“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

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

The housing and mortgage crisis was created by the lack of enforcement and general oversight by the government.  Excessive leverage and exotic mortgage products create by Wall Street got us here. We all know this now.  Here is our government’s solution as it pertains to the mortgage industry.

Pay is going to be regulated by the government for all persons involved in home financing in the mortgage business.  Loan offers to branch managers to owners are going to be regulated.  It’s socialism.  Price controls. Here is how much you can charge. Here is how much you can make as a profit. This is part of the punitive assault that is coming April 1^st 2011 as part of the Barney Frank reform. 

Didn’t Barney screw us with the GSE’s in the first place?  I have spoken with a lot of people I know in the mortgage business. Nobody is going to work for free. I do not believe for a moment that restricting profit and compensation at the government level will prevent another crisis nor add to solving the current one that has besieged the housing market.

Here is what is going to happen.  It is already difficult for perspective buyers to obtain financing to buy a home.  Restrictions on lending and the new negative incentives on the industry are going to further pressure demand.  Supply is heavy and now we are going to further negatively affect the demand side of the equation.  That’s really great for our country.  Housing is a huge risk to the economy. 

All of the problem loan types that fueled the speculative run up have been eliminated from the current system.  How will profit and price controls help the recovery?  It won’t.  I am obviously a capitalist.  I am happy to see the newest headlines of lawsuits that seek to prevent the new controls from taking affect. The legislation is unconstitutional.  The industry needs to fight.  The end game of pressuring demand will not be positive.

Let’s put it in layman terms so you can understand it more in dept. The government is making a statement in my opinion that all borrowers are stupid. They can’t  increase disclosure as a means of preventing people from making poor financing decisions so they will regulate the industry.  The mortgage players will have a cap of what they can charge. All fees, profit and risk to the lender will fall under the cap.  The industry will be commoditized and margins lowered to the point that only the very large banks will survive.  Please don’t lose sight of the fact that the consumer will want the lowest rate and will shop it as they see fit.  When the brokers are put out of business in whole the correspondent lenders will be next.  Then the regional banks and the net branch players will be under siege.  The large commercial banks will eventually own the business because they are the only ones that have the scale to weather the very low margins and eventually kill all competitors.  What happens when one cable company controls the programming in your area?  Prices go up and you know the rest of the story.

Brokers, lenders and banks are necessary to create competition on the basis of rates, fees, and service for the industry to remain healthy.  This new legislative initiative now facing the mortgage industry is bad for our country.  I didn’t sign up to be a socialist and I don’t think you did either. 

Come visit me at www.thenegotiatedsolution.com  . Rants are welcome.  I started my first career in the mortgage business in 1987 and it is a good business with a lot of very good hard working people that need to also support their families.  Keep this in mind.  Mortgage programs did hurt the people and the mortgage professionals did indeed sell them to the consumers.  However the consumers wanted them and they were just as greedy as the creators on Wall Street. The SEC and the regulators did the same job on their watch for all consumers as they did with Bernie Maddoff.  The government I say…rage against the machine. Sick the lawyer on the government and fight.

Blogging from the front line of the housing crisis.

GHunter

Let me start with the Mortgage Crisis-Mortgage Put-Back Liability and see who’s on top today and then I will get to getting even in the New Year.

Yesterday it was announce that Bank of America was settling the majority of their mortgage put back liability risk with Fannie Mae and Freddie Mac for a mere 2.8 billion dollars.  The market participants went quiet for a moment.  My understanding is that you could have heard a pin drop.  The put back liability was in the billions like 47 to possibly 73 billion dollars.  Those are very big numbers that were estimated by the Wall Street analysts. 

What is put back liability?  When an institution originates a loan or buys a previously originated loan on behalf of a homeowner there are standard reps and warranties.  The loans cannot go bad in a specific period of time. Further the standards of underwriting and closing those loans must adhere to certain guidelines.  When lenders are originating large volumes of loans they have a lot of discretion as to what they want to pool and sell.  Don’t think for a minute that all loans securitized or put in pools and shipped off to Never Land conform because they don’t.  There are so many loans that many times the loans are not properly reviewed. Ok, nobody looks at them may be a better way to put it. It’s like a soup kitchen and when there is a crisis the buyer comes back with a magnifying glass and has the right to audit loans and demand “buy backs”.  Put back risk is what Wall Street is calling it today.

