Here are the links:

http://www.myfoxla.com/dpps/news/dpgoh-man-bulldozes-home-to-send-bank-message-fc-20100222_6196364

video:

http://www.youtube.com/watch?v=R2_5y79gOaM&feature=player_embedded

<http://www.youtube.com/watch?v=R2_5y79gOaM&feature=player_embedded>

Wow!  What would Thomas Jefferson have made of this?  Wasn’t he one of our founding fathers that help write our Constitution?  After all, our country is built on freedom and the freewill of men.  This is a great moment if you are in tune with what is really going on between lenders and homeowners in the midst of this housing crisis.  Lenders in many cases are preying on homeowners and pushing them to limits that can cause them to break.  I don’t want to get into all the negatives we have seen but I do want to shout out to the lenders the message of this incident.

It’s all about “Respect”.  If you come into the equation and forget the primary premise of your business model you put yourself at extreme risk.  What is immediately factored into a lenders business model?  The model assumes that the business will be conducted in a fair and equitable manner.  The model incorporates risk but does not provide allowances for extreme risk that is provoked.  This is what we have here with the homeowner taking matters into his own hands and leveling the house.

The homeowner tried constructively to negotiate and even provide a solution for the property in the form of a short sale with a real buyer for his home.  The lender took the position that they held all the cards and demanded that the homeowner conform to their demands.  The lender clearly pushed the homeowner too far.  When the homeowner threatened to level the house that should have been a clear indication that they needed to adjust their tactics and regroup. This could have been avoided without question.  The lender was ignorant and they forgot about respect.

Trust me from experience on this one.  If you’re a lender and you lend $100 with the expectation of gaining 5-6 dollars in interest each year on your principle, with a couple discount points up front and a targeted net interest margin, you have not factored in the bulldozer effect.  There are enough errors and normal losses running a lending operation that the last thing you want is to push a borrower to rent a bulldozer and make good on such a threat.

If you’re a lender reading this we have to be fair and ask another question.  Are the homeowners solely to blame for the housing crisis?  If you think it was just the fault of the homeowners you weren’t seeing what I was seeing first hand.  Let’s face it, the lenders and the Pigs on Wall Street made a killing as real estate ran up.  They helped create a monster that with the aid of the current deflation is trapping homeowners significantly underwater with oceans of legacy debt from a cycle that ran out of control. Now the lenders want to recover as much money as they can on the way down.  They clearly do not care about the homeowners in many instances.  They just want to maximize recovery.  They have forgotten about the customer relationship and respect.  Do you want further proof of this?  The government just announced a significant extension to yet another housing program. The government is artificially supporting the housing market. The longer we can drag out the problem the easier it will be for the lenders to recover and for the overall economy to also bounce back.  The thing that is most unfortunate is that in the interim the lenders are preying on distressed homeowners with a multitude of practices.  The government has saved the free markets and the financial system.  The lenders have recapitalized with TARP and private capital.  It’s now game on for maximum recovery. Do you think Obama is worried about the homeowners or more about where he is going to get his next cheese burger and fries?

This is why the lender pushed the homeowner in the bulldozer example when they rejected his 170K contract to solve his housing problem.  They got greedy and took the position that he must conform to their wishes.  This action, although not openly condoned by the masses, places this homeowner in the hero category for many that suffer in despair with failed loan modifications etc.

What are the lenders saying to prevent such action?  They say things, and I quote, like this: “I hear that they are criminally prosecuting people that do such things”.  Now I thought that the guy that bulldozed his house was a bit extreme but that is not what got me irritated.  The quote from the lender is what pissed me off.  I have a client issue with a lender that occurred recently and it came down to an unfair incident and the question of what a particular client may be capable of if we don’t constructively work through the issues.  A key representative at the lender made that exact quote.  To me this is cowardly.  This is a way to intimidate conformance when you as the lender have forgotten how to respect the borrowers and mitigate through a recovery cycle in real estate.  Why not just scare the people so we can take their money, kick them out, blame them for the housing crisis, and get the collateral back in pristine condition. 

Sorry fellows but that is not the way it works.  Here is how I see it with the bulldozer or the sledge hammer or flooding the house etc.  As long as you do not light the house on fire or do anything that would endanger the welfare of others, in my opinion, there is no criminality.  It’s all civil baby. That means lender you better treat the borrowers with respect and avoid such extreme outcomes or you are going to be spending legal dollars with your henchmen and hit the wall with zero recovery when they laugh their way to the protection of bankruptcy.

Am I as an ex-lender being fair to the poor lenders?  Your listening to a guy who created and then ran a forty state wholesale mortgage division.  It wasn’t about delivering the loans to Wall Street and getting paid with no strings attached.  We had all kinds of problems.  I remember one where a guy openly admitted to mortgage fraud when we confronted him through our servicing department.  He knew he was at risk depending on how our bank wanted to pursue the issue.  He arranged a family member to buy the property and our servicing department told him to get lost.  He found his way back to me with a solution that mitigated the majority of the loss we were forecasting so I gave it the green light.  I didn’t want to be the boss man and disrespect a guy who was trying to do the right thing.  It’s all about cooperation and respect.  In the end the lender loses much less and we move on as a business.  I just don’t understand where respect got lost in the equation, but it has.

