.

 

The solution is for you to understand that this is your problem.  You can both be part of the solution and get over the expectation of “entitlement” or you can continue to waffle and dissipate all your assets and end up in foreclosure.  Ignorance and the attitude or expectation of entitlement sort of bother me if you haven’t gotten my drift. However, to be fair, I want to give you the context of entitlement with a recent example so you can be the judge.

 

A lady bought a house two years ago in Virginia.  She paid 500K for the house.  It supposedly was her dream home.  She and her husband make 160K per year and they can afford the payments just fine.  Recently a young man that just finished college bought a home two doors down for her.  He only paid 253K for his home.  This made the lady mad.  During our conversation she referred to the young man as a “Punk” just out of college.  To me that sounds a bit harsh.  The “Punk”, just got a better deal then you, was my thought.  The lady was disgusted that her shack was only worth 250K.  She wanted to hire our firm to get the lender to forgive the 250K she was underwater and let her keep her house.  This is “entitlement”.  I told her pompousness that it doesn’t work quite that way.  The only way this individual can essentially have her cake and eat it to is with a Real Estate Short Sale.  Oh my she said, “I would have to leave my home”.  She just wanted the lenders to forgive the residual mortgage debt.  When I had had just about enough of the conversation I abruptly created an exit with a guarantee.  I told her I will guarantee her two things.  First the government will save the free markets and she is on her own.  Secondly, I said, “you owe the mortgage debt to your lender until you don’t”.  She didn’t like the sound of either of my statements.  This is entitlement.  Doesn’t it make you proud to be an American?

 

Where is the solution for the decent human beings that are truly proud Americans?  The solution is in the only comprehensive “Free Market” option…The Real Estate Short Sale.  With a Short Sale you can effectively have your cake and eat it too.  It is also the most responsible action you can take by providing your lender a solution in this terrible housing crisis.  The downside of winning is that you will have to move from your present home.  The rewards are high so you can rent for a year or two and you will be just fine.  In this market that is probably the best for you anyway.

 

At the end of the day the responsible people will win and effectively mitigate and minimize the adverse affects of the housing crisis on their families. The soul searchers of entitlement will get crushed.  Get on board with a Real Estate Short Sale by reading our blog entries and taking a peak at The Negotiated Solution available at www.thenegotiatedsolution.com   Blogging from the front line of the housing crisis.

 

GHunter

The day before Christmas I caught a short blurb on Fox Business News regarding the state of the mortgage market.  An industry representative was adamantly demanding that people do something about their mortgage problems.  She said, and I quote, “Don’t let you lender mess with your grocery money”.  It was a short blip on the screen and it clearly caught my attention.  Was this fear mongering on the part of a mortgage industry guest on Fox or was this lady whole heartedly trying to communicate solid advice to the viewers?  I think this is an excellent topic to elaborate on.

 

If anyone without mortgage industry knowledge or familiarity with judgments and garnishments were to hear this on television they might immediately think that it is just another scare tactic on the part of some random guest of the mainstream media.  However, this lady had a very good point to make and I wish she had been more than a short blip on the newswire.  The primary topic related to all the delinquent or soon to be delinquent homeowners facing imminent foreclosure.

 

Here is what she was trying to explain but clearly did not have enough time on Fox to elaborate on her point.  If you are a distressed homeowner in jeopardy of losing your home to foreclosure you need to attempt to do something about it so you can avoid a deficiency judgment that will follow from you lender.  A deficiency judgment is allowed in many states and is no different from any other judgment.  When your home is foreclosed upon by the lender, the lender will follow state law and present before the judge or magistrate the deficiency.  When the amount is approved the court will grant the lender the right to a judgment that will be placed on your credit report. 

 

The problem with any judgment that is deemed worth collecting is that the lender can garnish your wages and really make your life a living hell in the process. This is what the lady was referring to when she said “don’t let the lender come between you and your grocery money”.  Once a judgment has been issued the lender can now take action to obtain a garnishment. A garnishment of wages is mandated by the state and your employer automatically must comply and divert your after tax money out of your pay check.  This is an involuntary action and it could be your grocery money.

