Here we are again.  The CEO of Bank of America is on the box today talking about his company’s earnings power and the scale of the franchise a couple years out.  The Fast Money Crew on CNBC loved it. What a power house so let’s all go out and load up on Bank of America stock.  Their guest, Barry Rhitzholtz of Fusion IQ, had a much more sobering and what I would classify as a realistic view. Before I get to Barry’s view let me provide a bit of context on Bank of America from personal experience and past blogs.

Bank of America had a previous CEO that was bellowing a $3.00 figure in annual earnings power per share and “we are the world” just a few years ago until he was forced out.. I mean forced to retire.  Maybe he just decided to retire or maybe he had to retire after the securities fraud based on the improper disclosure with the Merrill Lynch deal.  So we did a secondary offering in the twenties, brought in some money, and the stock shortly thereafter went to $3.  Well that must have just been a result of the financial crisis or securities fraud.  That CEO got bounced and now we have a new one.  The new one is talking about $2.20 in earnings power per share. Well, I only graduated from ODU but I still feel like my pocket is 80 cents light.  Why not just say $10 per share in earnings power “We Hope” but we really don’t have a clue what the risk is or what the hell is going to happen with all the homes on our books that are underwater.  A footnote should also be added to say “please nobody ask me about our purchase of Countrywide”.  Bank of America simply is not credible from my side of the pond.

Let’s also not forget the most recent sweet heart deal the fifty state attorney generals are going to give the banks in return for their legal extortion.   The big banks once again broke the law and foreclosed on many people illegally.  I apologize!  You are not allowed to use the word “illegal” in the same sentence in America anymore when you are talking about the big banks.  As I have blogged in the past they are above the law.  They do what they want and there is no accountability other than another fine.  Save the system even if you have to slaughter the homeowners.  Homeowner beware, the loan modification process is a great recovery tool for the lenders. 

Now, I am disgusted by the mere mention of Bank of America.  I have worked with them helping homeowners with Real Estate Short Sales for the past three years.  What I have witness is obscene.  That is one screwed up crooked organization with nothing but predatory profit motive at its core.  I have also been a corporate banking customer for over three years and they are fee happy here as well.  I don’t believe a dam thing anyone at Bank of America has to say.  Now let me reiterate Barry’s view on the banks.

He stated that all of the banking CEO’s just before and during the financial crisis did not have a clue as to the risk or their books or what was really occurring in the markets.  Currently according to Barry, the banks are barely solvent and I completely agree. They are being artificially supported by cheap money engineered by the Fed and floated on the hope machine or otherwise termed hot air balloon from the Obama organization. The government programs pump money into them as they begrudgingly work out problem loans.  The real issue with the banking industry as a whole is the current state of the real estate market.  There are millions of homes underwater with debt.  These people are going to smarten up one by one and look for a way out.  Let’s also not forget the birth cohort called “the baby boomers” is moving into retirement and won’t be there to gobble up the excess housing supply.  Nobody is looking at the macro picture it seems.

Although Barry Rhitzholtz was spot on he simply was too nice in his delivery.  I am going to paraphrase what he was trying to communicate as follows:  Don’t believe a dam thing the banks have to say.  They are crooked and have cheated you in the past.  The government needs them so they are being kept propped up.  They are puppets.  I would like to thank Barry for being candid in his view even though unpopular with the cast on TV.

The real estate market is going to be in a decline for some time to come.  Here is a link from just this morning:

Underwater mortgages rise as home prices fall – Yahoo! Finance

http://finance.yahoo.com/news/Underwater-mortgages-rise-as-apf-1329138840.html?x=0

If you are underwater on a property think of it like an investment.  Reduce exposure and live to make another investment.  Don’t go broke with the moral character baloney. If you think the government really cares about you think again. They care about the system.  If you think your lender cares about you then you are a fool.  If you think I am out of line then apply for a loan modification and let me know how life is.  Accept that you have made a bad investment and find a permanent solution.  Come visit our site at www.thenegotiatedsolution.com for a free video introduction to Real Estate Short Sales and the land of forgiven mortgage debt.  I am proud to be part of this creation.  This represents integrity and a real solution for distressed homeowners. 

When Bank of America speaks it makes me want to tell all homeowners that are underwater nationwide that it may be time to act.  Let’s help the CEO understand the risk in the system and the responsibility his company has.  We are tired of being misled by an organization, and group of banks for that matter, that act above the law.   2011 is prime time for a permanent solution. Think 1099C, forgiven mortgage debt, stop and avoid foreclosure. All of this can be accomplished with a Real Estate Short Sale.  Please take a moment and let me will lead you out of the desert and to your own personal “oasis” as it pertains to the mess in real estate.

Blogging from the front line of the housing crisis.

GHunter

I simply do not understand given the level of personal accomplishment, commitment and often intellect that it takes to get into politics in Washington, why they are so collectively slow and dumb in addressing the most threatening problems.   This is not a political rant that I am about to embark on.  We have a jobless recovery.  What sea change can we pull the levers on today that will move the needle and truly begin to add jobs?