How would I have handled the bulldozer situation after negotiations had failed?  First for the record, I do want to say that I love Caterpillar.  I personally would have rented a much bigger Kitty Cat and had a news crew on the schedule.  I would have also not told the lender.  If I were to a point where they were taking my house, putting my belongings on the curb, and tying up my livelihood with my business, I would have gone out of my way to be more polite.  I would have gone to the local Hallmark store and gotten a nice card for the bank president.  I would have then taken a picture of the house after I flattened it with the mighty American made Caterpillar and then scripted the following note for personal delivery:

Dear Mr. Bank President,

I have tried to do my best to constructively solve the situation that I am currently immersed in and I have failed.  I wish I could have done more to solve this problem in a mutually beneficial manner and conform to your wishes, but respectfully your persistence and demands were more than I was able to handle.  I am now also faced with losing my livelihood.  As a last request I am asking for a little compassion in the form of a small advance.  I need enough money to buy a couple gallons of Elmers Glue.  Since you wouldn’t work with me and I am losing my business too I thought it would be a good idea if I focused my ambition on a new trade.  I would like to use this situation and the time you have graciously granted me as a positive opportunity to become a puzzle master.  I have enclosed a picture of my house that I just bulldozed so you can encourage me.  After you made it clear you were large, in charge, and completely inflexible with the negotiations I decided I had no other choice but to conform to your demands.  Between now and the time you foreclose on the property I am going to work diligently on putting each splinter of the house back together with the glue.  I want you to know that I am a novice at this puzzle master stuff but I thought it would make your day.  Enjoy the picture.  Sincerely, Your Loyal Customer.

With all the housing issues up in the air, who is keeping an eye on the homeowner to see if they are being treated fairly?  Nobody, the government will slap the lenders on the hand just like they did with the failed 75 billion dollar loan modification program. Three percent of the homeowners or 30,000 out of a projected one million applicants got a short term to intermediate term loan modification fix.  Oh well, they got a slap on the hand in the media and it’s on to another program we are going to come up with.  Burry it and pump out the false hope has been the strategy.  What should you do?  Educate yourself for free at www.thenegotiatedsolution.com on a Real Estate Short Sale Solution.  It’s free and if nothing else you need to know your options and understand what is going on so you don’t get caught up with the crooks or beat down by the lenders.  Good luck and if all else fails please humor me and remember to rent the biggest bulldozer.

GHunter

Blogging from the front line of the housing crisis.

First I want to state a couple embarrassing public statistics regarding Loan Modifications and failed government programs.  The statistics that came out in recent weeks for the governments 75 Billion Save The World Program were laughable.  One Million people were supposed to be eligible for loan modifications.  We are talking about a government subsidized program.  It turns out that only 30,000 people received short term solutions.  Keep in mind that the statistics since 2007 show that a very high percentage of completed loan modifications fail and the people end back up in default.  The notion of “here is a couple hundo off your payment and you should like it and deal with it” is a tough sell when you have to still make the high payment and you’re a couple hundred thousand under on your property value relative you’re your mortgage debt. 

What is a Loan Modification to your lender?  I am going to give it to you straight right in your ear whether you want to listen or not.  This is your problem and if you don’t listen you will more than likely end up where a client of mine did in the example below.  A Loan Modification is an opportunity for your lender to capitalize on your moral character.  We all want to do the right thing…right?  Sure we do as long as we are being treated fairly.  Moral character will bury you.  Your lender is going to pledge to you that you are eligible for a Loan Modification and ask you to send in all your financial information.  Keep in mind they love you so they want to do only what is best for you at all times.  What happens once they get all your paystubs, bank statements, etc?  Now is when they peer into your personal finances an attempt to get your money.  Absurd right?  I am the traitor now right!  How could I suggest such a thing from your lender?  Oh My…save it the truth sucks. They pump you up with false hope and prophecy of your ultimate eligibility.  Eligibility for what?  Oh, you mean the payment that you can now afford and the potential for forgiven debt and keeping the house.  Wrong!  You will end up with a couple hundred bucks off the payment with all the expenses and curtailment added to the back of your mortgage note.  In the process over several months with much frustration many of you will go broke and capitulate your savings and safe money to you lender on the basis of wanting to do the right thing.  Then you will wake up and realize you have been had with an ultimatum of pay or foreclosure.  Eventually you will find a Short Sale is the only fair remedy to your problem.  Let’s not jump the gun.  Let’s see what a recent new client had to say about their personal loan modification experience.

A family was referred to my team from a recent happy customer where we completed a Real Estate Short Sale.  These new clients had just been through and experience that I would classify as “Feudal”. The spend ten months trying to get a loan modification with the help of an attorney.  An attorney…Wow!  How cool would it be to be an attorney? That must be a person with extreme intelligence and the utmost care and consideration for all people in distress.  Well I will let you decide.  This attorney took $3,800 from this family and failed miserably and was eventually never heard from.  The clients ended up after ten months getting their own loan modification that consisted of an unaffordable couple “hundo” off of a 4K monthly payment.  It gets better.  The attorney that took their money didn’t even give them an objective time line to switch gears if things weren’t progressing according to plan with their loan modification.  How about if in 90-120 days it is not working out then we need to investigate a Short Sale.  How about some advice on preservation of assets and exercising the caution not to dissipate all your assets and saving to your lender in the interim of the process.  The attorney provided no guidance but he did cash their check.  He was stellar when it came to the check cashing exercise. 

Where are these people now?  Great question.  They are clients of mine fully engaged in a Real Estate Short Sale.  The bad news is that they have had a recent reality check.  The attorney fleeced them and their lender pumped them up to a point that they capitulated all their saving and retirement to the cause.  Yes “the cause”. They got on the Choo Choo and now it came to a sudden stop and they have to get off.  I am actually not sure if the train even stopped but I do know when they showed up for help they definitely had to get off the train.

We all want to do the right thing as long as it is fair.  It obviously is not fair and your lender has you in their sights.  You are being targeted for the funds that can be recovered.  Legally without a better solution you do owe the money so the lender can do anything to you including outright lie if that helps with recovery.  They are not being supervised and you owe them money.  What happens when you cannot comply with the paltry loan modification and you are living paycheck to paycheck?  That is when the lender lowers the boom on you as they did with these clients.  They tell you that you either make the modified payment now or they will foreclose on you within 10 days.  Shocker isn’t it?  If you don’t want to believe this or hear such a story from me then that is fine.  I suggest you go for the Loan Modification and then call me with your sad story to sign up for the Short Sale.  It’s a personal choice.  If you come to me early before you have gotten taken, i.e., before you are broke, then you will not be broke.  These clients have three children.  While I am clearly disgusted by what is going on the only thing I can do with my team is steer you to the fair solution with a Short Sale.   Wake up America.  Sometimes when kids are involved I come real close to yelling at my clients when I hear such stories.  Everyday is like a broken record with the Loan Modification stories.