A guest on Fast Money said Bank of America was very wary of their put back risk just a few days ago on an investor conference call.  Apparently Tim Geitner of the Treasury Dept. decided to go easy on them but for what reason?  Bank of America seems to have its grubby little hands in everything.  They bought the largest piece of landfill and compacted sewage know to the mortgage market named Countrywide and renamed it Bank of America.  It comes down to poor management. That is why they overpaid for Merrill Lynch and the CEO lied about all the disclosure to the public markets in 2008.  The stock went down to $3.00 and low and behold nobody is going to jail.  Forget the laws, Sarbanes Oxley etc.  That is all bull.  The laws are for you and me and the smaller companies.  The big guys don’t have to adhere to the laws. 

How did Bank of America get such a sweet deal from Treasury?  Most people might say that the system is so crooked that it just plain sucks to be the little guy.  From my vantage point the system is clearly stacked against the little company and the common citizen.  The question is why?  The government is going to pick up the tab in the hundreds of billions for the Fannie and Freddie mortgage mess.  Who is the government?  The government by the people and for the people. Sorry but that is you and me the tax payer.  Bank of America just got another free ride so they can continue to do whatever they want.  They have effectively removed accountability from the English language once again and I expect this to continue.  Let the government brag about he 12 billion it made on the Citigroup bail out but at the end of the day after all the profits are tallied lets not forget to add in the 400 billion these clowns will end up eating on Fannie and Freddie down the road. Thanks Barney Frank. 

You know I dispise Bank of America and everything that company represents.  We have worked with so many lenders assisting distressed homeowners with workouts, loan modifications, and short sales one might ask why would Bank of America stand out. They just do based on their profit motive as a service of loans to homeowners and their grossly high levels of incompetence within their ranks.  Don’t take it from me ask around.

Maybe its not fair for me to single out Bank of America. If you think I am just picking on Bank of America then let’s talk about Goldman Sachs.  They admitted fraud to the Securities and Exchange Commission.  They did what they wanted with the mortgages that they securitized. They even bet against securitizations that were pretty much guaranteed to fail.  They made billions.  It gets better.  Check out Jesse Ventura’s new show on Tru TV –“Conspiracy Theory-Mortgage Mess” .  This was a good show.  At the end of the day Goldman paid 553 million in a fine to the SEC and everything was good. That means I can go out and scam some people thereby taking all their money so they can’t buy their kids Christmas presents and just stroke the judge a check to absolve me. For me and you that would be a crime, but for Goldman it just another day at the office.

I almost forgot that when AIG was drowning and needed 130 billion from the government by Monday they got it and virtually no questions were asked. Why and how you ask.  The majority of that 130 B went to Goldman Sachs to make them 100% whole on their derivative contracts they had with AIG.  Force Majeure my friend. AIG did not have the capacity on its own to make good on these contracts.  Force Majeure is used in the commodities market when an “act of God” incident prevents a seller from delivering on a contract. They declare Force Majeure and they are out of the contract.  Why didn’t AIG say the equivalent “pack sand” to Goldman?  Certainly if AIG couldn’t pay it would have had to seek bankruptcy protection and Goldman surely wouldn’t have been made whole.  Is our government and the system crooked?  Yes without question. Goldman got paid in full. 

Put aside the discontent.  Let’s stop talking about what is unfair and unjust. Regardless of fairness, criminality, accountability or any other word you would like to throw in its all about the financial system.  The government is going to give every wrongdoer a pass regardless so the financial goliaths can be here to aid and assist in the economic recovery.  The economy needs to move past the blame and we need to mend.  This is why Bank of America just got a huge windfall of liability relief from your personal taxpayer checkbook. According to Jesse’s show Goldman is so tied up with the government that they had to save their pals with the AIG bailout.

Now that we all know the system is rigged what is my message to you?  Should you defiantly stand by your moral character and promote the righteousness of the good while you continue to pay your mortgage on your underwater home?  Millions of homeowners are underwater on mortgages as a result of a crisis your government help create.  What good are laws and regulations if they are not enforced.  The real estate market has trapped some many people it just doesn’t seem fair.  It’s not fair for you; please remember you are the little guy.  You are supposed to conform and die broke. Unlike the Wall Street players you are expendable.