How would you like to goose the consumer, make our country much safer, and put the terrorist on their backs by virtue of their wallets without having to kill them all?  Sidebar, I am not advocating not to kill them. That works for me too. However, did you know that Aubrey McClendon, CEO of Chesapeake Energy drives a car that was converted to natural gas?  He pays 75 cents per gallon.  That pisses me off.  Why can’t I do that in Virginia? Simple, there is no mandate from Obama or any of those other bright scholars we have elected to lead.

I don’t know what the figures of annual outflows are to the Saudi’s and all those other lovely people but it’s around 350 billion plus annually.  We have new technology that has elevated our country to a very secure position with over 100 years of natural gas. Did you know that the same technology has spawned a huge recovery effort on our soil in the last year drilling for oil?  We are the second largest producer of oil.  We can fix our problems if we decide to do so.

We have the resources to put a real “Game Changer” in play.  Reverse the money flow and mandate the conversion of vehicles to clean burning natural gas.  Don’t take it from me. Check out The Boone Pickens Plan.  He has an awesome plan that begins with converting the 6.5 million heavy trucks to natural gas.

The government is going to pay me as a tax credit for having insulation blown in my attic in 2010.  My house is now much more efficient and my wife loves that the house is much warmer. Ok, that’s terrific, but I am still annoyed at the fact that we are not addressing the big picture.  I have heard estimates that each large truck, like a bus or trash hauler can be converted to natural gas for about 6K per vehicle.  Uncle same is going to throw me $1500 for a portion of the money I spent on insulation why not issue a presidential order for the same dollars as an incentive to get vehicle natural gas conversions going.  It would truly be a step in the right direction.  Based on Pickens estimates converting the 6.5 million heavy haulers that run routes in America today would save us having to import 2.5 million barrels of crude from the Sheik per day.  That is the sharp end of the sword I am talking about. Everybody is tired about the job numbers and hearing about the housing crisis. Let’s fix it and stop hoping it gets better. 

Oil is going up and if you don’t own oil stocks you are going to get very annoyed.  I filled my car for $3.09 recently and the same station today with 3.45 for regular.  I hope oil spikes to $150 and get everybody’s attention.  It’s not going to hurt me but that is not the point.  Historically it takes two major issues to really get the attention in Washington.  In my opinion, the best thing for our country and our national security would be a massive oil spike.  It’s coming!

This will push the mandate for natural gas.  America will begin to reverse the flow of funds to the Middle East and we will create jobs and secure our future.  How does this help with the housing crisis?  If the real rate of unemployment is 17-18% due to people dropping out of the work force we need to create real jobs through new industry and technology.  If people have work then they can buy homes and lending to people becomes much less risky on a macro level for all the big banks.

In the meantime, please don’t lose focus on the front line of the housing crisis. We have too much debt.  Millions of people are upside down in homes and scared. We are helping homeowners get out from under these properties with Short Sales and sticking the debt to the lenders.  That’s right, forgiven mortgage debt!  They hate it when they have to treat the homeowner fairly.  It’s a recovery game. Somebody has to look out for the little guy.  What’s wrong with getting rid of debt and keeping it fair?  Learn more at  www.thenegotiatedsolution.com

It’s not going to be any different when the last Saudi tanker comes over and we call them up and say “no thanks” we don’t need it, send it back.  We aren’t even going to bomb you.  We don’t need your oil anymore so we will leave you to your own devices. 

If you love this country and you want real positive change direct a friend stuck in an underwater home to seek expert help and hope for a massive oil spike.  Let’s get rid of the excess debt in the system and address real change on the energy front.  I think both will be upon us soon and it will push the mandate for change so our country can once again take the lead by a wide margin and prosper.  I believe we can fix our problems but we need leadership to set the wheels of capitalism in motion. Once this happens there is no stopping it. Ronnie said, “Peace through Strength”, may this continue.

Blogging from the front line of the housing crisis. GHunter

Second wave of housing bust hammers more cities

Cities that held up during the housing bust are hammered by second wave of falling prices

http://finance.yahoo.com/news/Second-wave-of-housing-bust-apf-411171723.html?x=0&sec=topStories&pos=2&asset=&ccode=

Don’t say I didn’t tell you.  I have been preaching this in my blog and to customers and realtors until I am blue in the face.  Many realtors tell me, “but the inventory levels are tight”.  Yeah, and there aren’t problem properties just waiting to be dumped on the market by the banks.  Foreclosures and short sales clearly have an adverse affect on current market resale values.

Once again, what about the millions of homeowners that are underwater on their mortgages?  When the people wake up and either decide to walk away or work it out with a short sale this poses a considerable threat to the real estate market and the over all economic recovery.  Mort Zuckerman (the billionaire) stated this recently as the single most dangerous issue affecting the prospects for a continued recovery.

When push comes to shove you can be sure that people are going to dump their houses when they see no end in sight. Think about this.  What if you were at the retirement age and you were stuck in a property that you have owned for years but found yourself underwater due to your primary mortgage and a piled on home equity line.  Now you’re a couple hundred thousand underwater as a result of a past refinance and the expansion of the home equity line when values were good. Deflation has now cut your value in half, your income is going to drop drastically in a few years and you see little in the way of a solution.  What is somebody going to do?  Before we get to that question, doing nothing may simply no longer be a viable option.  I am not an estate attorney but I would assume that if you die and your lender puts a claim on your estate for the excess debt your kids may get short changed.  Same holds true if you get hit by a Mac truck.  Do you put it to your lender or to your kids?  Savor that one for awhile.

