Myth—“As is” means inspection is unnecessary

MYTH: One of those myths which will not seem to die is that there is no need to have a home inspection on a property which is being sold “as is” since the seller has already indicated they are not going to repair anything. Failure to get an ASHI certified home inspector to thoroughly evaluate the home you are about to put down hard cash for is by far one of the riskiest things you can do when dealing with real estate.

REASON: You can’t judge a book by its cover (or a house by a walk-thru) 

The need for an inspection has been recognized by laws in almost all the states which grant the buyer the right to have an inspection and further to have certain types of issues addressed (to their satisfaction) or they have the right to walk away, retain their earnest money and go on about their business to find something more acceptable. 

In today’s climate with so many homes being offered for short sale it is increasingly likely that a traditional seller will offer a home for sale ”as is” because they have no money to provide repairs in the event an inspection shows there are items which need repair. 

Additionally, the market is currently flooded with bank-owned homes (REO’s which have been acquired via foreclosure or deed-in-lieu.) In either case the home has been vacant for an extended period of time, almost certainly without utilities on, and likely with delayed maintenance prior to the borrower losing it. Mold you see is definitely an issue: mold which has not yet manifested itself should cause you greater concern. There are so many major problems which can lie dormant in a long vacated home that you couldn’t give me one, much less convince me to buy it, even at a deep discount. (I rented a very nice, expensive Florida home which had been vacant for 3 years; I could tell you stories). To buy such a property without the benefit of a home inspection is foolhardy. If your REALTOR doesn’t advise you to have one, you need to 

start looking cross-eyed at the person you have trusted to advise you in your housing matters.

REALITY: A side benefit of an inspection is to know what repairs you want to ask the seller to take care of as a condition of moving ahead with the transaction. The core purpose of a home inspection is to determine what is the actual condition of the property (structurally, mechanically, etc) in order to determine if you wish to buy it: whether repairs are made or not. You may find a problem which is so expensive to repair or cannot be fixed to your satisfaction no matter what is done, which could cause you to decide to walk away from the transaction. As a real estate salesperson I had a couple walk away from a home after the home inspection found major termite damage as well as an active infestation of termites which we had not seen during our tour of the home. It could have been fixed but they were not certain that they would ever feel quite right about the integrity of the kitchen floor when so much of it (and the support beams) had been eaten away by the little varmints.

An inspection is for your peace of mind about the quality and condition of the home you are acquiring. It matters not whether it is being sold ‘as is’ or otherwise. You still need to know you’re not paying for a ‘pig in a poke’. Get the toughest inspection company you can find and ask for their TOUGHEST inspector. 

Good luck with your purchase.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Affordable Housing

What is “Affordable Housing”?

Q. With so many people losing their homes to foreclosure and the loud discussions about whether or not they should be ‘rescued’ being raised all over the country by folks from all walks of life, perhaps we need to try to figure out what makes a house affordable.  Is ‘affordable’ a term which means a certain price point?  Is affordable different in different parts of the country?  How can person know if a house is affordable? It is all so confusing.

A.  Oh what a difference a few bank closings and a little recession make. Back in the olden days, say 2007, even then the term was elusive, referring to an elusive, unidentified house that the average middle class American could afford. Now we can’t even figure out who is a middle class American much less what is or is not affordable. All our bench marks have shifted. The value of a home today changes almost as frequently as you need to change sheets. Nonetheless, we need to get a handle on this whole affordable thing.

Let’s take the first question: Is affordable a term which means a certain price point?

It is more helpful to look at a home as being affordable in relationship to your overall income rather than a certain dollar amount. All houses are affordable to SOMEBODY. But maybe not affordable to you. Back in the very conservative, distant past, lenders used the guideline for loan approval as 28% of your gross monthly income (amount you earned before taxes) to be allocated for housing expenses. More than that and you could easily fall on hard times if your income shifted a bit. 

Our current crisis was caused in large part by a shift in practice which allowed many homebuyers to commit as much as 50% or more of their income to their housing payment. If you had a healthy savings account, property values remained stable, the creek didn’t rise and your dog didn’t die, then you MIGHT have been okay. But life happens. Your money got ‘funny’ (that’s what Aunt Carolyn calls it when it doesn’t stretch as much as it used to), property values started going down like elevators (every day) and interest rate resets have taken their toll. Now not only can many folk not afford the home where they currently live, they are unsure what is “affordable” for them. Hopefully, this guideline will help you decide. Very simply, if you make enough in 1 week to pay for your housing that should leave you with a comfortable amount to manage the other expenses of your life.

