As Nationalization fears fade we can all finally get back to life and rest a little easier.  Nationalization would have been a complete catastrophe for our economy.  I question the competency of leaders such as Senator Dodd of Connecticut as he recklessly made such suggestions.  He is clearly a misguided individual.  Let’s get down to the substances of nationalization.

 

Do our leaders not understand that our economic platform runs on confidence?  Did Dodd not learn from witnessing what happened to our people and our financial system after Lehman was allowed to fail?  Senator Dodd, let me help you see how the world suffered.  When Lehman, as a major broker dealer, was allowed to fail all of the equity and bonds were wiped out.  This caused individuals and institutions worldwide to lose money.  The domino effect was a crushing blow to confidence.  Everyone pulled in their horns in the investing community.  Then we had several large money market funds break the constant value of one dollar.  From there our financial markets literally went to the edge of the “Abyss” and looked over.  Since then our government has been spending billions and propping up our markets with a broad assortment of programs just wishing we could get back to the day before we let Lehman fail.  Senator Dodd, you are an example of complete ignorance and questionable competency.

 

Nationalization would have destroyed our economy by driving away the sources of potential private capital.  Our country has thrived on free markets that are properly regulated to maintain order.  Ruining them with nationalization versus the alternative of fixing them and re-regulating them are two very different things.

 

Ski Daddy Cramer of CNBC posed the perfect question this week on Nationalization.  Isn’t anybody thinking about what would have happened to all the preferred equity and bonds of these financial companies if they were to be nationalized?  Then he went on to say that this is where all of the annuity companies invest your money.  The negative domino effect on our economy and financial system would be completely catastrophic if nationalization were allowed to occur with our major financial institutions.

 

As of yesterday the world is a better place.  The brains of our country have prevailed by looking past tomorrow.  With trillions in personal wealth evisorated in such a short time after Lehman it is time to believe in American once again.  We screwed up big time allowing Lehman to fail and everyone at the Fed and Treasury knows it. Cooler heads are now prevailing and the administration sees the huge franchise value of institutions like BAC and C.  Bernanke commented on the very point of franchise value on Tuesday.  Our country cannot afford to lose this franchise value.  We will need these engines to recover and continue to be the backbone of the world financial system.  Please Senator Dodd, shut the hell up.  Nobody on Main Street, that has seen their retirement and personal wealth crushed, wants to hear you abusing your platform with flagrant comments over nationalization.  I leave the Senator to be judged by his peers.

 

On a positive note, this is a time to try to “Be Good to Your Bad Self”.  We have to pick ourselves up even as many of us are demoralized from the loss of jobs, wealth and many of us facing the loss of our homes.  We have to have faith in our country and our free market system.  Things got out of hand and everybody as far as the eye can see shares the blame.  Obama in his speech made the comment that in order for us to lead in the new century we must invest in education.  If you are willing to quit high school you are now not just quitting on yourself but you are quitting on your country.  I thought this was a profound statement.  Education is the key and we all need to be part of the solution.

 

Now having said that, you know I have to use this last profound statement as a segway to a Real Estate Short Sale.  I won’t bore you so I will just say, if you are in trouble on your home or an investment property please take the time to educate yourself on the potential solutions available to you today.  If you just walk away from the property in this time of crisis you are not only quitting on yourself but in my opinion you are also quitting on your country.  Don’t do it.  Provide your lender a solution and help them while you help yourself.  This is the responsible thing to do.  We will show you how to do it the right way at www.thenegotiatedsolution.com

 

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

If you pay attention to CNBC you may begin to get the impression that the government is going to begin subsidizing mortgages and even sending out checks to get people out of trouble.  It sounds great for many people in this time of crisis but remember we haven’t seen the details.  The Devil is always in the details.

 

The first thought that comes to mind is the shear number of people that are underwater on their mortgages. The second thought is what will happen if the government incentivizes failure and gives money to people through subsidies or other debt forgiveness plans.  What will the people do that are not in trouble but still fighting to make a mortgage payment that may not be ideal?  They probably will default and look for the free handout. 

 

It’s a very difficult decision in determining who and how to help without making the housing problem in our economy worst.  The key is to stabilize housing.  I thought the tax credit for purchasing an existing home went a long way toward helping only to find out it was cut back and now only available for new first time home buyers.

 

Instead of waiting for another failed government program have you considered your current options?  I had a client last week tell me he was waiting on what the government was going to do before determining if he was going to face the responsibility for his problem with an investor property. 

 

If you have Mortgage Troubles here are your options to avoid foreclosure:

 

1)      Loan Modification:  A modification with your existing lender is a move that can be considered if you want to stay in your home.  Modifications don’t have a high success rate because people’s expectations are not realistic.  You lender may cut your payment down by a couple hundred dollars per month but don’t expect them to forgive any of the debt.  All of the reduction in payments will be added to the back of your mortgage for you to make up in the future.  A modification is nice for a select few but it won’t help you if you don’t have a job and can’t make any payments.  It also may require you to be delinquent before any consideration by your lender.  Whatever the new payment is associated with a successful modification, you will have to make it to avoid foreclosure regardless if you owe more than the current value of your home.  Don’t expect a market rate of interest for your new payment.  If you do you are setting yourself up for a major disappointment.  The lender really doesn’t care.  You owe them the money and that is pretty much the end of any discussion.