Regardless of your situation this is why it is important to constructively address the problem with a Real Estate Short Sale now.  Real Estate is illiquid and the cycles are long. Wait until you see where this one ends up.  This mess is only getting started.  Some very experience people already had this in the forecast as early as 2005.  The late Sir John Templeton said, “Real Estate is in a bubble and prices are going down down down”. He then advised, “wait until values drop 90% and then buy buy buy”.  I have noted this on three occasions in the last two years in my blog.  I have also shared this with friends and associates there were in denial and even more stuck in high priced homes than in 2009.  They all implied that Templeton was an old guy that lost his marbles. How would you like to own a couple beach rental houses that are just beautiful that you bought at 2007 prices, improved and leveraged to the hilt?  I know several people in this predicament and they are in big trouble today.  The smart ones will seek professional help with a short sale so they can have all the mortgage debt forgiven (mitigated) and find a constructive way to avoid foreclosure or file bankruptcy.

There are also many people with investment properties that are rented. The properties may be underwater but as long as the rent is coming in regularly the owners can afford to do nothing (denial). The fundamental issue here is that with a jobless recovery and such a high real unemployment rate (17-18%) the tenants most offer feel wage pressure or lose their jobs outright.  This happens all the time and clients call in a state of panic.  Did anyone think for a moment that the economic crisis didn’t affect everyone?  The tenants got it just as bad.

Something else I would like to add.  A statistic just came out stating that is was cheaper to buy than rent.  Wow!  Such a positive spin was put on that news flash by the media.  Let’s all run out and buy.  Has anyone ever heard of a discounting mechanism and efficient market theory?  It appears the market knows that real estate is going to continue to decline.  The numbers don’t lie. The market has priced it accordingly.

Debt issuance got way out of hand in the last cycle and we are still in the bust stage.  Let’s use the analogy “the eye of the storm”.  Unless you are going to pay your lender in full now is a very good time to investigate a solution.  A short sale is my favorite, because done properly there are significant benefits. A Loan Modification may be a delay tactic or a simple means of avoiding foreclosure temporarily.  At the end of the day you want to get out from under the property with as much of your credit and assets intact.  You need an expert team to accomplish this.  We welcome you to investigate this on our site at www.thenegotiatedsolution.com

Conversely, if you call me or email me in total panic because you hired a realtor or a paper-pusher vs. a professional team that actually mitigate the debt then you get what you signed up for.  Here is the body of today’s email from a poor sole that should frankly sue his realtor:

EMAIL:

hello George, 

Thanks for the note. Actually we are in the process of a short sale again now. 

Our process has been a challenge due to the fact that the condo association had a law suit and we lost our buyer from it because the banks did not lend because of it. 

Presently, the suit has now been taken care of and we are now in a new contract with boa just providing a counter offer. 

Wells has filed a judgment against us 60,000. 

We owe the condo assoc from non payment of 6 month 4000.

there are more details to this but we are still in a very bad position. 

My wife does not want to file for bankruptcy because of her job clearance and afraid it will ruin our future. 

Meanwhile, everything that keeps delaying our processes the bills, fees. Attorneys fees are building up and I am afraid to say that there maybe no way out of this situation. 

If you think you can help. Please give me a ring. 

My response:

Mike,

Your problems begin and end with your choice to stick with your current realtor.  I am sorry to hear you are in such a mess of a situation.  If you recall I suggested you dump the realtor last year and hire us to fix the problem for you.  If you already go hit with a judgment there is little we can do for you. Good Luck.  George

This is what happens all the time.  They hired a realtor and ended up stuck. The realtors are clueless and only have their eye on the sales commission.  I am not saying they are not nice people.  I am directly implying that they do not have the experience or the team to negotiate, guide and protect you to a constructive solution with lenders.  If you want to end up here go hire a realtor.  For everybody that ends up here I say “you owe the debt until you don’t”.  If you think I am picking on realtors you can ask why this guy already has a judgment for 60,000 slapped on him from Wells Fargo with an ongoing short sale. What a treat. Where is his understanding of credit or any strategy or basic guidance to help protect his wife’s employment?  Not available from realtors. To the point, this realtor is completely incompetent and the guy is still stuck in the process. His excuse last year was that the realtor was a nice person.  I am sure she still is. Maybe by being exposed to this communication I can convince just one person to take a different path.

All of this can be avoided.  First recognize that real estate is going to continue to decline and maybe in excess of twenty percent over the next 18 months.  Secondly, make a decision that you want a solution and act.  The situation of being stuck underwater with properties is everywhere.  Real constructive solutions are available. We have a 2 hour video at www.thenegotiatedsolution.com , a blog http://blog.thenegotiatedsolution.com ,and one on one consultations that are absolutely free.  You just have to be ready.  I am hoping the headline and article link help.