I want to give you another example from a phone call from yesterday that I received from an existing client.  He had read that Bank of America was going to come out with a new Loan Modification initiative that he believed would make him eligible for 30% debt forgiveness of the existing principle on his two loans and the perfect payment.  I gave him a nice “HELLO” on the phone.  You mean Bank of America that was recently criticized by the government for being one of the worst lenders involved in their failed 75 Billion dollar subsidized program is going to be the front runner with Loan Modifications that entail 25-30% of principle debt forgiveness for YOU? 

That would mean that the US Treasury Department is going to have to require that all financial institutions to write down their loan portfolios another 30% and plan on conveniently doing it next year again just to satisfy the people.  The mortgage debt is bound by contract law with the investors that own the actual mortgage paper behind the large servicers. The visions of grandeur with holy debt forgiveness are never going to happen.  How about all the other great programs from the government and the threat to change the bankruptcy laws to coerce the lenders into helping with loan modifications from 08 & 09?  Failed!  They don’t work for the masses. Get smart or go broke, your choice.

Let me elaborate more on the motivations of the banks and large lenders as I see it.

When are people going to understand the Band-Aid concept?  The concept of a Band-Aid is to delay the process or otherwise drag it out. Literally put a Band-Aid on it.   If a lender like BAC can drag out the problem and recovers more money through the loan modification process I described above in conjunction with billions in new earnings to offset current additions to loan loss reserves then they win.  Look at it this way.  If all the defaults are realized today and they hypothetically equate to 12 billion but the bank only reserved 10 billion then Wall Street doesn’t bless this and the stock goes down.  Ouch!  We wouldn’t want that to happen.  Given the bank has already recapitalized and for the most part has already reserved against the majority of its real estate losses, wouldn’t it be more financially sound to take the mortgagors down for as much money as possible while delaying the process.  That means that in the public eye the can reserve 10 billion per quarter for loan loss reserves and come in with a controlled loan loss contribution at or below that figure while the work their lawful recovery efforts on you.  Now that is how to run a business and Wall Street likes that very much. 

That’s were we are folks.  Its capitalism and if you owe one of these goliaths money you better get a real plan before they take advantage of you.  The bulls eye is on your head and the Choo Choo Train doesn’t rest.  Maybe this blog will set you straight and you can solve your problem with a Short Sale and still be in good financial shape.  This is why I am writing to all those that will listen.  Go to my home page at www.thenegotiatedsolution.com and sign up for our FREE two hour video “The Negotiated Solution” and learn about the Short Sale.   

I hear sad stories every week from good people that got hurt really badly by either doing nothing or believing in the loan modification process.  It doesn’t have to be you!  I guarantee your time will not be wasted investigating a Short Sale. The Short Sale Solution done property where it entails Credit Strategy, Asset Preservation, Property Disposal, and Mitigation of the unpaid Residual Mortgage Debt is the only way to keep it fair and get the most out of the solution.   

Blogging from the front line of the Real Estate Crisis.

GHunter

The media headlines just reported a failed terrorist attempt to blow up another plane.  Hugo Chavez in the South once again is making waves with threats against companies.  We are fighting two wars and as we enter the ninth year in Afghanistan all of thoughts are along the lines of another Vietnam and when the hell we are going to get out of this Hell Hole. Our military is doing great job but it is hard and we are losing young lives.  I have clients that have lost children in this war.  With all this crap and the media hyping the body count and what appears to be a standstill it is hard to find hope but hope is clearly present.

There is no question America is a killing machine when you line the enemy up in uniform and declare game on.  We all understand that the two current wars are very different and the cost in conjunction with our financial crisis has cost us dearly.  Where is the third front that I offer to you as Great Hope for 2010?  Who has recently taken the reins of General? 

We all know that America is dependent on foreign oil for its security and survival but do you know that the technology in Natural Gas in just the past three years alone has made America the Saudi Arabia of Natural Gas with a current 100 year supply domestically.  Many people don’t really understand the consequences and opportunity of this recent development. 

Rex Tillerson the CEO of Exxon Mobil has just given the command for America to open the third front and mobilize for war with the purchase of XTO Energy.  This may not be evident today but the forces of capitalism with its unweilding power of creative destruction have been hereby commanded to mobilize and prepare for battle. This battle will not have the elements of lethal force like that of the mechanized infantry division Sadam’s troops fired on at night at the end of the Iraqi war in 2003.  When the sun rose the battle field looked like Armageddon and Congress tried to court martial the commander in charge for overkill.  America is soft because we are stuck with a bunch of pansies and fat losers in Congress.  Theses are the same losers that allowed the lack of regulation and excessive leverage to wipe out the common equity of Fannie Mae & Freddie Mac and almost destroy our financial system.  They would rather legislate the war and send our troops into battle with inferior rules of engagement like the ones currently in Afghanistan… “Don’t shoot until you’re shot at”. To me this is worrisome but friends of mine tell me that this is the way we wage war and this has always been the way.  

The Generals of Capitalism do not have to play by the same rules of engagement. The new front in the war that will soon be opening against terrorism and in full support of our independence will also not be run by Congress.  It will be run by the Generals of the free market emboldened by the power of technology, innovation, and investment.  Some may think it’s early but they are wrong because the technology is in place.  What is going to happen and how is this a third front?