Sorry I am not a conformist and I believe that it’s all about getting even.  This isn’t about making a mistake or losing a bet. You got cheated by the system.  You have been fleeced and your family has suffered because of your stress and anguish since 2008 over this whole real estate mortgage mess.  Is it time to get even or are you going to just wipe away the tears and keep paying.  You’re a renter with full ownership responsibility no matter how you view it.

That brings me to the short sale as a solution for the people stuck in these underwater properties.  It doesn’t matter if its and investment property or your primary residence. People will rank and file into two different camps on this issue.  Many will continue paying and end up in a bad financial place while others will perk up and decide they have had enough and that 2011 is prime time for getting even.  Getting even sounds like a bad word and almost criminal.  Certainly that is what your lender wants you to think.  Sorry but its fair and legal to negotiate your way out of the debt.  

Your lender will say that you singed up for the mortgage.  The economy, your lender, your appraisal, the realtor or the builder that “jacked you”, the government, and all the malfeasance on behalf of the lenders that put the financial system “out of order”…well that is your problem… “just pay”. 

Lets not forget the Loan Modification process. You are the lender customer.  Can I say this like Sam Kinison would have?  It won’t take you long to find out that the lender Loan Modification process is a scam levered to the lender.  Conversely, how about a comprehensive solution that allows you to sell the property and shelve the debt back on the lender.  It’s legal and don’t you think it’s “just” given what goes on with the cozy relationships between the government and the big banks. 

If you can relate this is what my teams does for people Monday through Friday.  We have helped hundreds of people reduce exposure and get out from under properties.  Many of our clients that follow our credit strategy are eligible for a new loan at their option in one year after completing the short sale.  The more you see how crooked the system is the more you will chose a permanent solution that is fair for you.  I love sticking the lenders with the debt and the expenses.  It”s fun.  With the help of our law firm we make it a property based solution and help the greedy lenders understand that it’s not going to be the free ride with our clients like they get from the government. We also provide proprietary advice on asset preservation and how to handle the mortgage and property tax payments.  A properly represented distressed homeowner is no longer distressed even before the short sale is completed and the lenders hate it.  We are mitigators and not paper pushers.  That is why I can confidently use the word “impale”. 

If your New Years resolution is to enjoy life and reduce your stress by getting rid of a property that is underwater with debt then maybe you should take a time out and come visit me at www.thenegotiatedsolution.com   .  It’s worth your time I guarantee it.

Blogging from the front line of the housing crisis.

GHunter

According to the Fast Money gang on CNBC from August 5^th, 2010 it appears that the Obama Camp may be stirring the pot with another round of Eternal Hope for some homeowners that are underwater on their mortgages.  If you watched the program it was debated and made blatantly clear that this is very bad policy for our country.  Never the less Obama is simply a politician and we all know what that equates to.

 

At the heart of the issue is FNMA & Freddie Mac.  The early discussions are for the administration to figure a way to allow the government sponsored mortgage investors to forgive up to 25% of a homeowner’s mortgage.  This is in complete defiance of present and existing contract law that ties our entire system at the core.  This is also in complete defiance of objections from Tim Geitner as the Head of The Treasury Department and Larry Summers.  Apparently Obama wants to work some inside deal on his own that is strictly political that will selectively help certain homeowners at the cost of roughly 200-300 billion plopped on to the deficit. 

 

What is this?  Is this policy or grand larceny against all Americans?  How is this different from the Summer of 2008 when the administration in power said that they were going to push loan modifications and that the lenders better forgive debt to make everyone happy and promote a welfare class of losers by reinforcing that the government will pay for their mistakes.  It’s like there are not losers and there is not responsibility associated with ones actions.  A third place trophy with three in the competition makes you a winner. In retrospect we must not forget Jamie Diamond of JP Morgan’s public response to this outcry.  “We are not going to do that”.  We are not going to forgive the debt…”Pack Sand”.   If you recall that was pretty much the end of the political grandstanding.  The politicians said “Oh”.  Its contract law dummies.  Other people and investors own the underlying mortgage instruments.  Hello! 

