Do you think your lender loves you?  Well maybe this blog entry will help you understand the reality around Loan Modifications.  In November 2008 I wrote a blog on Sheila Bair, the Head of the FDIC, and that fact that she had stated on CNBC that they had taken over Indy Mac and were large and in charge in their governance over the failed institution.  As a matter of fact she said explicitly that Indy Mac had a program that was very fair for Loan Modifications.  They based the new payments for modification purposes on 38% debt to income.  Mrs. Bair was utterly disgusted at the state of Loan Modifications on the part of all lenders at the time and implied that with the FDIC in charge they had a great program.

 

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

Since the Spring of 2008 there has been much hype and excessive false hope surrounding all of the government plans for the many distressed homeowners in trouble with a mortgage on a property.  The verdict to date underscores that the programs put forth by the government have had limited success.  This is a kind statement. The jury’s verdict has been quantified by a plethora of evidence that the majority of the government programs simply don’t work for the situations most homeowners face in today’s deflationary environment.  The situation we face as a county once again comes back to the center line.  The free markets must be saved and used as an efficient means of clearing out the problems.  Take this recent article title and link as an example:

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

It’s time to blog.  You don’t have to go far for inspiration.  The most recent issue of Forbes Magazine on page 30 dated May 11^th, 2009 says it all.

 

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.

This is a nagging subject that simply will not go away.  Since yesterday afternoon I have had three separate realtors force horror stories on me about other realtors that allegedly do not know what they are doing with Short Sales.  You have to listen so I often find comedy along the way as the stories unfold.

 

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

I have had so many people call me with terrible Loan Modification stories.  Many of them have exhausted their efforts and become short sale clients.  Today I would like to ask the people to call or email some of the good stories on Loan Modifications.  I can tell you lots of good stories about happy families with Short Sales.  Let’s get the email and phones going with maybe just a few good stories of loan modifications where the family was given an affordable solution and enabled to stay in their home.  I am not being feseshish.  I really would like to hear at least a couple good stories.  I am sick and tired of the negative ones.

 

I want to share with you a story just last Thursday from a distressed homeowner.  A family owns a home as their primary residence in NC.  The area is a beach town and the predominant ownership of real estate in this area is as a second home.  This guy got behind 60 days on his mortgage because his business had cratered due to the economy.  He contact his lender asking for assistance with the intent to stay in his home.  He submitted a raft of paperwork and had to wait for 60 days.  At the end of the 60 days the lender said, “Harrah, you are eligible for a loan modification”.  He was relieved but then there was more.  The lender said, “before we can offer you a loan modification we have to have you complete a four month period of forbearance.”  I call this the stress test.  The homeowner was paying over $4,000 per month on his current mortgage and having trouble.  The lender, and I might ad a TARP recipient, required that he make a payment closer to $5,000 per month for a complete four months before a loan modification could be finalize.  This wasn’t the best news but the homeowner saw it as a credible option to stay in his home and keep his family situated.  He made the four consecutive forbearance payments. He took money form every nook and cranny to make it work.  Finally the forbearance period was up.  He called his lender repeatedly and received no response.  This went on of a couple weeks.  Finally with the tenacity built up he got through to his lender.  What do you think they said?  You are not going to believe this.  They told him that he may have been eligible for a loan modification at the time before forbearance but that he wasn’t eligible now.  He was told that he could not be helped and that he was pretty much on his own.  If he falls too far behind the lender stated they were going to foreclose on the property.

 

This story is real and there is no glamour in telling it.  We decided not to even take on this homeowner as a short sale client because the second homes are not moving in the area and we felt that we would only add to his misery.  This guy is stuck and his lender screwed him.  Now you see why I am asking for someone to share a good experience about a person or family with a loan modification.  I am not making this stuff up.  I think the government programs are nonsense to date.  The large banks that received TARP are supposed to be helping people.  The only thing they are helping is themselves. The TARP money is cheap for the short term and they are leveraging it to their favor.  Alls Wells that ends Wells.  Nice earnings report fellas.