Conservative, traditional lenders have found that as long as the consumer’s total long term debt is no more than 36% of their total gross income then there is enough wiggle room to afford other items which constitute a “reasonable” lifestyle. This rule has proven over the years to help people to have medical coverage, some degree of entertainment as well as build a small savings account.  Rarely would such a consumer end up in default on their mortgage unless there was a total loss of income.  

This then would represent an affordable house payment. Each individual has a unique affordable housing expense amount which would determine what is affordable for this family. I strongly believe it is important to keep home prices as low as possible, to offer a wide range of homes at different price points so that more consumers are able to comfortably afford to own a house and spend less than the  50%+ that many families currently spend to have a roof over their heads. What I have just described is “an affordable house payment” which is the goal for all us.  

The American Dream has almost universally been described as the desire to own a home. Politicians, housing professionals and the general public are encouraged to take a fresh look at our current concept of what achieving that dream means. Are we being successful if we provide the dream to people who can acquire but not retain the home for more than a few years? Are we achieving  our goal if many of the people we get into new homes are paying so much for that home after interest increases and a full tax assessment that 50%-60% of their income is required for basic housing expenses leaving precious little for any of the other necessities of life? Are we really providing affordable housing or housing which appears to be affordable at the beginning because of creative financing ploys which reduce the initial payments by hundreds of dollars per month deluding consumers into believing it is “affordable”? Why are foreclosure rates so high in the FHA arena with many first time buyers? Are the down payment assistance programs leading to more people being home owners (retaining a home for several years) or just  a revolving door of more people who build/buy but are back in the rental market within a couple of years? 

It is time to raise the difficult questions and look for some honest answers in trying to shape what will be done to improve our housing market. It is important to offer “affordable” housing to help stabilize our communities, to allow more consumers to enjoy both the emotional and financial benefits of home ownership. It is a dream worth working toward and saving to achieve. It should be more than a fleeting illusion which disappears and leaves in its wake a disillusioned, frustrated consumer who barely comprehends that the beautiful home and future they envisioned was doomed from the beginning.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Community Service Announcement: Modification Warnings

Community Service Announcement: Modification Warnings

There is a lot of positive which can be said of getting your loan modified and the mortgage payment changed to one which is more affordable. But you would be wise to consider some new twists which may mean it is not as great a bargain as you thought.

Temporary or Permanent Change

Back in the olden days—just a few months ago—loan modifications were made by lenders for distressed borrowers who had demonstrated the ability to resume payments and sustain them as permanent changes to the existing mortgage. The modification was processed as a PERMANENT change in the loan terms so the borrower could rest assured that the new loan was, in fact, one which could work for them. Many of the new modifications are only TEMPORARY. The trial period may be as short as 3 months or as long as six months. This is being used as a new test period to see whether or not you are able to sustain the payment. The problem is that there is no ironclad guarantee that the ‘modified’ loan payment will remain in place after that introductory period.

Life Happens

What happens if your loan is transferred to another servicer during your trial period? Worse yet, suppose your financial institution is sold or otherwise acquired by someone else? In either case, you would be holding an unenforceable, short-term agreement with a party different than the one you actually have to deal with concerning payments. You would be wise to consult with an attorney about the terms of ANY modification being proposed by your lender or to have an attorney to help you with structuring a modification which is practical given your current situation and the value of the property.

Temptation Could be too Strong …

Under the current administration’s plan to encourage lenders to modify as many loans as possible, lenders/servicers are being paid a fee to process those modifications. Substantial fees. They are paid based on whether or not they get the modification completed. They are paid whether it is an agreement which works for you or not. They are paid whether or not you have received what is called “net tangible benefit” (did it do you any good?).

We would hate to think that a bank might process modifications in order to receive payment even when they were aware that the payment amount was not sustainable for the borrower, but remember these are the same institutions which processed loans for some folks who clearly were not in a position to make those payments either. I’m just saying....

Has the modification been recorded?

One might argue that there is no point in recording a short term agreement and you could see their point. But maybe the reason for processing short term or temporary modifications was to avoid recording them in the first place. If there is NO RECORD officially—as in your local city’s Recorder’s Office—of the newly created Modified loan then the only record which exists is the OLD, unaffordable loan. IF your loan is transferred or sold, then the OLD loan is the current loan which is the ONLY loan that exists. Surely you can see where I am going with this.

Recommendation: If your loan has been modified and you want to keep that payment then it MUST be recorded.

HINT: Insist that your modification agreement contain a provision for the loan to be recorded promptly after agreement is finalized by your and your lender/servicer. Otherwise, you could be in for some heartburn.


Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Acquiring Real Estate with Tenants

Q: We have just bought an investment property which the seller lived in and rented out the other side. The seller has already agreed to vacate prior to closing but we do not know what to do abut the tenant. How do we get them out of the second unit?