 

Now we are on failed Obama program number six and this new animal looks like the beginnings of a number seven. Didn’t I tell you to expect a number eleven?  When the first couple don’t work and recently 40% of participants are voluntarily dropping out of Obama’s latest program because it’s “Bunk” it’s time for our leader to come up with a new spin.  Do you see the ongoing theme here that I have been blogging about for almost two years?

 

This is all about the Prophecy of Hope.  The government needs to keep people wrapped tightly in good moral character so they don’t dump their problems on their lenders.  Do the right thing while we tax you.  Be a good conformist.  Here is another bone for you.  Even though a Short Sale will get you out of the mess with all the debt forgiven we would prefer to give you another bone and take some of you from 50% underwater to 25% underwater on your home.  Yes the smart ones will soon after figure out that they are still renters will full ownership responsibility but who cares.  The people are stupid to the politicians and they can be manipulated.  Nothing has changed.  Just wait when you see program number eleven.

 

What is your way out of a housing problem?  Do you owe significantly more to your lenders than your home is worth and are you facing an upcoming rate adjustment that is only going to make the affordability issue worse?  After you consider your situation you need to then ask yourself this question.  Do you want a fair and equitable opportunity or would you prefer to be lied to and led down the conformist path?  It’s a personal choice at the end of the day.  How about a Real Estate Short Sale done by a group of experts that will get you out from under the property with the majority of your credit, assets, and family well being intact?  The Short Sale is the only fair and formidable weapon to give you the opportunity to start over.  What you decide today for your family will determine where you are in one to two years out.  I am not a commissioner of hope but loan modifications, government programs, foreclosure, and/or bankruptcy are not the answers if you are looking for a real permanent solution.  I don’t understand how people can be constantly deceived and manipulated by the politicians and the lenders for their own benefit.  It’s a crooked world. 

 

Come see me today just to investigate a Short Sale over a Loan Modification and other potential paths at www.thenegotiatedsolution.com .  Stop a foreclosure dead in its tracks if it has gone this far.  Find a solution that will give you your future back.  Don’t you dare contemplate sacrificing your children’s college or your retirement to make your lender happy.

 

My message to you when I hear the warning signs of yet another Obama spin is to get on board with a real solution and let Obama blabber. He is going to do it anyway.   November will make his group accountable.  I can’t wait for that sideshow. 

 

Blogging from the Front Line of the Housing Crisis.

 

GHunter

The recent Obama Administration mortgage program to help homeowners refinance was initially established for homeowners that were no more than 105% of debt to current market value.  To all of us in the industry this was frankly laughable.  It was common knowledge that the deflationary spiral down in real estate nationwide has left many people 40-50% upside down with their properties relative to equity.  The program recently just received a nice modification whereby it will allow homeowners to refinance up to 125% of debt over current market value.  The administration also recently endorsed the Real Estate Short Sale as another free market means of solving a mortgage problem by adding small financial incentives for borrowers and lenders to participate. What does this mean for you?

 

This means that the policies are becoming realistic and we can put the news media hype and requests for urgent governmental initiatives as a means of calming the public aside.  Now is a time for a long drawn out healing process that will include significant deleveraging.  This is the only way people are going to be able to get their arms around their debt and get there personal financial house in order.

 

The change to the mortgage assistance program is primarily for FNMA & Freddie Mac existing mortgages and it does have qualification provisions.  Certainly you must have a job and you must clearly be in a position to afford the repayment of the new loan.  The government wants to facilitate the lowering of the national private citizens’ debt service but it does not want to assume a massive new wave of default liability.

 

Having said this, where does 125% of debt to market value peg the needle in the mind of most people?  In my opinion, this change along with the incentive for short sales are two of the most realistic and truly valuable moves to help distressed homeowners since the crisis began.  My reasoning is that these initiatives are realistic and grounded based on human psychology. 