 

My point is once again that the government is going to save the free markets and you are clearly on your own.  This is an example.  Where is the accountability to the lenders for such shenanigans?  This is none.  The lenders talk the talk and their CEO’s act out on television.  It’s a money game.

 

This type of story is important not because you shouldn’t attempt a loan modification to stay in your home, but because you need to have realistic expectations and be prepared if it doesn’t work out in your favor.  What should you expect with a loan modification?

 

You should expect a reasonable reduction in payment or a calculation tied to approximately 38% of your gross monthly income being attributed to your total monthly housing expense.  Total monthly housing expense includes principle, interest, property taxes, homeowners insurance, property condo fee or HOA, and PMI if applicable.  You must also be gainfully employed.

 

I would like to share with you one more story from a recent customer that just completed a successful short sale with our company.  We just closed a short sale and got approximately $240K forgiven for a family that desperately wanted to stay in their home.  They worked diligently and frankly relentlessly with their lenders to simply keep their family in their home.  They were on a crazy negative amortizing arm loan program.  They persevered through a complete six months of negotiations for a loan modification only to have their lender offer them a payment reduction of $200 buck per month in a take it or leave it fashion.  I am not going to go into the details regarding the hardship, but I will tell you it was clearly a qualified hardship that I professionally do not believe would be questionable by anyone.  Having said that, the family contacted us and we completed a successful short sale over a total period of approximately four months.  Where is the catch to this story and why is it so significant?  The homeowners wanted to stay in their home so badly that they told me that they would move back in and continue paying two weeks before closing the approved short sale if the primary lender would let them. 

 

This makes no sense to me.  I personally connected with both the husband and wife and I really feel like we did the best for them possible given the circumstances.  I am not sure when these stories will turn the corner with loan modifications.  Most if not all loan mods require you to be delinquent.  Now they are saying with the new government programs that is not necessarily the case.  If you want to stay in your home definitely fight the fight.  If you are not happy do not lose hope.  Do not say things that recent new clients have said like “I feel desperate”.  You are not desperate.  You are disappointed and humbled but you are not desperate and you have options.  You have lost the battle but the war has just begun.  We do not endorse loan modifications as a general rule because we don’t think the review process is fair.  Frankly I think lenders use it to size the clients up and prepare the collections department for offense.  I sanction the Real Estate Short Sale.  I use this with my team as a weapon.  It’s fair and there is pain and benefit to go around but you as the distressed homeowner have a fighting chance.  These are my words and I am passionate about the take down.  When you think or feel desperation come visit me a www.thenegotiatedsolution.com an take the Free Trial Video. 

 

Blogging from the front line of the housing crisis.

 

GHunter

I am referencing the Saturday Washington Post article titled, “What Might be Hurting Home Values” on page one of the Real Estate Section.

 

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/26/AR2009032604074.html

 

After an alert call from a realtor today asking if I was aware of the article and its ramifications to the market I was forced to find it and read it.  I always find humor in what the press reports.  The article pin points BPO’s or otherwise referred to as Broker Price Opinions as an alleged cause for declining home values.  The humor for me comes from the last paragraph where it states that the use of BPO’s by lenders are costing the Real Estate Appraisers lost revenue and that National Appraisal Groups, including the Appraisal Institute, are “UP IN ARMS”. 

 

Ok, let’s have some fun and learn from an insider as we go so we can stamp out the misinformation that is rampant in the press.  I would first like to note that the reporter never defines what a BPO actually is and why they even exist.  I am going to do that for you so nobody sheds any unnecessary tears on behalf of the poor humble appraisers.

 

What is a BPO or Brokers Price Opinion?  This is simply a report that provides property valuation support for lenders based on the 3-6 most recent relative comparable sales and listing trends in the general proximity to the property.  Some reports are more detailed than others.  Many will even provide guidance on 30 day, 60 day, or 90 day pricing suggestions for a given property.  The BPO is also a quick way to assess value on a property whereby the lender is considering issuing a loan or for an existing property in REO inventory.