Blogging from the front line of the housing crisis.

GHunter

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

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

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

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

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

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

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

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

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

Blogging from the front line of the housing crisis.

GHunter 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Blogging from the front line of the housing crisis.

GHunter

As a new week begins I have to keep the tooth pics and ear plugs ready for the next homeowner call that wants to tell me their Loan Modification story.  The tooth pics keep my eye lids open and the ear plugs stop me from interrupting the epic story.  Every story appears to be the same.  When are people going to get it? 

 

On Friday afternoon the sixth call came in for the week and the story followed this path.  “I was paying my mortgage to XYZ lender over the past six months while I was applying for a loan modification. They told me I was eligible and I was waiting to hear about my new payment.  Low and behold I was awaken by the hooves and the sound of the sleigh on the roof top …Ho Ho Ho it my lender delivering my new lower mortgage payment with all the debt forgiven and guess what guys?? I get to keep the house too. Ok for real, the lender came back and told them they were not eligible for the modification but thanks for the cash over the past several months.  But I paid the special higher payment for the past three months!  That was supposed to show you that I really was committed to the process.  (Lender) Again thanks for the cash sucker.  (Lender) When you sent us all your financials we saw you had some funds we legally could not get at.  Now that we have most of your money you better keep paying or we are going to foreclose on you.  This is how the calls usually go after the unsuspecting homeowner spends six to twelve months wrapped up in the good moral character effort of a loan modification.

 

This particular homeowner’s primary concern was that he had dissipated most of his savings and the grand implication of eligibility for a more affordable mortgage turned out to be a farce.  He asked me, “what about all the government programs?”  It’s the same story almost every time. 

 

Dear people of this great country.  If you are over exposed to real estate or stuck in a property please listen to me for one moment.  You have a problem as do approximately one in four homeowners nationwide that statistically are underwater on their mortgages.  Find a solution to the problem.  Solve the problem.  Don’t expect you lender to give you free money.  Please also understand that your lender is the servicer on your loan and often not the investor that owns your loan. The servicer is the toll booth operator.  They don’t care about your problems.  They can tell you anything and they often do.

 

Now, back to the government programs.  In my recent experience we have seen many lenders focus on how they can benefit from the government programs. Once again, if you have been following my blogs for the past two years you now clearly understand that the house problem is yours.

 

What don’t you do?  Don’t expect something for nothing.  Most people have unrealistic expectations and they anticipate that the lenders will actually give them a dream lower mortgage payment and reset their principle balance to the market price of the home.  The lenders are happy to imply eligibility for the dream payment but keep in mind the lenders are businesses and they get paid to recover money.  Its fun to believe in Santa but Santa won’t deceive you and kick you and your family out on the street.  The lender will indeed.

 

Second on the Do Not do list.  Be very wary of the three to four month special period called “FOREBEARANCE”.  I have had so many clients that have gone willing through this period and paid mortgage payments well above the normal levels only to be dropped on their heads by their lenders with no returned phone calls and “Sorry you are not eligible for a modification”.  (Borrower) “But you said if I made these payments I would be eligible”.  (Lender) Who told you that Humpty Dumpty?  No somebody I spoke with at your….  (Lender) You must be mistaken… The oh sh_t moment has just arrived.  Sometimes the calls are funny but you don’t dare laugh. The people get so angry.  I completely understand.  The lenders job once again is to get money out of you and not be your buddy. Honesty may not necessarily be in the equation.  Where does it say in your mortgage note that the lender must be honest with you? 

 

I want to give you a real like example of a client I like very much.  This guy completed a loan modification over fifteen months and actually paid it for approximately a year.  He was over $600K underwater on a home and he had a huge balloon payment at the end of the fourth year.  One day he said “Uncle”.  It occurred to him that he could never get out from under the mortgage debt.  Over a period of six months we completed a Real Estate Short Sale for him and he was finally able to regroup and move on with a financial future in his sights. The problem is that like many others he succumbed to the moral character draw and did not drill down and look for a permanent solution for the problem.  When the Short Sale Solution was finally in place it was a great one with all the debt forgiven, however, the damage was done well before he became a client of our firm.  He had dissipated all his savings and almost wiped out his retirement.  I want to tap you on the shoulder before you potentially take this path.  Go to our course program online at www.thenegotiatedsolution.com and spend two hours on our video.  It costs you nothing…nothing but your time. 

 

With all the failed government program and Sheila Bair, Head of the FDIC raising hell with discontent for the past two years over failed loan modifications and the unsatisfactory participation on the part of lenders you would think somebody would be suspect and not be so trusting to the point whereby they get fleeced.   The stories will continue.  We will always listen and put the phone on mute if your anger fit provides free comedy.  At the end of the day my team will always endorse a real solution.  The Short Sale is the only real opportunity to get out from under the property with the majority of your credit and assets in tact.  You may not realize it but 85% of our clients are in the discretionary camp. That means they are stuck and want a constructive way out.  Discretionary is good.  If you do nothing to solve the problem your discretionary period may end and then you issues may become much more serious. Regardless of the scenario where it be divorce, illness, investment gone bad, client trying to get over on the lender etc. it really doesn’t matter.  We always segway to the permanent solution that is fair and achievable with the Short Sale.