 

If you are gainfully employed and your family is settled in a home and your children are enrolled in the local schools, do you really want to bail on a home and dump the problem on your lender if the government will help you lower your monthly mortgage cost significantly thereby making it affordable to stay put?  Realistically the answer is for you to stay put and lower your rates from the 6-8% range to somewhere between 4.5-5.5% range.  When you work through the numbers the benefits far outweigh the personal hell you must face if you were to choose to leave the property. This positions the Obama program move toward a stabilizing factor then the previous unrealistic false hope before the change.  This now makes the program a constructive option for those within the program parameters were as before the change the program was unavailable to the majority of those in need.

 

The short sale incentives also point the distressed people in the right direction.  The government does not want the burden of backing homeowners that are in excess or 125% of value.  Why?  Clearly in the minds of all us when we see a bridge to recovery that is so far that we cannot see to the other side we look to take evasion and often panic actions to get out of a bad decision.  This means default, foreclosure, or the more constructive short sale solution for you and your lender.  The 125% threshold is a good fit for the administrations program to constructively address today’s problem where people in the 150% debt to equity area need to accept responsibility for their own solution.  This is the area where the market simply needs to clear itself through the process of foreclosure or short sale.  The government can help but can not afford to indirectly assume responsibility for everyone problems.  At the end of the day you own your own mortgage problem. The lender did not lend you the money with the contingency that the economy would be good and your house would never deflate in value.

 

At the end of the day it is very interesting to see all the hype from the government programs beginning with the Barney Frank program that was initially announced in April of 2008.  There was so much hype and false hope to calm the markets while the government quietly worked toward its primary motive to save the free markets from the abyss.  The free markets have been saved and the healing process is upon us.  It is going to take some real time.  I say real because we are accustomed to V shaped recoveries.  I think this one is going to take a couple more years until things get back to normal. The real positive is that the programs and initiatives are becoming realistic as they focus on human nature and realistic incentives to help people fix their own problems.  No more bailout headlines and that is good for everyone.

 

Lastly, I would like to comment on an article in Barrons today that outlined the success and failure of Loan Modifications.  Pick up a copy of Barrons if you are remotely considering a Loan Modification.  Look a the re-default rates and think through the cost you will have to bear to achieve an affordable Loan Modification from your existing lender. I would use the comparison of opting to get on an airplane to flyer from Alaska to New York for a cost of 10-20K in forbearance and payments and you only have a 20% chance of reaching your destination.  That means you spend the money and go through the personal hell over many months and your plane crashes in the mountains.  Good luck if you are convinced your lender loves you enough to give you a loan modification.  You have much better odds with the changes to the new government refinance program or the short sale solution.

 

The Real Estate Short Sale is once again the reigning champion of the free market solution.  It is almost impossible to fight the free market solution to find a better alternative. For those of you wanting to learn more about the Short Sale as a means of avoiding foreclosure we welcome you to join our Free Trial at www.thenegotiatedsolution.com.  It is free and will only cost you two hours of your time.  You have probably spent months worrying and losing sleep not to mention the assets you have dissipated in the interim.  Its time to learn about the short sale and its benefits.

 

Blogging from the front line of the housing crisis.  GHunter

The Mortgage Cramdown movement really starts with changes to the Bankruptcy laws to allow Bankruptcy judges to modify interest and payment rates.  Does this mean you are going to have all your miserable residual mortgage above market value forgiven?   I have the answer but I want to wait and let you find out for yourself.  To help you understand the most realistic vision of what is to come I would like to share with you the comments from a prominent member of Congress just last Friday evening.

 

When asked by the press if the Mortgage Cramdown Legislation was going to forgive debt here is what the Congressman had to say.  He said the program was designed to incentivize lenders to reduce interest rates and payments in an effort to avoid foreclosure and bolster negotiation.  Put a different way that means to help stabilize housing and once again address saving the free market.  He further went on to say that there would be virtually no forgiven mortgage debt. 