A: Acquiring rental property which is currently occupied can be a good or a bad thing. Depends. I love that word. Depends.

Depends on:

1. Whether or not your contract says that the purchase is subject to the current tenant’s lease. What that means is: If their lease expires in 10 months, they belong to you and they stay for the next 10 months
2. If your contract states that their tenancy expires if there is a transfer of the real estate, then you have the RIGHT to get rid of them and we need to get to the “HOW”. But before we do, if they are good paying tenants, why don’t you want to keep them? Do you have other plans for the property which requires that they move? Did you forget to consider this before you started the buying process?
3. If you are not absolutely sure what your state law is concerning landlord-tenant rights, now would be an excellent time to check. And
4. Finally, if they will not leave nicely, and you really want them to go, then you will need to do a forceful eviction.

A forceful eviction should always be handled in accordance with state law. So don’t even suggest that is what you plan to do until you have read/studied the guidelines on what is required in your state.

The local sheriff’s department is an excellent place to start with a quick phone call to ask them what is the procedure, what forms are required, how much it costs, how much notice must you give, etc.

Additionally, they can probably direct you to the correct website to study up on this new aspect of your adventure as a new landlord.

P.S.
I almost forgot. You might consider offering them “CASH-for-Keys”. That’s a tidy little concept which is fast gaining popularity as a way to get folks out of foreclosed homes and could be used in this scenario as well.

“CASH for KEYS” is handy when you need someone to go away quickly, quietly and without leaving a mess. Simple—You offer cash as an incentive to vacate your property. How much cash depends on their needs and how badly you want them gone. Is it worth $1000 to have them out in 10 days? It is if the eviction process takes months and could cost you a lot. It is if the clean-out could cost you twice that amount or if they do damage on their way out as a way of getting back at you for a forceful eviction. Is it worth $500 if they leave in a month but agree to leave the home in good condition, promise to remove all trash and other debris and go away nicely?

As a Fannie Mae Broker-Specialist I was authorized to grant up to $1000.00 for ‘cash-for-keys’ provided you agreed to leave the home broom-swept, everything intact and you vacated by the time you said you would. Cash-for-keys is a reasonable request/offer when you have acquired real estate and need to remove the ‘body’ which remains. The amount is negotiable and should hinge on the size of house, time of year, how fast the home will be vacated, is the money required for a deposit on another property, moving expenses or other legitimate need to facilitate the ‘body’ disappearing.

General guidelines for cash-for-keys include:

1. A written agreement which states all the particulars—how much, to whom, by whom, what is expected, when will money be delivered
2. It must be signed by someone in authority with the agency who is offering the cash
3. You should assume that if you do not have a copy—you do NOT have an agreement
4. Terms of acceptability—home broom swept, all trash removed, etc.
5. Specific date and time these must be completed
6. Other details as the parties deem necessary

WARNING: Cash-for-Keys is a type of contract. Give it the respect of a contract. If you have entered into a cash-for-keys agreement (contract) you must honor all the terms as you agreed or you should expect NOT to receive the money. If you promised to vacate by 5 p.m. on Friday that is not the same as 8 a.m. on Saturday. I’m sorry, you lose.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

So, you think you want to become an REO Broker?

Get ‘Em Listed and Roll in the Dough…

It happens every time I teach a class (and I just had an (FIS) class in Charleston last week). Several of my students will get all fired up about becoming a listing agent handling REO’s as the fast track to real estate success. Even though the class is (and is advertised as such) designed to help REALTORS learn how to be successful with options to AVERT foreclosures, someone always attends for the SPECIFIC purpose of meeting me and having me tell them the short cut to becoming a Fannie Mae broker or a representative for some other REO account. Aside from the fact that that is not the purpose of the training, there will always be someone who is persistent in trying to move conversation in that direction.

This article is for you—you know who you are.

Ah-h-h, the Cushy Life of an REO listing agent

I’ve been there, done that, got the T-shirt AND the award. I received the 1st Rising Star Award as Rookie Broker of Year for the United States from Fannie Mae in 2000. They were right on target with their assessment; my star has been rising, (also drifting, getting lost and other mundane contortions) ever since. Oh, but I digress.

The truth is that my Fannie Mae experience was, overall, a really good one. I received excellent training at the Disposition Center in Dallas, and great support from my initial salesperson, Shirley Mastenbrook. I learned how to effectively price property based on a precise analysis of market data and I sold a heck of a lot of Fannie Mae homes. My sales volume and income both increased dramatically. However, my life, as I knew it, completely disappeared. It’s emotionally devastating to process a forceful eviction. To be the person who stands there and officially authorizes someone to be thrown out of their home. Being property manager extraordinaire is an emotionally draining and time-consuming gig.