 

Don’t buy off on your lenders implied commitment to a loan modification.  If you decide to go that route just be aware that you need to pay attention.  If you don’t get what you want or deem it to be fair then you can always switch to a comprehensive short sale.  Two hundred buck off a $4000 monthly payment is not what you are looking for but if you do find your way to ultimate modification nirvana this is what you may get.    I hope that I have provided some valuable insight.  I do believe in Santa but I am not so trusting of people schlepping for the lenders claiming to have the peoples’ best interest at heart.  When in doubt simply “rage against the machine”. Come see me for a Real Estate Short Sale. 

 

Blogging from the front line of the housing crisis.

 

GHunter

The gross assumption by the lenders is that they did everything right and “You better do the right thing or else” says the lender.  How dare you strategically default on your loan obligation. It doesn’t matter that I mistreated you with your bogus loan modification. All you idiots should know that this was just a ploy for us to shake you down for money. Now pay regardless you pigmy or I will huff and puff and… and what?  And what is the question.  There appears to be a major new development in addition to the alleged unlawful foreclosure mess. It appears the lenders may have gone to great lengths for extreme profitability to create the mortgage crisis that has hurt so many of us. The difference now is that the fine details that are being uncovered are going to provide solid evidence and Fraud is in the equation.  Boy I am concerned that this will distract the lenders from intimidating and shaking down the homeowners. 

 

Well today is a great day for the beginning of the revelation of the truth.  We are beginning to move beyond allegations and soon will see just how involved the big lenders were in creating a massive speculative bubble in housing on the basis of Fraud. Yes, I said fraud.  This is not new.  Everybody in the industry knew it. It’s the burden of proof and the full scale onslaught by the attorneys that will be our reconciliation. Here comes the proof that will allow the sword to be drawn and the lenders to appropriately be slaughtered as retribution for every America that has suffered from their unadulterated greed and lack of civil responsibility.

 

At 12:00 noon today on CNBC’s Strategy Session I just happened to catch an interview from a prominent lead attorney that has had the opportunity to audit a sampling of 750,000 individual mortgage loans over the past two years for integrity.  The findings showed that 50% of the loans were fraudulently represented in mortgage securitization pools.  Wow!  How are the big lenders going to lie and cheat their way out of this whopper?  The pools were stuffed with loads of investor loans that were represented as much safer owner occupied loans. Who knew!  The pools were also supposed to have in many cases 90% vanilla high credit quality loans but ended up stuffed with junk and more junk.  Oh, the buyers of the securitizations must not have cared that No Doc loans were not the same quality as full verified income and asset loans.  Again, who knew?  The lender knew!  They knew everything every step of the way. 

 

Right now the litigation is only held back on principle by the courts due to a requirement that the attorneys must have 25% of each of the investors from each securitization pool sponsor the legal action.  The problem, according to the lead attorney, is that the securitizations were held by investors all around the world and it is really difficult to assemble 25% membership of each securitization pool.  The other element in favor of the banks is that the statue of limitations runs six years from the date the securitization was closed. That means that the 2005 securitization liability for the big lenders will run out next year.  Don’t fret people.  That fact that a high powered law firm has audited a three quarter of a million loans and found a 50% fraudulent outcome tells me there is going to be a pig roast. I love a well deserved piggy roast. That leads me to my favorite little piggy that begs for it.

 

Bank of America you poor little greedy piglet named “the primary culprit” today on the news.  Your buy of Countrywide with ex CEO “Tan Man” Mozilo who ironically just cut a deal with the SEC charges today doesn’t look so good now. Banky Pooh America you screw so many people with foreclosures and the short sale process. You allow incompetence to hide behind your Mickey Mouse Equator System for short sales.  You systematically torment the borrowers and even screw the realtors by unlawfully reducing their commissions contrary to investor requirements with what lenders call “overage”.  I caught you red handed on this recently and a mid level manager laughed and asked me to be quite.  Well its High Noon and time for you to taste a little fair accountability.  Now that the allegations of Securities Fraud have finally arisen I guess concerns of reputational risk from stealing a buyer and screwing one of our clients with foreclosure in February of this year is no longer a big issue.  Personally Bank of America is one company that I would love to see as the poster boy for a good ole fashion accountability ass kicking by all the attorneys.  Call up the tobacco attorneys.  Remember 1998? 

 

Now JPMorgan is a good company and unfortunately is being pulled into this due to their coming to the rescue for the cesspool named EMC Bear Stearns during the crisis.  Do they have liability?  Absolutely!  I like Jamie Dimon of Chase very much but EMC was a pig and the stuff they were buying was fraudulent from day one.  Read my blog from last year on EMC and the high loan-to-value investor loans that they proliferated to straw buyers that were members of investor groups sharing down payment and reserve funds.  EMC was the candy man and they knowingly supported and perpetuated outright fraud and manipulation of the basic integrity affecting the foundation of underwriting principles that the integrity of mortgages rested upon.  I saw it first hand and I have a whole slew of witnesses that were equally astonished.  We shook are heads and could not believe what was going on.  Apparently Jamie D knows it too because he just added another cool 1.7 billion to the litigation reserve for JPM. 