 

He explained that only in very extreme circumstances would there be any forgiven mortgage debt.  The program has been designed to pressure more lenders to the negotiation table with the threat of bankruptcy.  Whether it works is one thing but the real question you must ask yourself as a homeowner or investor is completely another thing. Tomorrow is a big day.  Many people are waiting for the details on more legislation with the expectations that the Obama Administration will be sending out checks for thousands to millions of distressed homeowners that made bad decisions.  The issuance of handouts in the form of checks is not real, but the expectations of saving people that currently find themselves in an upside down equity predicament with a property is real to them, and is the same as a check from Uncle Sam.  I am telling you for the record that there are people in trouble with their primary residences, second homes, investment properties, and many people significantly overexposed with multiple investment properties.  Thousands upon thousands of people have high hope and expectations for mercy and bailout. Dependent on what category you fall into, do you feel worthy of a bailout, and can you handle the scrutiny and rejection if you clearly are not eligible?

 

Are you planning to go to bankruptcy to essentially achieve a rotten loan modification?  You can’t lie or hide assets in Bankruptcy.  Uncle Sam frowns upon this.  If you are considering Bankruptcy as a solution are you aware of the overall credit and financial ramifications of this declaration.  Even if you file and decide not to go through with Bankruptcy you will be hurt severely.  Before you choose such a radical move you should understand all your options.

 

The only real way you can literally take advantage of the macro environment and be eligible for significant forgiven debt without breaking any federal laws or subjecting your self to incrimination is a Short Sale.  I stifle at the though and expectation of all the people in trouble that expect debt forgiveness with no sacrifice or solution to the lender.  Does anyone have any conceptual opinion of contract law?  All of the mortgages that are tied to the collateral, your problem homes, have investors and they have binding investment contracts.  Obama may have charisma and be a smooth talker at speech time but he does not have the money to make everyone whole or take on capitalism and the contact law that binds it into a machine.  You, me, Obama, and the commander of the mighty Sixth Fleet can not sustain the death knell to capitalism and our country without free markets and private capital.

 

Private capital has a life of its own.  If you take away the incentive of gain or pull the rug out from under the platform that supports it then private capital chooses not to participate.  We all say what happed to liquidity and markets worldwide after the demise of Lehman.

 

Now I ask you the question once again.  Is the mortgage Cramdown legislation and all the bells and whistles Obama throws at us tomorrow going to save all the distressed homeowners with the nirvana of forgiven mortgage debt?  I don’t definitively have the answer.  Knowing the client profiles, and the money and jobs most have, I would venture to say the many will simply not be eligible for any of the programs.  This is exactly what we have seen to date over the past year.  Where does that leave the vast majority of you? 

 

Frankly it leaves you with the financial incentive to investigate a Real Estate Short Sale to get out of a bad situation with any property.  Whether you truly have an affordability issue, or you are just an over exposed investor, please do not waffle around and go broke by taking no action or initiating any investigation.  I am going to give you an absolutely free opportunity to learn and help yourself and your family.

 

Today we are offering a 7 Day Free Trial of our online video program The Negotiated Solution available at www.thenegotiatedsolution.com The free part is the very intense and informative two hour video portion.  Obviously if you want unlimited access and all the other information you will have to upgrade and pay some money. However, I am offering you a credible presentation of the Real Estate Short Sale Solution with No Risk and No Credit card.  I want people to understand their options.  I give you my personal guarantee that the program will be well worth your time.  I would like everyone to be part of their own solution and so we can let the government take care of the real desperate folks and eventually get our country and economy back on track.

 

Let’s face it, this is America, but when you look at the stocks and companies that have virtually gone to nothing there is little to be proud of.  I beg for normalcy and I would like to see everyone win but that is not realistic.  There will be winners and there will be unfortunate circumstances with many more foreclosures and hardships to come.  I want you to be a winner. 

 

Blogging from the front line of the housing crisis.

 

GHunter

If you have not already taken the opportunity to check out the link on CNBC with Rick Santelli going ballistic on the septic nonsense the White House has produced in its latest effort to stabilize housing, I recommend you do so in my previous blog.

 

I want to help people see through the lines and noise of the media and misinformation that is plaguing us all.  Lets look at the tid bits of the new housing plan that we know and lets then take a real look at reality as it is presented in today’s real estate market.

 

The plan calls for people that are gainfully employed to be able to refinance to a low market rate of interest as long as their loan value is not more than 105% above the new mortgage value.  The main focus will be with existing FNMA and Freddie Mac loans but I am sure other lenders will also qualify.