In my view this is a third front and potentially the one that will be the most effective against oil rich terrorist sponsoring nations.  If you follow Boone Pickens he will help you do the math.  Recently he stated that if we just focused on converting our 6.5 million heavy diesel truck and heavy vehicles to natural gas over the short to intermediate term (5-10 years) we could reduce our dependence on foreign oil up to 15%.  Now that doesn’t seem that significant, and ten years is a very long time ,but if you put this in conjunction with new nuclear, wind, and solar power initiatives you can visualize a pretty big dent in foreign oil demand. 

The significance of such potential reduction in foreign oil demand has the potential to literally cut the legs out from beneath the terrorist funding sources. Take a country like Saudi Arabia.  They don’t have an economy that innovates.  They don’t have the human capital that a truly free democracy like our country spawns.  When the oil revenues wane due to a 10%-15% hit to the top line demand it will quickly become an Econ 101 supply demand equation.  The major funding sources of hatred and terrorism will become top heavy and wither.  Look what happened last year when oil briefly dipped into the 30’s.  There was a lot of nut holding going on I can assure you. 

This will truly be a third front in the epic battle of good vs. evil.  No blood has to be spilled here to achieve the ultimate goal of quashing terrorism and a significant move closer to energy independence and stability.  Just think what the positive effects of this mobilization will have on our economy.  The Generals will be all the major heads of the oil and gas companies and the capital for investment will rest upon the same foundation that caused our financial crisis… Wall Street.  Capitalism’s creative destruction can also be good and we must respect Wall Street as part of our arsenal.  Let’s hope congress doesn’t screw it up by preventing the proliferation of the newest technology that got us to this point.  Its time for the military to continue it plight but now it’s also time for the raw capitalist engine of freedom, democracy to enter the fight in their support. 

Rex Tillerson of Exxon Mobil has officially has set the mandate that Natural Gas will be a key component of our plight.  Watch the rank and file of the energy business get on board.  This is going to be an undertow that will not go unnoticed. Regardless of our troubles today we will rise to the challenge.  The third front may very well prove to be remarkable and the most devastating to our collective enemies world wide.  Don’t bet against capitalism.  In spite of our troubles and the housing crisis I offer all those that take a moment to read and ponder Great Hope for 2010.  All Hail Rex!

Stop & Avoid Foreclosure, investigate a Real Estate Short Sale Solution at www.thenegotiatedsolution.com

Blogging from the front line of the housing crisis.

GHunter

The object to keep everyone in their homes that wish to stay is a good one but we need to drill down on the methods of the lenders that are separate from the voice of our government.  This is the key.  Caveat Emptor or buyer beware also applies to the unsuspecting homeowner.  Read on and decide for yourself who is on your side. 

When you call your lender with a mortgage problem, a question when you are minorly delinquent, etc. you will many times hear this new message:

The government and the lender want you to know that many people are being prayed upon with loan modifications and the likes.  Anyone requesting money up front or giving you guidance not to make your mortgage payment is suspect and looked upon as a fraudster. 

In other words, steer clear of these groups and individuals, because we are your lender and your friend.  We obviously have your best interest at heart.  You are our customer.  Ok, sounds great doesn’t it.  In the real world there certainly are crooks that will take your money and do nothing for you.  Keep in mind not everyone is a crook and that you may need professional help with a Loan Modification of Short Sale to avoid much more serious consequences.  At this point I am going to completely refrain from voicing my opinion on the subject of this message as being “Truth or Deceit”.  I am going to give you a real life example so you can come to your own conclusion.

Last week a guy came buy my house to do some work on my pool.  I was ordering a safety cover out of concern for my family and neighborhood kids.  I expressed my strong desire to ensure that the pool was a safe place. I don’t want anyone to drown on my watch.  This guys name was Dave.  Dave said he completely understood.  Somehow the conversation went to his family.  He said he had seven kids.  We laughed.  I asked him if he was Catholic.  He said no but he had it all figured out.  Apparently every time he would bring up the subject with his wife about going back to work she would end up pregnant with another.  We laughed again.  He acknowledged he was truly blessed with a family.  Then out of nowhere he made a profound statement.  He said,  “I have a great family but no money” .  We started talking and it ended up he was completely broke and living hand to mouth with a monthly subsidy from his brother.  He went from laugher to a stressed out soul and he was dying to tell me his story.  I was drinking my coffee and I had time to kill early in the morning.  Here is his story:

He had a property he lost to foreclosure over a year ago.  It was an investment property.  He lost this property to save his new primary residence where he and his family lived.  Around the same time he lost this property he applied to his lender for a Loan Modification.  They told him he was eligible. Keep in mind this was about a year and a few months ago.  As part of the eligibility he obviously had to jump through some lender paperwork and compliance hoops.  We have all heard of those.  He ended up going through a forbearance period.  In the end he did obtain a Loan Modification.  An approximate $3.000 monthly mortgage payment was reduced by a net of $60 per month.  Congrats, right?  Wrong.  In the process the lender played this family’s good moral character to the poor house.  Over the term all of their savings and retirement accounts were slowly and voluntarily sucked into the lenders grasp.  The $60 solution was hardly a solution at all. This guy has been getting a $900 per month subsidy from his brother every month over the past year just to survive.  He is now totally broke with nothing but a paycheck.  He literally has nothing.  Is this in your judgment part of the plan by the lenders to get their money back or really part of the solution and our government’s intentions for the public? 