 

Maybe the 24.2% (CNBC statistic August 2010) of the millions of Americans with mortgages that are underwater on their homes all looked in the mirror and determined that they were just plain stupid.  They said I screwed up and I need to bleed every ounce of energy to make the lenders whole.  Morally maybe some simply could not stand the thought of doing anything but paying their lenders even if they had to consider not sending a child to college.

 

Stop!  I have been preaching for two years straight on the root of this issue.  You now are beginning to see the light of who was responsible for the huge speculative run up in housing. The cozy banks pumped it so I am calling on all fellow Americans with a beef to stock up on Marsh Mellows. 

 

In the meantime, if you are over exposed in real estate that is underwater or simply need help, come see me to investigate a Real Estate Short Sale at www.thenegotiatedsolution.com .  My team will help you with a very constructive solution so you can enjoy the pig roast comfortably from the sidelines. Oink!

 

Stay tuned! Apparently the liability facing the lenders relates to buying back the fraudulent loans from the securitization investors at “par” 100…face value. Oouch!

 

Blogging from the front line of the housing crisis.

 

GHunter

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Blogging from the front line of the housing crisis.

 

GHunter

It appears everybody has a story to tell over the past couple years given there have been millions of foreclosures and approximately 25% of the people with mortgages currently are underwater on their homes.  The stories range from the simple loss of job to the builder or the lender set me up with a loan that wasn’t right for me.  The stories are never ending.  I don’t believe the majority of them but many may very well be true.  From my vantage point people simply own homes that they can’t sell due to the debt burden and many are tormented by aggressive loan programs or failed loan modifications with ridicules terms. The people want out or some kind of a solution but they don’t know where to turn.

 

In a ten percent unemployment scenario with so many people caught up in the crisis you have to understand that anger and paranoia lead to the natural tendency to point the finger at someone you can blame.  I pretty much tell our clients just about everyone is affected by the common derivative.  The housing market caught a whiff of deflation due to extreme circumstances and everyone got caught.  Do you think we would have all this blame game if the prices never went own?  Of course not.  People got greedy and the lenders got greedy while the regulators were not paying attention.  Where are we now? How about a question that nobody wants to answer?

 

The ultimate question to solve this massive mortgage/housing crisis is this.  Should we monetize the debt or stand firm by our free market principles and allow the mighty forces of capitalism to clear the market.  I am not sure which answer is correct given both will causes significant pain and sacrifice.  Let’s look at each side in an attempt to find a solution. 

 

Monetization of the Debt:

 

This is what has been occurring for the most part in my view since the crisis really gained traction in housing.  The Federal Reserve has the ability to go into the market place and deploy billions of dollars to buy up liquid assets.  The prime example was through March of 2010 the Fed owned a full 25% of the mortgage backed securities market (MBS).  That was 1.25 trillion dollars worth of MBS pools.  What effect did this have?  By removing these securities from the market the spreads that affect mortgage rates compressed thereby providing the residential mortgage market with artificially low mortgage rates.  Think of it just like a government subsidy.  This of course was orchestrated in conjunction with more honey in the form of governmental tax credits for the purchase of homes.  All of this activity simply makes for an artificial market.  The real question is does this solve any problems or simply make matters worse and delay the inevitable?  The answer lies in how you feel about being several hundred thousand dollars underwater on your mortgage and paying only 1-3% when you may actually really own 6.0%.  To keep things in the real world context of all the phony loan modifications you have to really do some selling to convince me that you fee better paying less with a balance on your loan that far exceeds the value.  In other words, lowering the cost of the debt doesn’t solve the indebtedness problem.  You’re still a renter with full ownership responsibilities and you don’t have a way out because there is too much debt. How long before you give up and dump your problem on the system?

 

Now apply this to the entire country.  Let me suggest that no one do anything to take any responsibility for their housing/mortgage problem.  We will all just sit on our hands and blame others while relying on the government to carry us along until it goes broke.  This is what is happening now and it is truly scary if it continues indefinitely.  Remember the Fed is about to embark on QE2 to plow more easy money through the system.  We are talking another trillion with a T. Can they do it…absolutely?  Will it fix the problem?  No!

 

Free Market Principles:

 