 

Why do we have BPO’s and how did there prevalence really come about?  BPO’s are used by lenders in many instances prior to funding loans because frankly the lenders do not trust the paper the appraisal reports are written on.  The lenders need an independent third party method of validation so they know the appraisal report has validity.  This is part of a qualified quality control plan that lenders may choose to utilize.  BPO’s are also conversely used in Bank REO properties to assess the collateral on the books.  The lenders don’t want to hear more lies form the appraisers. They want value quickly that can be supported with credible market data and this can be achieved efficiently & accurately for a very low cost with a BPO.

 

The appraisers with their lobby and licensing are now crying that they are “UP IN ARMS”.  They are losing revenue and suffering as we all are in the greatest housing crisis since 1932.  Should we feel sorry for them and make BPO’s illegal?  Hold that thought.  What did the lenders normally do when their underwriting department discovered a fraudulent appraisal or an over zealous appraiser that clearly had their own agenda when it came to assessing value for the purpose of a loan?  This is a key question before we render the decision to pass laws to protect the appraisers or justly force them to feel the double edged sword of the housing crisis.  The answer is that underwriting departments simply took that appraiser off the eligibility list and refused to accept appraisal reports from that person in the future.  There was no accountability.  The states and the licensing department rarely did anything to appraisers.  It was the lender and the loan underwriting department’s job to verify the integrity of the appraisers work as a supporting vendor.  I think the fact that appraisers have to have a license is laughable.  Without enforcement of guidelines and ethics we can chalk all those allegations of fault up to appraiser discretion.  Everybody knows appraisers have 8-10% discretion when spoofing, I mean assigning, a value. 

 

Now that that game has run its course the appraisers as yelping because the housing crisis, where we all share blame, is unleashing pain from the back side of the sword.  The front side was very devastating as the speculative spiral up in values eventually devastated Wall Street market makers and effectively our entire banking system.  Appraisers played a roll as did realtors, lenders, homeowners, etc.  Everybody is to blame and we are in the wash out period where we all must repent and pay for the excesses.  I say let the appraisers bleed.  If they are worth their salt they will rise to the top and earn business or reinvent themselves.  If not they will die a failed capitalist.

 

Heavy stuff, I know.  I have personally witnessed a lot of garbage and deceit from appraisers on properties across forty states that I have no compassion for them.  Appraisers share their portion of the blame game for the housing crisis.  I have seen hundreds of inflated and flat out bogus appraisals that came from licensed so called reputable appraisers through my wholesale division.  The lenders must have a fast and efficient means of valuing their collateral and providing for 3^rd party integrity checks as needed with BPO’s.  The allegation that BPO’s are depressing values is nonsense and unsupported.  The primary driver of the gap down in property values and the continued declines is related to demand and the evisceration of available credit.  There is an abundance of housing inventory and the demand for this inventory has been restricted by the type and availability of credit.  Anyone that took an Econ 101 course in college knows that this means lower prices until demand and supply finds an equilibrium point.

 

If you find yourself at wits end with your lender turn to “The Negotiated Solution” and investigate a Real Estate Short Sale.

 

Blogging from the front lines of the housing crisis.

 

GHunter.

I have read article upon article in major publications and I listen to the people get advice from the pundits on CNBC.  Why are so many people so lost and distraught over the housing crisis?  I can tell you that I probably don’t need to mention that there is an awful lot of misinformation on potential solutions circling and a lot of people are very confused.

 

Here is a link to a recent Washington Post article titled “House Trap” http://www.washingtonpost.com/wp-dyn/content/article/2009/03/07/AR2009030700172.html

 

This article is representative to exactly what I am talking about.  The article focuses on people that are underwater on their homes.  Many people are finding out that they simply do not qualify for any government programs.  Even the folks with FNMA loans that exceed 105% Loan to Value may find they are also stuck.  People are facing the decision of default and subsequent foreclosure.  Others in the article are listed as going to bankruptcy as a solution.  Lastly, professed experts are suggesting people hoard cash so they can pay down the loans if they go the rout of a short sale. Why is the real solution hardly ever represented or even mentioned?  I don’t have the exact answer but I am somewhat sickened that so many people are prey to the housing crisis.  Families are being hurt and so many pundits and Wharton Professors and the likes can’t provide credible guidance towards a real solution.  The answer is that this is your problem and, if you are in trouble, nobody really cares a rat’s tail about you.  What is the incentive for them to take on your troubles?  Frankly there is none.