It’s a New Day

The REO market is booming and in some areas there are more REO’s available than traditional listings. Loss mitigation efforts, including modification and short sale attempts, have slowed the number of completed foreclosures even though the number is still unbelievably high. However, the amount of ‘shadow’ inventory (REO’s being held by guarantors and NOT being placed on the market) is estimated to be a significant amount and must eventually be placed on the open market.

Market dynamics are rapidly evolving. A new mixture of guidelines for disposition changing in response to market conditions and/or government regulations, recommendations or directives and REO owners all serve to make today’s REO broker’s job a very challenging one. The practicalities of good business decisions shaping what will or can be during the time period the REO is under the control of the guarantor or lender is fluid. When you own or manage a few properties you can be almost casual about how you dispose of them. When you own thousands upon thousands, stacked on top of each other, you have to utilize a more systematic, inventive approach in reducing those expenses which revert to you and become vigilant in avoiding any expenses you can. Utilization of a strong contract, with strict adherence to its dictates can mean survival or failure to survive. Whether expenses are moved to listing agents, buyer’s agents or buyers is immaterial; what is important is that anything which can be shifted to someone else, be shifted. The list is growing—now even eviction costs have been added to the list of costs which can be shifted to someone else.

Flies in the Ointment

Nothing messes up a good plan faster than messy details. It should not cause you concern if the dollar amount tied to a detail is a small number, with only two place holders, like $99.00. It gets serious when the numbers are BIG numbers, with 3 or more placeholders, say $475.00 for instance.

Likewise, phrases such as “shall maintain the premises” are not a big deal, unless the premises include a pool or some other high maintenance component. Assuming the responsibility to maintain can keep a person awake at night better than a crying baby. Didn’t they explain that ‘handle utilities’ meant that ‘deposits when required’ would come from your checking account? I suggest you re-check your account balance to be sure you can AFFORD to be an REO listing broker. It’s good business, if you can get it—provided you are sure you understand what you are signing up for.

Re-imbursement is on the Way

**Insignificant detail—To be delivered by deranged carrier pigeon who will be dispatched later this year.

I am not throwing snipes at Fannie Mae. They did an excellent job of processing reimbursements and doing so in a timely fashion based on the criteria they had set for their agents. However, things could be dicey IF you forgot to submit invoices on time. REO sellers are SERIOUS about their deadlines. You miss it; you eat it!!! No equivocating. You agreed and said you understood, this is a business, not a game for newbies who want to play at REO sales. Suck it up, write the check and remember to check due dates more carefully in the future. If you want to depress me, e-mail me and ask about the $15,000.00 I had to shell out after missing a few deadlines—it doesn’t take long for carpet and paint to run into some serious money. BIG numbers, with five place holders—like $15,000.00.

REO’s can be LEASED

Awesome plan! Announced by Freddie Mac in January of ‘09 and Fannie Mae in November of ‘09. This is the deal. Both organizations were (and remain) concerned with the increasingly large inventory of foreclosed properties as well as the public perception that they are not doing all they can to help alleviate the problem. Both have begun lease-back programs so that either the former owner of the property or a tenant placed there by the owner can lease the home back—AFTER foreclosure.

In a nutshell, the Freddie plan is a month-to-month lease, at current market rent. The property will be on the market during that timeframe and the new BUYER assumes responsibility for the eviction process and related costs to get the occupant out of their new home.

The Fannie Mae plan is essentially the same, except that it allows for a one year lease period. If you are the REO broker for either of these guarantors you have the honor of explaining the particulars and the implications to a buyer’s agent. What appears to be a win-win for Fannie or Freddie and the occupant can become a nightmare for the agents involved and a potential purchaser. The magnitude of unintended consequences is enough to make my hair go straight (and I have a very short, curly Afro). I suggest you take a crash course in landlord-tenant law in your state. Additionally, please check to be sure your E&O Insurance premiums are current.

Would I do it again?

The truth is, I might be tempted because of the guaranteed revenue stream. The reality, however, is the same as the prospect of teaching middle school kids: someone has to do it but I am not that hard up yet. Having sold REO’s for 2 ½ years, very successfully, I can see how dramatically the terrain has changed. Today’s REALTOR has a lot more risk, many more potential ‘bosses’, and fewer clear guidelines in an arena which mimics the wild, wild west pretty closely. Training by the companies who select agents is almost non-existent. The entire process is further complicated by the fact that you are stepping into situations like the landlord scenario I mentioned in the paragraph above.