 

This is a fact and not fiction.  This is also a scary thought so I am going to help you out with a little context to put you at ease.  It can happen and it does happen but only if you let it.  That is the beauty of the situation.  Lenders are overwhelmed and you have the opportunity to negotiate a short sale or loan modification.  The only people that are going to have to deal with a potential garnishment or other legal seizures of assets are those with assets to lose and those that just dumped their problem on their lender and never attempted a solution.  Also, the garnishments don’t happen immediately in this type of environment.  The lenders will obtain the judgments from the courts and try to collect them much later when the markets settle down much like they did in the years after the savings and loan crisis of the early 90’s. 

 

What does this mean for you?  Investigate if a real estate short sale is for you.  Does the benefit merit the time and effort you need to invest to succeed?  These are very important questions.  I am promoting my own book when I say check it out at www.thenegotiatedsolution.com , but I don’t want you to think I am participating in the fear mongering.  You are only at risk if your lender wants to pursue you.  Many of you in an upside down housing situation have money to lose.  How do I know?  We have hundreds of clients and 85% of them have no skin in the game and want a way out but they have money.  You would think the majority of people would be financially strapped and somewhat desperate.  This is simply not the case.  There are many people that participated in the real estate game that have good jobs and a lot to lose.  You know who you are.  Whether you have money now or expect to recover in the future I think it is best to settle with your lender or lenders and avoid the potential of any kind of judgment haunting you in the future.  Protect your bounty while the getting is good is another way to put it. 

 

Now, did I ever go after judgments when I was a lender?  The answer is no. I am referring to my team and my bank.  We chose to write the loss off against income and move on.  However, we were a small operation compared to the goliaths that may hold your mortgage.  We didn’t feel like dealing with the headaches and we were profitable.  Today’s environment is different.  Very few lenders are profitable and they want their money back.  The best advice I can give you is to take the risk off the table.  Don’t let anyone mess with your grocery money.  Avoid the foreclosure mess and walk away from an abundance of residual unpaid mortgage debt with a Real Estate Short Sale.  Blogging from the front line of the housing crisis!

 

GHunter 

 

 

 

The recent announcement by Citi and JP Morgan Chase to Stop Foreclosures for a period of time across their distressed loan portfolios was highly publicized. The perception that was derived from the news reports offered hope that the lenders were going to come together and provide affordable solutions for distressed homeowners. We can all agree it sounded like good news and a very constructive measure toward a resolution of our housing crisis.

The real question you have to ask yourself is did the bankers do it for their own self interest or simply because they really want to help the homeowners.

Let’s go over some simple facts so we don’t get caught up in the false hope of lower loan payments for all. This is not a permanent moratorium on foreclosures. A foreclosure proceeding is the lenders legal right to regain control over a property once it has become delinquent. The lenders want their money back at some point. If they cannot work out a solution they will eventually have to revert back to foreclosure. The current announcements are directed at stopping foreclosures so it can be determined what borrowers should be helped with modified terms to keep them in their homes. Keep in mind, there is no guarantee that the lenders will come up with long term solutions to keep the distressed homeowners in their homes. Also keep in mind that many of you are not going to be eligible because you don’t meet the real definition of a distressed homeowner.

Here is my view. There are so many properties in real estate owned (REO) portfolios on the banks’ balance sheets that it would only be prudent to temporarily stop foreclosures. After all, a basic supply and demand analysis dictates that by adding more properties by foreclosure to the current portfolios will only further depress existing property values and make matters worse for the lenders themselves. The bankers and lenders alike need to slow the foreclosure process down to allow for the current REO inventory to be sold at reasonable prices. Otherwise allowing the rate of foreclosures to accelerate will only add to the severity of the problem. Also, it is not the intention of lenders to take down complete communities with foreclosures. They need natural attrition and balance or they will inflict additional unnecessary losses to their portfolios.

The fact is the majority of loan modifications and government programs, with all the rhetoric, have had low adoption rates and not worked for the people as forecasted. It is hard to wave a wand and change the past given the sheer size of the housing crisis. Stopping foreclosures a solid year plus into the full brunt of the housing crisis clearly is not the prime spot for the lenders to all of the sudden become kind to the distressed homeowners. The bankers and lenders are taking this action to save their own hides. Plain and simple, this is how it works. According to the lenders, there is a financial incentive to put on the breaks regarding foreclosures so let’s make it a positive PR campaign while we are at it. It makes perfect sense.