Frankly this is the scam that the lenders are pulling on people nationwide.  Don’t seek help from someone that will represent you and level the playing field to keep it fair.  This is our mission statement.  Your lender wants to keep it fair for you.  After they are done with you and you are flat broke what do you think happens?  The story continues:

I told him the only thing he could do at this point was to call and try to seek a remedy from the newest Obama plan.  He told me that he was ashamed to have to take money form his bother every month.  He put his head down almost to sob.  This is the part of this crisis that I hate.  The human toll is terrible.  I told him he should be grateful to have such a brother and that if his brother had money he surely couldn’t take it with him.  That made him feel better.  I gave him my personal contact information and told him to follow up with me after he contact his lender.  He called me two days later with the results. His lender said he made $48 too little to qualify for any of the plans and that his investor was a private lender.  They then went on to inform him that they only offer one Loan Modification per loan over the life of the loan.  It is blatantly obviously to everyone reading this blog that a reduction of $60 per month for a family of seven children after you have taken all their verifiable savings over the course is a disgrace.  Then they apparently exposed the evidence of deceit in a final blow.  They told Dave that at this juncture that if he did not make his payments they were going to foreclosure on him and he would have to vacate his home. That was it.  Unfortunately this is verifiably happening to many unsuspecting people.

Now, as an expert in the field with twenty years of extensive lending experience, I am going to give it to you straight whether you want to hear it or not.  Here is how the game is played.  If the lender can string the process out and get all of your money in the process it actually doesn’t hurt them, rather it helps them.  These loans are already the majority reserved for losses on their books.  All the write offers were taken in the past year during the crisis.  The lenders were required to reserve and increase capital to satisfy the government and the markets.  Now they are in the recovery mode and you may owe them money.  They don’t have rights to your retirement accounts and every nickel you have unless you capitulate it to them. 

The moral here is don’t trust your lender nor your government.  The government has saved the free markets and the financial system.  As I have said before, you are on your own.  No one has to end up destitute and in despair as Dave has in this example.  This does not have to happen and it doesn’t happen to any of our clients. Nobody that I represent or give advice to will go down this path.  I am passionate about this statement as my next blog is going to illustrate with three very recent examples of what I call Grand Slam Home Runs with Short Sales.  I am going to give you play by play examples of three people in very difficult situations that walked away from $630K, 390K and $285K respectively while not going broke and at the same time providing a real solution to their lenders.  All of the advice and time I spent with Dave was free and much of what we offer is free.  All you have to do is get motivated to help yourself.  Start today.  Investigate a Real Estate Short Sale at www.thenegotiatedsolution.com .  Sign up for the 2 hour video.  The cost is nothing but your time.  We designed this program to separate our team from the crooks and fraudsters on the basis of quality and credibility.  No money, no credit cards input, only your time and desire to help yourself. We help the people level the playing field, keep it fair, and win! Caveat Emptor to the homeowner!

GHunter, Blogging from the front line of the housing crisis.

Today the markets rallied because the Case-Shiller Housing Index came out and showed two consecutive monthly improvements.  Everybody went wild as though the housing crisis is over.  This scares me but also makes me feel good because my stocks keep going up.  Can somebody come over and look in my viewfinder for a day.  Some days I feel like a life boat captain on the Titanic. 

The housing crisis is nowhere near over and deflation is still ravaging the prices.  Robert Shiller even came out and warned everyone that even though his name was on the index that it wouldn’t take much for the housing market to make another break to the downside.  You can find Robert Shiller on CNBC from time to time.  You have to love this guy.  He has the street cred and he tells you the truth whether you want to hear it or not.  The best part is that he will tell you that a 1000 pound bolder is going to drop right on your head without raising his voice or getting overly excited.  Of course nobody listens and then he says play the tapes and don’t say I didn’t tell you so.  We are here again so plan on housing prices continuing to decline.

The only way we are going to find our way out of this situation is to be realistic.  To make my point I would like to revisit the housing run up in the late 80’s the sputtered in 1989.  It took 5.5 years for the markets to stop going down and finally flatten out.  It was 94 and a half before it was over.  Now the speculative run this time around was enormous as compared to the run in the late 80’s.  This time it almost completely wiped out our financial system.  How long do you think it is going to take for market stability?  It is going to take time and we are going to need some inflation to counter the deflation in my opinion.  The one gentleman I admire but definitely would not want to be with the task of walking this tight rope is Ben Bernanke.  I hope he fixes it before we all have to learn Chinese.

Let’s reflect on a recent Barron’s article from two weeks ago.   A major Walls Street firm having researched the supply and demand trends in all the major market came to the following conclusion.  The approximate 14+ million people that were defined as immediately affected were approximately 24% underwater on their homes.  The research expectation was that the same people in two years would be approximately 48% underwater on their homes.  I don’t know how in-depth their research was but on the surface it really makes sense.  We are talking about approximately one third of the 40 million people that bought in the last stage of the housing run up.  Many of these people are facing default and need to find a solution.  The pressure on the housing prices is nothing more than deflation pressing down on the whole market.  The best means of a solution for the most affected people would be a Real Estate Short Sale.  This is the only way they will be able to get out from under this enormous debt burden without going completely broke.  It’s a personal choice, broke and too lazy to research a short sale, or a winner that got out from under a lot of debt and provided their lender a solution.

Another point that I like to make to clients to put the housing market in perspective is to take a stock like General Electric and use it as an example.  We all know that markets trade on emotion.  The stock market is much more liquid than the housing market so emotions can be reflected much more quickly.  In contrast a persons personal pain on a home can be put off and we can experience denial if we so chose for a period of time.  About a year ago General Electric stock was around 32 after coming down from approx. the 42 level.  GE was a triple A rated company and an American financial and industrial conglomerate.  What was not to like about GE?  Everything!  We all expected GE to come down to a level of fair value.  We each had a level in our heads and we thought the mighty GE was safe.  Wrong!  It came all the way down to 6 and we all prayed for mercy.  My point here is the markets go way above fair value on human emotion and fear and they go way below in the same manner when they reverse.  This happened with GE that now resides at around 14.  I am asking you what is going to happen with the housing market.  There are already homes that can be bought at a level perceived to be below the cost of construction.  Where does it go from here? 