For agents who decide this is still the route you wish to pursue, I’d like to share some thoughts on making an informed decision.

The Five Star Conference, complete with training institute, offers just what you need—but the entire cost for that training will be at your own expense. The timing of the annual event may not coincide with when you want to get started and there are numerous other challenges to concern yourself with as well. Learn how to perform a professional BPO (www.fanniemaebpo.com) so that you are really good at determining property value PRIOR to the listing. Additionally, it might be beneficial for you to read the actual contract used by the guarantor you think you want to represent. I am suggesting that you read both the listing agency contract (which you and your broker will need to sign) and the contract which you will provide to buyers/buyer’s agents. You can learn a lot about the firm you will be working for by studying the documents which will bind you to them.

REO sellers do not all require the same level of service

It is important that you pre-determine what type of REO listing agent you want to be: an agent who only lists properties (such as HUD homes) without an obligation to handle utilities, etc – or does property management to a degree (Fannie Mae or Freddie Mac) or offers an even broader range of services such as rehab, keeping utilities in your name and a full menu of other services. Then only seek or accept listings from an REO seller whose needs mesh with those services which you are willing to perform.

I would caution you to avoid seeing the REO business as something you will just ‘tack on’ to the rest of your business. Most REO sellers are very demanding. Their volume is growing faster than mushrooms and a huge quantity of ‘shadow’ inventory is just waiting to be released. It would be wise to see this as a major part of your business and to make a decision based on whether you were prepared or willing to shift and become primarily an REO seller’s agent if this is the path you chose. If you do well, the volume will definitely follow. If you do poorly because you cannot handle unexpected volume, they will drop you like a hot potato and never speak to you again. They take “failure to perform” very seriously.

I would encourage you to talk to some agents who have listed REO’s within the past 18 months. Sit down with them over dinner (your treat) and ask for an honest analysis of those things which they see as problematic.

Your final question to them should be: “What is the worst thing that could happen?” Consider their answer. If you can live with the worst thing that could happen, then go for it.

Best of luck in the REO world.

Happy to be a “Former Fannie Mae Broker”

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

From the Desk of: Buying T-I-M-E

Never before has the expression “If I could just buy some time” meant so much to people. When you are facing foreclosure you need time to discover your options, analyze your situation and implement an action plan. Your most precious commodity is time…And it’s running out.

When your money is running out…

You don’t have time to wait for the trickle down effect of the stimulus package to make a difference in your personal situation. While the package will make a significant difference over the long haul for thousands of Americans, anyone who thinks it is going to quickly make a difference for EVERY American is kidding themselves. Facing reality is hard, but necessary. As a country, we have ignored hard truths with disastrous consequences for too long. Nothing will be gained by continuing to point fingers. However, we must immediately recognize that each of us has a role to play in correcting the serious housing problem we face as a country. (Even if your home is paid off, FREE and CLEAR). The housing market holds the key to stabilizing our country, so anything we can do to keep people in their homes is a step in the right direction.

First thing’s first...

DO NOT ABANDON YOUR HOME. Even when you are behind on your mortgage, no matter how far behind you are, DO NOT abandon your home until the entire legal process has been played out. You can stay in YOUR house until your right to possession has ended. Exactly when that time is will be determined by three (3) factors:

1. Type of foreclosure in your state: judicial or non-judicial
2. Whether you have a mortgage or a deed of trust
3. State statutes regarding sheriff or trustee sale and possession timeframes

Find out the answers to items 1, 2 and 3, and then abide by them. Make sure your lender abides by them as well. Things could improve while you are holding out. Hold on.

Things are changing radically and very quickly because of the magnitude of the housing problem. Your local courts could dramatically change the way they process pending foreclosures so that you have a chance to work things out with the lender. Stay in our home and fight for the chance to work things out. More banks are willing to work with borrowers today simply because they really can’t manage the huge backlog of homes which have already been lost to foreclosure. If you can present a viable plan, your chances of retaining home ownership are pretty good.

Second thing’s second…

I know you know that, but I needed to get your attention. Probably the second most valuable thing anyone will ever tell you to do to save your home from foreclosure is to

1. Demand the lender or servicer who is threatening to sue you for foreclosure produce the original note/deed of trust which says you owe them. In legal terms you are asking them to demonstrate that they are the “real party of interest.” In common language that means, prove I owe you. Prove you have the right to demand payments from me.
   
2. The most effective way to demand this documentation is with a “qualified written request”. You are entitled to request that and any other information you want which is related to servicing on your loan (any mortgage loan in the United States) under federal RESPA regulations. Details are taught in the workshop.

What Choices do I have????