 

2)      Hybrid Refinance:  A Hybrid Refinance is a more constructive means of seeking a long term affordable solution if you are underwater on your home but would genuinely like to stay in your home.  This vehicle carves out a chuck of your existing indebtedness from your lender with a new loan and seeks to mitigate and/or restructure any residual debt.  The end result is an affordable long term solution. The new market rate first trust loan is usually 85-95% of your homes current market value.  You do not have to be delinquent to qualify for a Hybrid.  Not everyone is qualified for this solution.  You must be gainfully employed and you must also qualify for the new loan based on income and credit.   Again, this is an innovative solution that helps a select group of people that are underwater on their homes.  If you have bad credit, insufficient income, or no job you are simply not eligible for the Hybrid.

 

3)      Real Estate Short Sale:  The Short Sale is not the option that will allow you to stay in your home.  The Short Sale is a workout with your lender that enables you to sell the home for less the indebtedness.  This is the only vehicle that will provide the opportunity for forgiven mortgage debt.  This should be considered if you simply cannot afford or qualify for the loan modification or hybrid refinance.  Many people owe hundreds of thousands of dollars over what their properties are currently worth. Others have too much exposure with second homes and investment properties where the values have literally cratered.  In these scenarios you need a real plan.  I hear people all the time suggest that they will hold out until the market comes back, only to call back a couple months later with a sob story of how their tenants lost their job and can’t pay the rent.  Denial is not healthy.  We cannot influence the market so we have to follow it. The current price trend in the national real estate market is down. 

 

Realistically these are the only three options you have to stop and/or avoid foreclosure if you are currently at an affordability crossroad.  It is imperative to think clearly and address the problem.  All three options are available at www.thenegotiatedsolution.com

 

As I said in an earlier blog, the government is going to save the free markets.  I will be shocked it they subsidize mortgages even for people that are termed destitute.  Foreclosure and bankruptcy are free market remedies that allow orderly termination and renewal.  Having said that, if there is any subsidy given it will only be for the very needy and it will only be a Band-Aid to help stabilize the markets.  Once the economy regains its legs all bets will be off. Our government can not afford to borrow to pay for peoples misfortunes.

 

I am suggesting to all those that are concerned and have affordability issues to examine the three options I have outlined above.  If you owe significantly more than your property is worth a short sale could be your wisest move.  You will need to do some sole searching and put aside the denial and moral character to benefit.  It is truly the lesser of two evils.  The debt will burry you and it will hurt your family.  Think of the short sale as an act of prevention.  It is a very constructive solution for you and your lender.  Don’t attempt it without a complete understanding or the credit side, tax implications, and personal liability associated with the mortgage note.  I do not advise that you consult only a realtor. 

 

On the subject of a realtor, we have a new client in Florida that is unhappy with their realtor and current delayed short sale solution.  Selling a property and signing a note for the unpaid mortgage debt is what your solution may entail with improper council.  Other mistakes include emptying out your retirement accounts to satisfy your lender.  On Friday I had another client sign up for the program and regretfully admit that they liquidated 200K from an IRA to pay people off for a business that went bankrupt.  Now they are in trouble with their home.  I asked why and where did they get such advice.  These are common mistakes and tragedies that can be avoided with a plan and credible advice. 

 

Please humor me for a moment.  In the jungle the Hyena will take the spoils with complete disregard if it were not for the watchful eye of the Ferocious Lion.  Regardless of what option you chose to pursue above, your family and financial well being are at risk.  Are you prepared for the role of the Lion?  Is your lender the Hyena?  Do you have the knowledge you need to make the right decision and see it through to a solution?   We talk to a lot of people facing the mortgage/housing crisis.  I would like everyone to know that the homeowner is consistently more harmful to themselves than you could ever imagine. 

 

The blog is free at blog.thenegotiatedsolution.com and the program is on special for February for only $99.95.  You make the call.  Good luck!  Blogging from the front line of the housing crisis.

 

GHunter

One of the most frustrating aspects of any short sale or loan modification, is dealing with the bank loss mitigation department.  Any person having been through this process  can attest.  First, going through the process you realize that the collection department is different than loss mitigation.  In other words, even if you have an assigned negotiator, does not mean the collections people will stop their harassing phone calls, letters, certified mailings, emails and other threats, they will not.  Additionally, you might start receiving mailings from bankruptcy attorneys, etc.  Finally, once your credit has become impaired expect your credit card companies, irrespective of your payment history, to cut your credit lines.  They figure even if you have a 25 year on time payment history with them, you are now a credit risk.