 

Ok, this sounds great, but what is wrong with this picture?  We are in a deflationary environment and many people are underwater on their homes by $100-300K.  These are many of the people that are considering walking away from their homes and dumping their problem on their lenders resulting in FORECLOSURE.  I don’t see the final bill sending out hundreds of thousands of dollars to make everyone’s bad investment decision a good one.  A mere 5% does very little to get at the root of the real problem.  Given this, the Real Estate Short Sale is once again front and center as the best and most effective tool for the distressed homeowner or over exposed real estate investor.

 

Now let’s look at the loan modification part of the plan.  Reflecting back on past blogs you know that in order to be eligible for any type of loan modification you must have a job.  I believe the plan will issue subsidies to incentivize the lenders to make loan modifications where they normally wouldn’t but don’t count on forgiven mortgage debt.  Keep in mind investors own this paper and they have the right to decide and sue.  If you think smooth talking Obama is going to turn contract law over with the stroke of a pen and undermine the foundation of capitalism, I am telling you I wouldn’t bet on it.  Free markets and capitalism must survive or Obama runs out of money. 

 

If you take the last two paragraphs and merge them together you come up with lots of people that will want loan modifications or refinancing that are underwater on their homes by a significant margin.  I hate to introduce reality but this is the view from my window every day.  Are you going to be happy with a loan modification that takes you down to 31% of monthly gross income when you know you owe another 200K and there are stings attached?  This is my question to you.  I know people are suffering.  Why not plan to move within a couple football fields of your current home and rent for something you can afford while you simultaneously pursue a Short Sale and get all the debt forgiven?  I am not crazy.  This is a real option.  It’s not easy but I suggest you at least consider a short sale because it is the only free market option available to you where you hold the reins.

 

Here are my final thoughts on whatever the final Obama Lunchcapades of Housing produces.  I am happy to see that they are coming out with something. I am not as made or vocal as Rick Santelli of CNBC because I know that anything that comes out as free lunch will only be a band aid until the economy begins to recover.  Once all the programs an stimulus kick in and really begin to gain traction it will be back to free market business as usual.  What does this mean for you?  If you are in trouble you will fail and the steam roller of capitalism will move you over like a daisy.  Lenders will foreclose on you with complete ambivalence.  Your home will be sold to someone new, you will become a statistic, and the process of renewal will move ahead in an orderly fashion.

 

Please do not think the government gives a crap about you, they don’t.  They care about the free market that is it.  If they cared about you the programs from last year would have come to everyone’s rescue and the politicians, corporate CEO’s, Treasury Secretary, etc would not have been allow to lie through their teeth on television.  Do you not remember that “everything was fine” at Bear Sterns, FNMA, Freddie Mac, AIG, Lehman Bothers.  I have had about enough of the deception and lies.  Take the reins in your own hands and rise to ultimate solution to Avoid Foreclosure with The Real Estate Short Sale.  We will show you how to do it the right way at www.thenegotiatedsolution.com and get the debt forgiven.

 

Blogging from the front line of the housing crisis. 

 

GHunter

I have nothing but respect for Rick Santelli.  Why should someone get a free ride when the majority of Americans (92% approximately) are making their mortgage payments even if it’s difficult to do so in the current environment.  It’s all about social responsibility.  My hat goes off to Rick for standing up and shaking the White House Tree.  He really pissed people off in the administration to a point where they came out and went on the attack on television.  Freedom of speech baby, suck it up and take your lumps White House because this isn’t over by a long shot.

 

Give em hell Rick, American was not built on handouts and rewarding failure.  Failure and renewal must occur if the free markets are to function and allow our country to recover from this nasty recession.  More on this and the Obama Lunchcapades plan and how it affects you in my next blog.

 

Here is a link to the video if you are interested. 

 

Santelli’s Tea Party

CNBC’s Rick Santelli and the traders on the floor of the CME Group express outrage over the notion they may have to pay their neighbor’s mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capital.

 

http://www.cnbc.com/id/15840232?video=1039849853

 

Blogging from the front line of the housing crisis and www.thenegotiatedsolution.com

 

GHunter

Well we have all had just about enough from Congress. Congress and the regulatory houses did not just make a few mistakes. They were absent and its time for you to make them accountable at the polls. What am I talking about?