The mighty free market is ruled by capitalism and some of the most vicious creative destruction known to man. When a market clears it takes and asset from a weak holder and puts it in the hands of a strong one.  It often is a vicious cleansing process.  This would mean that the Fed and the Obama Administration and the Treasury would have to send the signal that it is time for the lenders to slay the people that are not paying their debts for any reason by the virtue of the law as vested in them by their rights under the terms of the mortgage instruments.  A blood bath of epic proportions.  You may think I am dramatizing this but you haven’t read your mortgage note or the law.  The lenders without the fear of the government backlash would love to clear the market.  They would sick their recovery teams on the people and conduct the slaughter by market while managing their REO inventory and exposure as they executed the plan.  Stop!  We can’t do this.  The market can not bare it according to whom?  This is how markets always work or at least how I was taught they should work.  I would love it because I have cash ready to buy a beach house for the family but instead I have to wait another couple years while the over levered owners do nothing under a veil of governmental protection and artificially induced markets. It’s not a fair situation.  The real crux of the free market solution takes the form of an earthquake.  We know the free markets are potentially very destructive. What if we all stood by our principles and the free marketed was allowed to clear and the following quarter we determined that real estate was pretty much worthless and all or our banks and financial system was once again insolvent?  The quake would potentially destroy everything.  Now you see why when the guy or gal says hey I pay my mortgage why should I have to carry those that don’t.  We are all connected and we are soft and fat from the good times.   We have to carry them until the country is in a safe place before we drop them into the boiling kettle. Allowing the free market to clear at this point may do more damage than good. The free market principle is text book but I am not sure it’s the answer either.

 

To summarize, this question makes me glad I went to Old Dominion University and not Harvard.  I don’t have to worry about the President calling me up.  My solution is related but not popular with the pro life crowd.  I fight for the people.  I want presidential pardons so we can kill all the accountants that stood for “mark to market” with illiquid securities during the financial crisis.  I am convinced these idiots are solely responsible by genetic order for every bad decision know to man since the beginning of time. Please humor me.  2008 was the toughest time in my life that I have ever witnessed both personally and professionally and the memory is still fresh as I am sure it is for you.  I don’t want to go back.  Let’s go forward and focus on the positive.

 

How can I help you today?  I can’t help the country solve this macro problem or even provide a suitable definitive answer for the tough question I pose, but I can reach out and touch you as an individual.  When I said the boiling Kettle I meant it whole heartedly. If you have a property that is underwater and you don’t plan or you cannot afford to pay for it and keep it for a very long time you need a solution for yourself and your family. The only solution that is real and fair is a real estate short sale.  If you buy off on the lies and promises of a loan modification please read the fine print around the new balance of what you owe. Don’t let your lender own you.  A short sale done properly with a full team of qualified advisers that cover the real estate sale, pricing, legal, liability, credit, and tax is what you need.  You can solve your own problem.  It is not easy and it takes time but you can avoid the boiling kettle.  The people that do nothing are going to be cast out on their own once the economy really begins to gain traction in a sustained recovery.  It will happen and when it does it will happen quickly.  Do not forget the cash on corporate balance sheets and your history.  American companies are cash rich on the whole and lean and mean after weathering the financial crisis.  When they plow the money into the market employment will improve in a vacuum.  When the country no longer needs to worry about the people underwater on their mortgages because the free market is deemed healthy enough to deal with the problem there will be no more worry!  This is why we have homeless people in this great country.  Think about it.  Come visit me at www.thenegotiatedsolution.com and investigate the short sale solution for absolutely nothing but your time. Don’t do nothing and be glad you also don’t have to answer the question of monetization or free market.

 

Blogging from the front line of the housing crisis.

 

GHunter

People in the media are many times automatically given credibility on subject matter. The question is should you listen and follow their advice? This is a key question as it pertains to your mortgage if you are currently underwater on your house because mortgage debt is a big hammer if not mitigated properly.

 

The article and ongoing debate attempts to bridge commercial mortgage responsibility with residential and throw in the moral conflict.  It is obviously debated for showmanship by two very nice people who do not have a clue as to the current contract laws under which many of you signed up for your residential mortgage.  Everybody is doing it is does not make it credible or good advice. This is the kind of advice people follow and end up in bankruptcy. It gets better. Then the bankruptcy attorney takes your money and you go away feeling like you have a real solution.  This happens time after time until one discovers that there are major long term negative consequences and associations with your decision to take the path of bankruptcy. 

 

Given this scenario, what is the next question I used to ask my loan applicants since 1987 when I was in the mortgage business and could not provide them a loan based on their bankruptcy decision?  I would ask them in a frank manner where their bankruptcy attorney was now.  They would always say that they gave money and the attorney was out of the picture.

 

Humor me for a moment and then follow the link to this article. This is great.  I am going to put myself in the chair of the debate and change the subject matter just a bit to present an analogy to make my point further with the same credibility on the new subject as I see with the current debate participants.  Let’s talk about your heart condition or someone you know that has a heart condition. Here we go:

 

My name is George. Did you know I know a little bit about everything?  Your heart is bothering you.  Go get another one or buy one of those medical implants. Yeah, go throw one in. Why not everybody is doing it?  What are you waiting for?  Having you hear of all the success stories?  I hear they work great.  What else do you need me to weigh in on as an expert?   I am getting some great media coverage and I may not be there for your follow up questions as they relate to pertinent issues.  Did I tell you I love Yahoo and I am getting some great media exposure?

 

Have you ever heard of the 30/30 guarantee when buying a used car?  Thirty feet or thirty seconds whichever comes first.  This is what you are going to get with listening to the foolish advice in this article or any idiot that tells you to just throw in a new heart. There are consequences.  Just like a replacement heart you dam well better have a plan and know what the hell you are doing and what the laws are or you are screwed.  The question to the debate is going to be is it good business to Walk Away?