 

If you have successfully completed a short sale with the assistance of The Short Sale Negotiator Congratulations, but your work is still not done.  Two important steps remain, first is the daunting task of figuring out how to put this on your tax return.  The Law Offices of Tucker & Associates, PLLC, and their CPAs, can assist you with individual income tax preparation.  Next weeks blog, will talk about some tax strategies.  The following week, we will talk about the final step, credit rehabilitation. 

 

Please be aware that the number reported on a 1099-C is not always accurate.  This week I had a client bring in a 1099-C where Wells Fargo had reported the debt forgiveness was $420,000.  After many consultations with Wells Fargo, where they first started with a derogatory, and holier than thou attitude, we were able to get it corrected to $290,000.  The $130,000 correction, is a difference in $52,000 in taxation to the client.  In other words, pay close attention to the details.

 

Make sure your 1099-C is accurate, double, triple check all numbers.  Wells Fargo had put their BPO number in the file, but this client had netted them $130,000 higher than their BPO, it was over a million dollar loan.  Again, next week we will be back with some insights on how you report this debt forgiveness.

 

Until then, make it a great week. Guest Blogger blog.thenegotiatedsolution.com

 

Lawrence Tucker, Esquire, MBA

Principal, Tucker & Associates, PLLC

Legal Counsel, for The Short Sale Negotiator

On Tuesday evening (2-3-09) I caught an episode of Carmen On The Money on CNBC.  Carmen runs a great show and there is no doubt this lady is a class act with her heart and soul in the right place.  She clearly wants to help and inform people every step of the way.  I like her very much!

 

The first segment of the Tuesday show touched on Real Estate Short Sales.  There were three experts on the bench to assist Carmen with the call in line.  One was the credit guy that is frequently on the show, the second was a financial manager, and the third was a highly ranked financial planner with special certificates of education and accomplishment.  All three experts are accomplished people, and I don’t want to disrespect them, but we are talking about Short Sales and people are at risk.

 

One of the callers was a lady from Florida name Cathy.  She is 52 years old and she has already lost one half of the value of her home and most of her saving trying to maintain the mortgage payments.  She owes significantly more to her lenders then her Florida home is worth.  Most of the homes on her street are in foreclosure or have already been forecloses.  In addition, she has lost her job and there are no jobs in her state.  She is going to have to move out of state to find employment.  The only real asset Cathy had left was her retirement account with just over 125K.  The question to Carmen and the bench was “What should I do about the house and the mortgage”.  How would you answer this and what would you do?

 

The collective reasoning from the bench was a suggestive act of futility.  They recommended that Cathy do whatever she could to save her credit rating.   With no other resources that meant Cathy should sell the house and make up the difference by emptying out her retirement account.  The emphasis was on saving the credit profile.  Is this the right advice for Cathy?  Is this the right advice for you?

 

Absolutely not!  This is blatantly the WRONG advice for Cathy.  Carmen, shame on you!  We can teach you a credit strategy.  Credit is a journey and you will recover.  However, once the retirement money is gone, it’s gone, and you have no last resort funds.  To put things into more perspective, the lenders can’t even get at your retirement money through bankruptcy.  Why would you give it to them voluntarily.  The lenders will eat the residual mortgage debt with a short sale.  Don’t think for one moment if you are in Cathy’s situation that the advice from the show is your only option.  Wrong!

 

It’s ok.  Times are very different.  Carmen and the bench do not completely understand short sales.  The market doesn’t understand short sales.  We are clearly in the midst of the 100 Year Storm.  Cathy 52 was very resistant to the advice and for good reason.  What should Cathy do?  Follow your heart.  Don’t end up destitute.  A Short Sale with a plan and even a small bit of continuity results in forgiven mortgage debt.  Cathy’s gut was telling her not to let go of the retirement money.  Right On! 

 

The Short Sale is the weapon of choice.  I have a client where we are now completing a third transaction for over a six month period.  The grand total is ….are you ready for this… approx. 950K in forgiven residual mortgage debt.  This does not include unpaid interest that was also forgiven.  What was the cost?  The client had to collectively bring approx. $6,700 dollars to the closing tables across all three transactions in total and sign a $20,000 note.  The third transaction is set to close this month.  Who’s the expert now?   How would you rate a professional baseball player that went 3 for 3?  Are we talking Grand Slam Home Run or just and average player?  This is what we do.  Go to my home page at www.thenegotiatedsolution.com and scroll down to the very bottom and click on the label for “About”.  Read the very last line.  This is my gift to you. 

 

The “Armies Of The Dead” from “Return Of The King” are attacking the lenders nationwide.  The market is in a total state of chaos and you are at risk.  Take my gift, use it wisely, and join the onslaught.  Wield the sword with the bounty of forgiven mortgage debt, dignity, and closure. 

 

Blogging from the front line of the housing crisis and taking no prisoners. 

 

GHunter