Remember Fannie Mae, Freddie Mac, Bear Sterns, and Lehman Brothers? Great American institutions and everything is going to be just fine until it isn’t. There are people in office and at the Securities Exchange Commission (SEC) that represent that they will look after the markets and ensure that it is fair for the little guy.

Fannie and Freddie were fine and about a month later they weren’t fine and had to be nationalized. Oh come on, conservatorship means insufficient capital as far as the eye can see and if you were a stockholder it means “toast”.

Bear Sterns is really what I am itching to talk about. Both Bear and Lehman were fine on a given Monday. Their CEO’s said they were adequately capitalized and they would be fine. What a pack of lies. The most recent statement came from Dick Fuld of Lehman Brothers. I am sure that Dick didn’t know about the 45 to 1 leverage, or that no one in God’s creation wanted to buy them, or that the leveraged residential and commercial mortgage paper was no good. His parents knew long ago and that is why they named him appropriately “Dick”. How does it feel to be a Lehman Brothers stockholder? I would like to see guys like this go to jail. Where the hell is Sarbanes Oxley?

This brings me to Bear Sterns. Bear was a similar situation and in my opinion based on personal experience more of a culprit than Lehman. Based on what I am about to share with you Bear should be out of business and Lehman should have been saved. Although who am I to make all this stuff up? It must have just been a dream. I had a dream that we were selling significant qualities of mortgage paper to Bear Sterns. Under the cover of the insurance agencies and their backhanded triple A rated deals the mortgage paper was garbage and the regulators were blind to what was taking place. In 06 & 07 Bear Sterns was pushing the financing envelope beyond anyone’s imagination. No one was coherent or even present to question it.

Enter the “Straw Buyer”. If you can sell anything in a pool of mortgages on Wall Street and the government doesn’t care then why should you? Bear Sterns did exactly this, at least as far as my dream goes.

The Straw Buyer is a person with good credit and a job that joins an investor group and writes a contract for the purchase of a property. This person has no money but they do have good credit and a job. To Bear Sterns this was an opportunity to find a way to give this person a loan. Why worry about underwriting guidelines like “reserves” or “skin in the game”. Let’s let the people find somebody else’s money and we will give them a loan. Let me clarify, not just any loan, how about a loan up to $1,000,000 with no income verification and only four credit trades with a 12 month history. You only need guidelines if you have to convince the market that is buying the paper that it is good paper. If there is no threshold to raise the money then do what ever you please. Wow!

How did the straw buyer get the loan if they had no money of their own? What lender would create a mortgage program that would allow this under any type of protective underwriting guidelines? Bear Sterns wanted to fill more pools of securitizations to Wall Street so they allowed loans to straw buyers who were members of investor clubs. The investor clubs would have a couple accounts with a couple hundred thousand dollars in them. These account statements would be shared with multiples of borrowers accompanied by a letter from the investment club that stated the buyer was a member and had the rights to the funds. Wow again!. The straw buyer would buy the house and the investor club would make the payments as long as the real estate market continued to go up. Properties were sold and the club and the straw buyer shared the profit. If the real estate market cracked and the club got caught with the property the straw buyer agreed to take the foreclosure and stick the problem to the lender. That is exactly what happened.

This was a great gig for the straw buyers and the investment clubs. Well now that the party ended and the wave of delinquencies and foreclosures has hit us, everyone is blaming the homeowners. The homeowners must just be stupid or is there something else that nobody wants to talk about. Bear Sterns never should have allowed any perspective buyer to obtain a mortgage without their own money. This is pure unadulterated greed and they got away with it while the regulators were literally asleep at the wheel.

What a dream that was. I wouldn’t want to claim it to be more than fiction because it may really look bad and interfere with all the photo ops Congress likes to enjoy. Heaven forbid that anyone at the SEC should have to actually earn their paychecks. Showing up for work and cashing them is more in line with reality.

When you vote you should know the extent that our country’s leadership was absent. This was despicable. Let’s vote these idiots out of office and bring accountability and prudent underwriting guidelines back. I am voting for experience and strong track records that can be validated. Go forward on November 4th and make your vote count.

What do you think? This is America and I am tired of this crap.

GHunter