Let’s consider the answer to that question. It is critical that you start with an honest inventory of your situation. How far behind are you? Do you have the resources to resume payments? If not now, when will you be able to do so? What do you want to do? What are you ABLE to do? Why should the bank consider your proposal? You’ll need to able to defend it as being reasonable, based on your current circumstances.

Space in this article will not allow me to go into detail but I will provide you with the options you can consider. Do further research on each of them, online, in the library, on websites such as HomeOwnershipMatters.com Or at the blog: HomeOwnershipMatters.blogspot.com.

1. Options to keep the house—special forbearance, loan modification or a partial claim. You need to learn what each of these means and how it works
2. Options to let the house go—short sale, assumption or deed-in-lieu. All of these options are better than foreclosure but you need to know exactly how they work to avoid creating yet another problem for yourself down the road.
3. Reverse mortgage could be considered, it could be your solution. Be sure to use a government backed reverse mortgage if you decide to use this option.
4. Receiving disability payments (if you have a claim pending) could make the difference. Hold on until you know what you will be receiving
5. Acquiring a roommate could change your finances—get started working on it (I mean a roommate who will PAY—not one who will add to your expenses)
6. Selling unnecessary items in order to cover the gap until you get a permanent solution. Ebay or Craigslist could bring in some immediate cash. (Stop crying—we are trying to save your home and Buy “T I M E”).
7. Some other solution which has not even occurred to me

“Answer” the summons

The summons is your official notification that the lender has moved to legal action. The court notifies you via the “summons”. Your response should be to the clerk of the courts, the lender/servicer and their attorney. It is critical that your answer be received within the legally stipulated timeframe in your state. It is strongly recommended that the answer be sent by certified mail, with a signature required. This is a task which you can handle on your own, with a little coaching.

Basically, an answer should acknowledge that you are aware of your situation and that you are working with the lender on a plan. Specify what that plan entails. If you are challenging whether or not the lender has the legal right to foreclose (due to failure to produce the original note or demonstrate that they are the “real party of interest”) this is your time to say so. The foreclosure is likely to be stalled based on the quality of a timely, well prepared “answer”.

Buying “T I M E” workshops offered…

Workshops to teach consumers what they can do to “save themselves” will be offered in cities across the country beginning in March. All workshops will be posted to the HOM calendar as soon as they are confirmed so look for one in your area soon. These workshops are 3 hours in length with an hour after for questions and answers. Attendees will leave with a comprehensive packet which details all the options outlined above as well as a sample “qualified written request” with complete instructions on how to use one most effectively. Each borrower who attends will also walk away with clarity on how to prepare an “answer” since this is also critical if legal action has begun.

Want to host a workshop in your town?

The commitment is simple and inexpensive. A workshop can be offered anywhere in the country if a host is willing to provide a suitable space and advertising to let the public know that the event will be held. There is no fee for the speaker (donations will be accepted) but expenses to the event must be covered. For a nominal expense you can offer a very valuable training which can save homes in your community. For details about what is required, please send an email to Heather at meade.heather@gmail.com.

Local initiative is needed

We all have high expectations of the new administration but our President has said repeatedly, and has demonstrated with his grassroots campaign, that the masses can make a difference, when they choose to become involved. If every person who reads this article would share it with the people in your personal database, you would help several people to avoid foreclosure.

If the leaders of organizations would share the articles and the link to the blog with your entire company, you might save not only their home but the home of some of their family members or friends. Driving people to the blog and website so that they can get practical, easy to understand information to help them with their personal choices could make a big difference. Anyone reading this who has the connections to have a workshop in your city or a program aired on Public Access or Government Access television or local radio show could reach thousands of folks with some concrete/self help which could make all the difference in your community. I am a teacher and a writer. I know the role I am to play. I ask each of you to find your role in helping our country get back on its feet. We must find some resolution to our housing problems.

“Working together, we can make a difference”

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Loan Modification Specialist (LMS) Certification Offered in Florida

Dates: July 27, 28, 29, 2009
Times: 8:30-4:30 every day

Location: Perdido Bay Golf Resort
1 Doug Ford Drive
Pensacola, FL 32507

Sponsor: Home Ownership Matters Training Institute

Trainer: Mildred Wilkins, (FIS) Foreclosure Intervention Specialist

Former Fannie Mae Broker-Specialist

Get the training you need from someone who has:
1. Learned property valuation from Fannie Mae

2. Sold real estate/processed many successful short sales

3. Lost a home to foreclosure/I can teach you about deficiency judgment

4. Learn from a professional; TO BECOME MORE PROFESSIONAL

Registration: Early bird registration ends 4/25, so HURRY and register TODAY, seats are VERY LIMITED: ONLY TEN AVAILABLE! (Yes, ONLY 10)

Lodging: The Cottages at Perdido Bay (http://www.perdidocottages.com) (Lodging NOT included in the price of the certification)

Course Description:

This Loan Modification Specialist (LMS) certification program is comprehensive, rigorous 3 day training designed to prepare attendees to successfully facilitate loan modifications. Professional development is necessary to be competitive in this emerging field. This certification has been designed and is taught by a former Fannie Mae Broker-Specialist who has specialized in foreclosure intervention training since 2002.