 

The Yahoo article heading and link just below it:

It’s Okay To Walk Away: Let’s End the “Morality” Double-Standard on Mortgage Defaults

http://finance.yahoo.com/tech-ticker/it%27s-okay-to-walk-away-let%27s-end-the-%22morality%22-double-standard-on-mortgage-defaults-535365.html?tickers=mac,vno,spg,xhb,vnq,tol,len&sec=topStories&pos=8&asset=&ccode=

 

What happens to you in a deficiency state when you walk away from the mortgage as advised in this debate and on many other media platforms?  Let me kindly run the movie for you.  It’s just like Ground Hog Day but without the laughs and pop corn.  I briefly commented on this article on Yahoo but here is an expanded version. 

 

You walk away form the mortgage. The article and debate implies…Hey it’s just like a commercial loan right. Look at all the companies walking away from these. This is the way we roll in America. Obama is in charge and you signed up for free money with no accountability right? Right on!  Forget about the contract law and let’s change the law.  Get on board and Walk Away…because everybody is doing it? 

 

Advice like this is termed “bread crumbs” by my team.  We save people from the mortgage crisis with successful well planned Short Sales.  You must have a comprehensive plan to address Credit, the property, asset preservation, and mitigation of any unpaid mortgage debt.  Does still sound like a bread crumb when compared to the Yahoo debate? 

 

To the point, hypothetically today you walk away form the mortgage/(s) and follow the media advice.  Soon thereafter, depending on your level of delinquency, acceleration begins. What the hell is acceleration?  It’s part of the lenders legal right of recovery mandated by state law to take back the property.  We are not at the point where the lender starts up the truck and runs over your family financially and you begin considering not sending your kids to college. That comes later and I will yell at you and insult you if this thought ever enters the equation.  Acceleration leads to full blown foreclosure whereby you begin getting letters and demands until you receive the actual foreclosure sale date. There will be a definitive time and date on the court house steps.  Of course you may ignore this because the “walk away” advice or other bread crumbs you gathered where so convincing.  I hope this is not the case for you.

 

Now let’s assume the lender forecloses on your property.  We are now moving to the point where they are going to press you financially and you will have a clear view of the contracts you signed and your personal liability. Anyone that signed the mortgage note in a deficiency state is personally liable.  If you own the property but have not signed the note you are ok. Don’t confuse ownership on the property deed with who signed the mortgage note.

 

All foreclosure processes are mandated by protocol established by the laws of the state where the property resides.  Once the foreclosure occurs the lender will begin the process that will allow them to present their deficiency to the judge or magistrate of the court.  This usually takes approximately thirty days.  The court will grant a deficiency judgment against you for a big number.  This judgment will then show up on your credit report following your social security number for 20 years in Virginia as an example. Again, this judgment will only be placed on people that have executed the mortgage note.  This is no different from losing a court case where you are the defendant and the judge rules for the plaintiff. Please do not think for a moment that you will have your day in court to plead poor little homeowner in front of the judge. You will not. The deficiency judgment will be granted in deficiency states based on the mortgage note.  You are personally liable in these states and its will be automatic.  Hello Virginia is for lovers and Maryland. 

 

Once the judgment is in place the lender has the discretion to come after you or sell the rights of this debt.  Somebody is going to look to recover the money.  It’s now an opportunity.  First the lender will seek to garnish your wages in many cases and come before your groceries.  Once you discover this you will freak out and realize the advice you followed was very bad.  This will push you to an attorney much like the sweet sounds of siren songs on the beach.  Get out your credit card Bankruptcy is sweet justice. Then you are in short a deadbeat for a very long time and I am done. Figure it out yet?

 

Don’t walk away from the mortgage.  We will help you with all the critical items mentioned as part of our plan above.  Why is credit so important?  You need a job, promotions, security clearances, large purchases like a car, a rental house to keep the rain off you.  Should you just hire a realtor?  They are in many cases qualified to sell your house but they are NOT qualified to represent you with financial negotiations?  If they were then their Brokers Errors & Omissions Insurance Policy would cover this.  It does not, just ask them. This issue is also covered in past blogs on our site at www.thenegotiatedsolution.com   A realtor can only help you sell the house. They are not responsible for you and they cannot give you legal, tax, credit or personal liability advice.  Many attorneys that do not have experience mitigating property issues in the current environment are in the same boat. They mean well and will bill you hourly but they should not be representing you.  We take care of the whole equation as expert negotiators with lending recovery experience, licensed attorneys, and a licensed real estate broker on our team. We are also qualified to provide Tax and Liability advice in house.  Beware and ask questions.

 

 

Avoid foreclosure with a plan and a properly executed Real Estate Short Sale from a competent team that can offer you a comprehensive solution with a stellar track record of success.  Don’t settle for a paper pusher or a realtor that says “No Problem, sit tight, we will take care of you”.  Anytime I have heard “No Problem” that means one is coming.

 

Come visit our site, blog, and free video to investigate your options.  The decision you make today will determine where you and your family are with this problem one to two years out.

 

Blogging from the front line of the housing crisis.

 

GHunter,