In the words of the late Sir John Templeton in 2005 as the real estate speculation craze raged on, he said “wait until it drops 90% and then buy buy buy”.  Everybody thought he was a fool.  He was certainly no fool in hindsight.   

The Deflationary Dragon is still raking havoc.  If you need a roof over your head I say it’s ok to buy a house you like.  Affordability is very attractive.  However, if you are stuck in a situation with denial to the left and foreclosure to the right I am telling you to carve out a path right up the middle and solve your problem with a Short Sale. 

We are still offering anyone in the 50 states access to our Free Trial. Take two hours to investigate the Short Sale at www.thenegotiatedsolution.com as a means of avoiding outright default and Foreclosure. We offer a Full Service that will handle the entire process from selling the property to the closing.   Its not easy but it’s the best free market option you have where you can win. We have many happy clients. 

Blogging from the front line of the housing crisis.

Ghunter

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

Well, so much for cable television interviews.  Her interview was excellent and what she said got my attention.  We actually decided to help select individuals with Indy Mac with Loan Modifications.  I would like to tell you about a recent experience on the part of one of our clients.

The client had a job and had tried for three months with Indy Mac to obtain a loan modification to no avail.  We decided to give it a try because he was gainfully employed and the numbers just made sense for a Loan Modification to avoid foreclosure and keep this homeowner in the home.  After all his primary objective was to stay in the home and the loan program was the nastiest of all, a negative amortizing arm.  This type of loan make the lenders look like predators so we felt this would be the added incentive to make this work for our client.

We started out with our standard proposal and demand letters as negotiators and licensed attorneys.  The one thing we added to the equation was the optional backstop of a short sale if our client was not completely satisfied with the terms of the Loan Modification.  Our demand letters demonstrated our clients desire to stay in the home and also exposed the risk of a $200,000 loss that we were prepared to put right up the pipes of Indy Mac with a Short Sale if they did not treat our client fairly.

Four months went by and Indy Mac was in a complete state of chaos.  Hey Sheila, who the hell did you put in charge of that zoo anyway?  Did you bring back the CEO with messed up teeth that ran the company completely into the ground?  I wasn’t sure but my client had had enough after four months.  We decided it was time to switch gears and go with the Short Sale.

At this interval we collectively had given up hope of any prospects of a successful loan modification even though our client was a dead ringer for the program as described on national cable television (11-18-08) by Sheila Bair, Head of the FDIC.  We put the property on the market and obtain a contact within ten days.  We then immediately submitted our short sale proposal.  Now what do you think happened?

Within thirty days as we are steamrolling along at putting the $200,000 loss to the Einstein at Indy my client gets a letter in the mail.  Low and behold it’s an approval for his Loan Modification.  The terms were spot on.  The client was elated.  This was the first trust letter.  The second trust letter we later discovered got lost at Indy but was on its way.  My client decided that he wanted to cancel the short sale.  He was very happy with the terms and he really wanted to keep the house.  For me and my team that was a win.  What else can you ask for in this real estate crisis other than a very happy customer?

We cancelled the short sale and the client mailed his May payment in to the Great Halls of Indy Mac.   Remember the terms were very fair and the client had this agreement in writing from Indy Mac.  Indy Mac cashed his check just like they should.  Are you ready for what happened next?  Indy Mac sent him another letter.  I am going to cut and paste the email from my client so you can see it in his words:

Email subject line:  Loan modification denied!!!!

George,I’m officially freaking out now!

I thought the modification on the first loan was going to take place but I received a letter tonight saying that “Based on the information submitted in my financial package, the present status of my loan and/or other specific criteria regarding your loan, we cannot accommodate your request for a loan modification.” Of course they cashed the $1,200.00 check that I sent them, but denied my loan.

What do I do now? All of my roommates have moved out and I was planning on staying here for the long term.

Please advise…

I received this email about 9 pm last Thursday.  The client was flipping out.  I started to laugh because it was kind of funny.  I emailed him that we would work it out in the morning with the hopes that after thirty days with an approval I am sure it must just be a mistake.  It turns out there was no mistake.  My client and I laughed together.  After he was done ranting that cursing like a sailor it was just funny how nuts things are with these lenders. 

The story has a great ending.  We started the short sale back up and the homeowner’s is very content.  He is done with Indy Mac and he now has the mindset that the only fair approach for him is the short sale.

You make the call on the Short Sale.  I have always taken the position that Loan Modifications were for beggars and solutions that revolved around Short Sales were for winners.  Investigate our 2 hour video free trial at www.thenegotiatedsolution.com and investigate the short sale solution for yourself.  Heaven or Hell on earth is a personal choice. 

Blogging from the front line of the housing crisis.

GHunter

Administration Offers a Plan to Spur Short Sales

http://www.financial-planning.com/news/administratoin-offers-plans-spur-short-sales-2661934-1.html

The administration has done a good job at addressing the severe problems that were facing the free markets since the day Lehman Brothers was allowed to fail.  Now what you are seeing is that the financial side of our economy is no longer looking over the abyss.  We are in a healing process.  The fear that all companies are going to go out of business and the end of capitalism is abating.  This is a slow and painful process.  We are now at the point where the administration is clearly moving back to the free market center line.  They are no longer concerned about the people that are in trouble with their homes.  They are moving toward a focus of how to get rid of the problem, stabilize real estate, and get the economy back on solid ground.  The free market with Real Estate Short Sales and Deed in Lieu is just another means of avoiding foreclosures.  As the article indicates, why not provide an incentive for lenders to get rid of the problems.  Who cares if we can’t save all the homeowners?  If you read this article and follow the theme of my blog since the fourth quarter of 2008 you will see I told you this would happen.  The government will save the free markets and you will be on your own with your mortgage problem.  This is where we are heading as a country.  As major financial risk dissipates greasing the private sectors palm with compensation is just another opportunity to get past the problem.