Wilkins created the (FIS) Foreclosure Intervention Specialist certification program for REALTORS, the first such certification for real estate professionals in the nation in 2005. (FIS) for Housing Counselors was added in 2006. The (LMS) certification will set apart those who have taken substantive hands-on training and are truly prepared to call themselves ‘specialists’.

Let the (LMS) certification move you closer to transitioning into a whole new career. There is pent up demand for this service, a limited number of qualified providers and even less training available for those in the private sector who currently own or plan to open a for-profit business.

(LMS) certification. Your answer. Today. Register. NOW!!!!

Why offer certification?

HOM Training Institute is the training arm of Home Ownership Matters, LLC. Providing quality education to real estate professionals such as REALTORS, attorneys and housing counselors has been the focus of the institute for several years, with the goal of training professionals to be competent in the fight against foreclosure. The dramatic increase in the sheer number of modifications which are being utilized, along with the fact that most individuals or organizations which offer them have little to no training in the field has created a need for practical, comprehensive training in this area. HOM Training Institute is responding to that need with the (LMS) certification training. The consumer is the person who ultimately benefits from this program.

Is this training right for you?

This is a fast-paced, but comprehensive, look at the many details which need to be considered if you have concretely decided, OR you are contemplating opening, a business which specializes in providing loan modification services. You will not be taught how to create a database of consumers who have already received foreclosure notices from public records and do direct mailing to them to get business. You will, instead, be taught how to set up a professional office where you meet with clients who have been referred to you from sources such as local counseling agencies, your local foreclosure hotline, reputable non-profit organizations and others in the community who are looking for competent, professional loan modification service providers to meet the growing need as the housing crisis deepens. While there is a significant move across the country to provide training to housing counselors within non-profits who help low to moderate income borrowers, there is no corresponding training to meet that same need for middle to upper income borrowers who are simultaneously struggling.

What to expect:

As attendees, you will:
1. Receive clarity on the legal process of foreclosure (state specific) and the applications for a potential loan modification

2. Cover the components of the mortgage documents which specifically impact the possibility of workouts

3. Learn the elements necessary for a successful modification and the practical strategies for implementing such a workout

4. Receive instructions on how to successfully (LEGALLY) block foreclosure long enough to complete the modification process

5. Gain a thorough understanding of the inner workings of the Loss Mitigation shop and how to work effectively with them

6. Leave this training with a clear picture of the ethical and legal constraints which should (and must) govern your business in order to avoid lawsuits

(LMS) Loan Modification Specialist
Certification Training

Day 1: Practical and Professional Strategies
Session I: Understanding the Foreclosure Process

This session will cover the basic process for foreclosure, beginning with default and culminating in the particulars of the foreclosure process. Both judicial and non-judicial foreclosure will be discussed, since they are vastly different. It is impossible to help someone effectively with a modification without understanding the bigger picture of what the foreclosure process is for your state and where the consumer is in that process. The class will cover the differences between foreclosure with a note and foreclosure under a deed of trust. Additionally, such things as redemption rights will be covered with a general focus on what they are and the intention under the law (and the way they are abused by foreclosure intervention scam artists). Each attendee will have an opportunity to get clarity on the ‘specific law’ for your state in a timeframe tailored for this purpose.

Lunch—The Perdido Grill

Session II: Loan Modification—An Intervention Solution Whose Time Has Come

This session will provide clarity on the details of what exactly constitutes a modification, the components of a good, sustainable one and how to structure such a workout. Just as important, this session will cover the risk factors which can undermine a mod and cause the consumer to re-default. Learning to more accurately analyze the short term capacity of the borrower and the long term feasibility of the workout proposal, prior to an agreement being reached, are the keys to long term sustainability. Success should be measured not by whether or not you got someone to say yes, but by whether or not the workout is ‘working’. If the answer is no after a month, then it would fail the test of a workout. It was, in fact, just a band-aid. This training is designed to train you how to offer long-term, sustainable proposals for modification and get them accepted.

***********************************************************

Individual appointments for state law coverage

(filled on a 1st come, best choice basis)

Appt 1—5 until 6 p.m.

Appt 2—6 until 7 p.m.