If you have any doubt, then ask yourself why the lenders have not fully adopted all the government programs to benefit the homeowners. Also, why do loan modifications represent an approximate 90% failure rate? The lenders are owned the money and without a financial incentive to force their hand, frankly, you lose.

Where is the positive for you? The lenders are giving you more time to provide them a solution. A real estate short sale is ideal in this environment. Provide your lender a comprehensive solution. Get your property sold and provide your lender a solution that they cannot pass up. Don’t expect your lender to grant you an affordable solution to your current predicament. Their attitude is that you borrowed the money and you owe it back to them. Remember the old saying “beggars can’t be choosey”. They are absolutely 100% correct and at their discretion they can legally pursue you for their money by means of the mortgage note.

A solution is a hand. Stop and avoid foreclosure all together with Real Estate Short Sales. Even if you just made a bad decision or just got caught and don’t have a real affordability problem, the macro environment in housing is giving you a pass. As an ex-lender, I am urging you to educate yourself and take advantage of your best options. Our site has it all at www.thenegotiatedsolution.com . The sooner you focus on a solution the sooner you will benefit. I am blogging from the front line of the housing crisis.

GHunter

A foreclosure is the legal means by which your lender regains control over your property. The process is governed by the various state laws. Each state has disclosure guidelines, time lines, and restrictions as to how the foreclosure proceedings must be conducted. The lenders must follow the laws in each state when foreclosing on a property.

At a certain point of loan delinquency, a lender will exercise their right to foreclose on the property. When a lender determines that they are going to begin foreclosure proceedings on your property you will begin to receive notices from attorneys with demands for full payment. When these demands are not met in the time frames outlined, the lender has the legal right to accelerate the mortgage. This means that the loan you thought you had with 28 years remaining will soon be due all at once. The letters surrounding demand, acceleration and the actual establishment of a foreclosure date are intimidating to the homeowner.

Why is it important to stop foreclosure and make the effort to avoid foreclosure altogether with either a Loan Modification, Hybrid Refinance, or a Short Sale with your lender?

When you originally took out your mortgage, and went to settlement with all the happy realtors, lenders, and settlement attorneys that were dreaming dollar signs and just wanted you to quickly sign the 150 pages of documents so they could get rid of you and get paid, there was a very important document in the pile. It was called a Mortgage Note. You signed a Deed of Trust and a Mortgage Note. The Deed of Trust attached to the house or otherwise termed the collateral. Conversely the Mortgage Note attached to you and made you personally liable.

I had a client on Friday that decided after several months that he didn’t want to finish his short sale because it was taking too much time. This guy is actually in the business and did not understand the ramifications of the Mortgage Note. I explained it to him like this. If you are not personally liable for the mortgage thereby giving the lender the legal right to come after you, then why do lenders require Mortgage Notes and not just a Deed of Trust. I mean come on, why don’t we just consider all loans non recourse. Right about that time he woke up and said, “ah….” . Yeah, and your in the business!

This is precisely why it is important not to dump your problem in your lenders lap. You need to be responsible and provide your lender a solution. The Short Sale is an excellent means of avoiding foreclosure and helping yourself out of a bad situation. Don’t be fooled by what you hear. You owe the lenders the money and even if you can’t pay it don’t give them an incentive or legal means of getting any type of judgment against you. You will recover from this real estate mess. When you do, you will not want to deal with the headaches of the past.

Oh and lastly, get out of denial. You have a problem and you are not helping yourself emptying the retirement accounts and running up the credit cards with no solution.

On a positive note, has your check from the government arrived in your mailbox yet? You better go check the mailbox. You know the one from all the bailout program that you are expecting. What about your happy lender that just adores you? Has your one sided Loan Modification been approved yet? I am thinking that you either have a big check on the kitchen table or your lender values you as a customer so much that they just called you and said, “Spin the wheel and name your new lower payment”.

Tomorrow is another day, keep checking the mailbox or get a solution. Your lender literally does not give a “rat’s ass” about you. I am blogging from the front line of the housing crisis. Check out thenegotiatedsolution.com for answers.

Ghunter