It’s for the greater good of the people and our economy.  Sympatric cries that were once massaged by the politicians will soon not be tolerated.  The free market machine will crush the losers that got into trouble with real estate and a process of renewal will occur.  If you’re the odd man out it will be no different than being left on the battle field.  After all you signed up for the mortgage and you owe the money.  Once the economy and the housing market yield definitive signs of protracted stabilization you are toast unless you have a credible solution of your own. 

Why is it guaranteed that this will happen?  How do I know this is happening right now?  We are in a process of deleveraging.  Everyone has heard the news headlines of the excessive levels of private debt relative to GDP and the savings rate.  Do you think that the consumers are just going to huddle up and save save save to pay the debt down before they start spending lavishly again?  It sounds like the practical and responsible thing to do, but it’s not realistic.

What is happening right now is a process of massive evaporation of debt.  Regardless of what you have read or have heard in the news, debt is being extinguished at an alarming rate.  Millions of dollars in debt is being forgiven with Short Sales.  Credit cards, car loans, and all types of unsecured debt are being renegotiated and/or charged off.  The lenders are taking what they can get.  The excesses are being corrected at and alarming rate.  The lenders are literally capitulating to obtain some form of recovery.  How do I know this?  Maybe you think I just read this somewhere and it sounded like a juicy story.  No, we are seeing it everyday with our clients.  Debt is disappearing in one form or another and the lenders are capitulating.  Deflation has caused Goliath to fear David and the fear is real.

This is great news for our economy.  The process of renewal is solidly underway.  The message for you is to get on board.  If you sit there with a mortgage problem you can’t handle and do nothing to find your own viable solution you are going to get slaughtered.  Take the Free Trial at www.thenegotiatedsolution.com and investigate the Short Sale Solution.  This is your opportunity.  Take it or face the eventual accountability of the free market for the debt you now owe your lenders.

Blogging from the front line of the housing crisis.

Since this blog  - another article came out from Washington Post on this same subject.  Good article stating lenders are now getting some incentives for some short sales.  http://www.washingtonpost.com/wp-dyn/content/article/2009/05/22/AR2009052201480.html

GHunter

Do you remember the movie Moses with Charleston Heston?  Of course you do.  It was awesome and it was so long it had to have an intermission in the 1970’s when I first saw it.

Moses called on to Ramsey and said “Let my people go”.  Then he quietly communicated to Ramsey that he was going to kick his bald skinning white butt out of that fancy pharos suit if he didn’t comply.  That is precisely why Ramsey let Moses go and he later parted the Red Sea and all the rest of the story.  Ramsey was no fool because Moses was a force to be reckoned with.  Moses’s people made it across the sea and are clearly a tough and very respectable group when it comes to capitalism and the pursue of the almighty dollar. 

Yes I am having some fun with this.  I need you to look at the family picture in Forbes Magazine that is backed by the Stanford University endowment.  They buy loans from banks and the FDIC on the cheap and come after deadbeat homeowners for the money.  I am going to quote you two sections of the article as follows to emphasize my point:  Article direct link:

http://www.forbes.com/forbes/2009/0511/030-fdic-foreclosure-stanford-collection-agent.html

Quote #1 from Forbes that I recommend each and every one of you visit Forbes and read:

{They make at least three attempts to negotiate before commencing any litigation.  But there are limits.  He will, he says, throw an old lady out of her house if she is missing payments while driving a new Ferrari. He has assembled a national army of cheap lawyers, for which he is now paying $300,000 per month in fees.  “Our first line is to try to work something out”, Says James Hrebenar. “if they do not pay, and we have to foreclose, we do what we have to do.”}

Quote #2

{Then there is the $49,000 loan made by a Bank of America unit to a Great Neck, NY jeweler who gave his personal guarantee.  “I offered him $12,000, that is all my clients can afford”, says the jewelers lawyer, whose offer is under consideration.  “They’re unreasonable-in simple terms, ballbusters”.

Now what is the point of all this nonsense?  Yes they are in fact some of Moses people. They are blood thirsty capitalists (“ball busters”) and they are buying the rights to the debt that unsuspecting homeowners like you can not pay.  There are some very strong incentives to squeeze blood from a stone when you are a capitalist.  Buy the paper for 50 cents and recover 67 cents with you comfortably eating breakfast at Denny’s, or recover 72 cents with you eating spam and sleeping on the curb.  How is the recovery going to work out for you?

Prevent this and avoid having to deal with capitalists like the ones depicted in the Forbes article by signing on to The Real Estate Short Sale.  These people don’t look very intimidating, but they own the rights to your unpaid debt, and you are a sissy and they will scare you with their “cheap” attorneys to capitulate more often then not.  What do I say?  I say get out in front of them and provide your lenders a solution in the form of a well planned short sale.  Avoid foreclosure and bleed the lenders like the greedy pigs they are with a solution that they cannot afford to pass up.  This is prevention in the purest form.

To be fair I must disclose that a short sale solution can be a lengthy and difficult process in the current environment and I have a slight advantage with my team.  We posture as ex-lenders and licensed attorneys thereby allowing us to convincingly show the lenders the staircase to “Lender Hell” if necessary, and illustrate to them the incentives of cooperation.  Sounds so eloquent doesn’t it?  Sometimes it’s bees with honey and other times its cooperation or the crowbar. 

My last point that I always try to make to my clients is to remember the past.  In the early 1990’s during the Savings & Loan Crisis many banks failed and there was a significant amount of debt owed floating around.  The smart people negotiated and the stupid people fled in denial only to have to face one of Moses people.

Go to Forbes and read this article and look at the people.  Again, they are not intimidating.  They are capitalists and they are looking for you if you look at all like an opportunity.  I say good for them.  If you are stupid enough not to take advantage of a short sale in this environment or too lazy not to investigate the subject at www.thenegotiatedsolution.com then you may deserve what you get (Free Trial still offered).

