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

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

 

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

 

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

 

Santelli’s Tea Party

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

 

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

 

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

 

GHunter

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

GHunter

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

 

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

 

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

 

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

 

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

 

Lawrence Tucker, Esquire, MBA

Principal, Tucker & Associates, PLLC

Legal Counsel, for The Short Sale Negotiator

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

GHunter