 

Let’s look at the details of the newest government programs and find the real positive that can help you if you are in trouble with a property.  The general program highlights were touched on in a recent blog dated March 4^th.  Now that many of the details are out you should recognize that it is time to take action and simply review your credible options.  Here are your extreme options:

 

1)      Do nothing. Continue to make what payments you can on the property and eventually go into default and suffer the ramifications of a foreclosure.  I term the time surrounding the inaction to the date of foreclosure as the “waffling period”.  This is the period where you waffle and dissipate assets with no real means of a solution.

2)      Pay everything to make your lender whole.  This is almost never financially feasible but it needs to be noted as an option.  If you want to empty out every assets including your retirement and your children’s college fund to make the lender whole regardless of the selling price and associated expenses you have that option.  This is just plain stupid but it is an option for those caught in the good moral character and willing to sacrifice all for their lender.

 

Both of these options are at extreme ends of the spectrum and make little sense for anyone.

 

What are the more realistic options?

 

1)      Bankruptcy.  Be a quitter and bail into the refuge of bankruptcy.  There is a significant price for this and we don’t recommend it but you can certainly take this path.  I can’t stop you from jumping off a tall building either so it’s all about what makes sense to you and personal choice.  Attorneys will take your money to help you do this just about every day of the week.

2)      Government program.  Seek the assistance of a governmental program to help you stay in your home.  Many of you will find out that based on your gainful employment and income that you simply do not qualify for any program.  It will soon become clear to you that you are ultimately responsible for the adverse financial effects of being stuck upside down with a property. 

3)      Loan modification.  See what you can accomplish with a loan modification.  You will save a couple hundred bucks per month that will be tacked onto the back of your mortgage note and you will find out where you stand with your lender.  You will not be able to stay in your home and have all the debt forgiven by your lender.  It is best I tell you this so you don’t sweat sleepless nights over the details.  There is a very high probability that you will not be satisfied with the results of this option. A big problem here is you need to have a job to qualify in the majority of cases. 

4)      Deed in Lieu.  You can hand the keys over to your lender and dump your problem in their lap.  This again is something we do not recommend given it has many of the same ramifications of a foreclosure.

5)      Short Sale. This is the only option where you can achieve a fair and level playing field with your lender and obtain significant forgiven mortgage debt.  Think of it like rebooting your computer when it is completely stuck.  When it comes back on you get a fresh start.  I am not going to go into too much detail because I have been promoting this on the blog since September and the course is on our site a www.thenegotiatedsolution.com .  Investigate when you have the time for more details.

 

The real positive is that most of the details on the governmental programs since the Spring of 2008 are out in the open. We now have much more clarity.  Now is the time for you to evaluate a real solution to your problem by a simple process of elimination.  Stop with the denial and the false hope. If you have a good job, but you have significant paper losses on real estate, you are not going to get a free ride from the government.  My recommendation is for you to sit with your family and pass your own legislation to the housing crisis today.  Name it “My Personal Financial Freedom Act”.  From the great halls of your kitchen you can objectively determine where you are and where your collective objectives lie.  If you are really having difficulty and want to stay in your current home at all costs the most realistic options are government program or loan modifications.  I am not endorsing these options nor do I think you will be happy with them but this is where to start if you must. If you otherwise like to outsmart your lender and mitigate the majority of this housing crisis from your credit and finances for years to come, by providing your lender a solution with real substance, then you need to follow me down the free market road of “The Real Estate Short Sale”.  Stop foreclosure and/or Avoid Foreclosure all together with a well planned short sale.

 

Denial and good moral character are ok as long as your eventually address the problem and don’t allow it to completely ruin you financially.  Take your time if you so choose but investigate credible options towards a solution or conversely pay the missed cost of opportunity.    The blog is free and we have a No Risk 7 Day Free Trial for The Negotiated Solution.  Its free so don’t be a fool.  The papers and the pundits are not helping the people. Legislate today from your kitchen and win!

 

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

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