Why am I so harsh with this last statement?  I am purposely being harsh because people without a plan that have a family to care for can become destitute.  I took on a new client last week in this situation and I am not happy about it.  This one is a freebie and this family is really in trouble.  If this gentleman would have listened to my advice, that was completely free six months ago, he wouldn’t be where he is today.  This is upsetting to me so I am here to light a fire under all those willing to listen.

Protect your family, yourself, your emotional well being and don’t get in the crosshairs of Moses or any of his buddies.

Blogging from the front line of the housing crisis.

GHunter.

Early this afternoon I was speaking with a very aggressive young realtor in his twenties.  I have personally worked with this individual very successfully over the past year.  We got to talking and somehow he got on an open rant about the incompetence of the old guard of realtors.  I said with humor, “The Blowhards, I mean Dinosaurs”, yes exactly he replied.  He told me he was sick of the bossy old timers proclaiming they know what they are doing and watching them walk unsuspecting homeowners to foreclosure.  Now I started to tune in to what he was saying.  He went on to tell me how they simply don’t know how to price the properties and they just want to put the listings in the MLS and get paid.  I have heard this many times before and witnessed it myself.  He told me he was a nice guy the first year or so he was in the business but that now he was out for blood.  His illustration was that he would get up for work and put his hockey suit on and plow through the realtors.  I related to his “my way or the highway attitude”.  He is sick of the incompetence, excuses and general lack of care for the business.  As we shared stories just from yesterday, it once again became clear that his point was that the old times either needed to get up to speed to properly represent the distressed homeowners, or they needed to take a back seat and let the twenty to forty year old bull dogs handle the short sales.

It’s comical that with each of these calls regarding stories of discontent are directed at realtors by another realtor.  Recently I have had realtors on our full service cases that have failed to follow our protocol and we buzzed them accordingly.  They hate to have “big brother” checking to be sure they do their job.  After all pricing a property is not complete by just dumping a listing in the MLS.  There is a two part process that we require as part of our program.  There is also a pricing model and means of keeping the property on the market that reflects the best interest of the seller.  Not all realtors like new things.  Many are control freaks and think they know everything.  This is true even as they fail clients and walk them to foreclosure. You would think they would want to keep an open mind and learn so they can earn referrals from helping people avoid foreclosure.

Recently there has been a flurry of realtors that have signed up for a class that apparently  issues them a certification as a distressed property expert.  I have had at least ten of them tell me in the last week that the only reason they took the class was for the certification.  I told one of them I thought this was completely ridicules when he proposed completely ratifying and locking up one of our listings with a low ball contract.  He got upset.  In the end he was more upset with himself when I threw it in his face that he was an expert after the course and where the hell was the clue telling him how to keep the property on the market. Oh yeah, I gave that to him and it didn’t come from the idiot handbook associated with his new certification that will gather dust in the glove compartment.  He listened and we are ok so I am not going to imply that he is just another idiot trying to make a buck selling real estate in Florida.   

At the end of the day I have to listen to realtors that proclaim they are the experts and that all the others are idiots.  That was a funny excerpt conversational rant from a guy in his late thirties yesterday morning.  He was the expert and all the other realtors were just idiots.  The stories never stop.  I would like everyone to be aware that these are unprecedented times in real estate and the realtors have lost control with short sales.  Realtors in general are more apt to unintentionally walk you to foreclosure than outline a real plan for you and your family.  You must educate yourself and be careful.  I am telling you point blank that realtors, and hundreds of them, are proclaiming that the real estate industry is rife with incompetence.  Listen to me so you have the time to benefit from a short sale and not have your property inadvertently sit on the market while the window of opportunity closes.

This is precisely why we monitor all the realtors assigned to our client’s properties.  We keep tabs on the pricing, activity, and follow up.  If somebody is a slacking off it doesn’t mean we move to get them replaced.  It means we light a fire under them so we can help the homeowner win.  Avoiding Foreclosure with successful Short Sales is a team effort. Until the realtors wise up they are creating liability for themselves and wasting too much time calling each other out on the basis of expertise.  

Soon we will be adding a new strategy supplement to the Resources Section of our site titled Realtor Risk Factors.  The problem is getting so bad that our attorneys have decided that it is time to elaborate on the risk associated with the distressed homeowner’s failure, and their ultimate financial demise.  Right now the realtors think they are insulated and that it’s not their problem if representation does not work out.  On an individual case basis they may be correct for the time being.  However, after listening and blogging on the unfortunate consequences of failure and the part the realtors have played over the past year, one may start to see of vision of the next big opportunity.  Maybe it will be a class action suit against the realtors.  I say this will all seriousness.  The realtors and their brokers think they are insulated.  What they do not know is that even their Errors & Emissions Policies do not cover them representing the distressed homeowners in Short Sale negotiations.  Wake up call.  Let’s call it the fine print.  Given what is going on this is a big mess just waiting to happen.  We will be adding the risk factor strategy supplement to our Premium Course Upgrade very soon.

In the meantime, the Dinosaurs roam free and the stories will continue.  It is up to you if you are a distressed homeowner dealing with a decision in this awful housing crisis to not count on the realtor for everything.  Understand the risk that the Dinosaurs may only be good at listing your property but not much else.  If you look at their picture and it looks like in was taken in 1990 you may want to ask what qualifies them to help you short sale your property.  I would also ask to speak with happy customers where they were directly involved and successfully completed a short sale.  Happy customers are very key.  I have lots of happy customers.  When you ask for them and the realtor attempts to ignore you, with a short sale, you better show them the door or you may be a risk.  A Short Sale to Stop and/or Avoid Foreclosure is not a rookie’s or an old timer’s game.   You need a plan.  Please join our two hour video free trail at www.thenegotiatedsolution.com . 

Blogging from the front line of the housing crisis.

GHunter