Appt 3—7:15 until 8:15 p.m.

Day 2: First Thing’s First for a Successful Modification
Session III: “Buying TIME” – When the Money is Running Out

The focus of this session is worth the cost of the training, even if you failed to attend any other sessions. Time—or the lack thereof, is a major stumbling block to any successful workout—including a modification. This session will cover a highly successful strategy which combines strategic and legal restraints that will give you several extra months and a very strong negotiating position. When time is on my side—and I have your undivided attention—then we can work something out. Using the power of an under-utilized federal law will give you the time you NEED to get the attention REQUIRED for a successful workout. A team of foreclosure attorneys have put together a comprehensive list of all the possible ‘audit items’ you might use to challenge the servicing on a loan or the validity of the loan itself. This TOOL will be the focus of this session. Let’s say, “It gets a servicer’s attention.”

Lunch—The Perdido Grill

Session IV: Behind the Scenes of a Loan Servicer’s Shop

As a former Fannie Mae Broker-Specialist the trainer was introduced to the inner workings of the disposition department of the largest insurer of properties in the United States. That introduction to the mindset behind the scenes, as well as subsequent Fannie Mae training on servicing, has been invaluable in teaching students in other classes what to expect from the servicer’s shop. Once you understand the mindset, you are better prepared to GIVE THEM WHAT THEY WANT—to get what you need. It’s a basic negotiating concept—the trick is knowing what the other party wants (which is seldom what they ACTUALLY tell you they want) and then being able to provide it. A successful modification agreement—in truth, an agreement between two parties for anything—hinges on a meeting of the minds with whether or not the needs of both parties are being addressed. Crafting a modification which has the potential to be both accepted and sustainable for the consumer is possible when you understand what the servicer shop truly wants.

**********************************************************

Individual appointments for state law coverage

(filled on a 1st come, best choice basis)

Appt 1—5 until 6 p.m.

Appt 2—6 until 7 p.m.

Appt 3—7:15 until 8:15 p.m.

Day 3: Practical and Professional Strategies
Session V: Modification Stripped Down

We’ll cover the basics of modification during this session. How to determine what recommendation to make and what supporting documentation should be supplied in order to validate that recommendation. Would a combination of components work better for this borrower? Is the medication a permanent ‘fix’ to the borrower’s financial situation or must you consider some additional long term strategy? Does the modification agreement provide protection from onerous terms? Is your client protected with a provision for timely recording of the modification to avoid repercussions during a subsequent transfer to a new servicer? If you don’t already know how to do all of the above mentioned things, then sign up today so you can learn how to structure a modification which will provide immediate relief and long term sustainability for your client. Remember: “If it ain’t on the paper, it don’t exist.” Feel free to repeat that quote by HOM founder Mildred Wilkins.

Lunch—The Perdido Grill

Session VI: Ethical and Legal Constraints

This final session is, perhaps, the most important session. It will focus on the need for clearly understanding how critical it is not only that you operate a modification business in an ethical manner, but that you also avoid even the appearance of borderline behavior. A number of states have already enacted legislation which covers businesses and individuals who are “foreclosure intervention counselors”. Offering a modification for a fee would definitely put you in that category. Not only are you obligated to abide by Federal privacy laws and fair housing laws, but there is an assortment of other laws which are geared to protect consumers from unscrupulous providers of service. There is, and will continue to be, aggressive investigation and prosecution of organizations and individuals who seek to take advantage of consumers during this trying time. HOM is basically a consumer advocacy agency and is, therefore, strongly supportive of legal action against any modification service provider who uses their knowledge and influence to take advantage of a consumer who has trusted you to help them at this difficult time. HOM will not endorse nor condone any illegal or unscrupulous behavior as it relates to foreclosure intervention, including loan modifications. Attendees of all training sessions offered by the Institute will clearly recognize that behavior above board, at all times, is continually advocated and expected of HOM graduates. Completion of a HOM Institute training should not be used as a cover for unscrupulous behavior. Be forewarned that the reputation of the company will be fiercely and publicly defended if a graduate seeks to use the integrity of the company in order to validate themselves.

**Dinner option available: Class vote required!

REGISTER TODAY, it may be the only way you are able to reserve your spot! Remember, there are only TEN spots open for this training!

Other training dates: May 25-27 and June 8-10

Airports:

Pensacola; 17 Miles Away
Mobile; 55 Miles Away
Okaloosa Regional; 53 Miles Away
Ft.Walton Beach; 48 Miles Away

REO Assumptions and Assertions

REO Assumptions and Assertions

Biggest Assumption: They just need to dump it

Translation: They’ll take any kind of crazy offer

Assertion: N-O-T YET

As a former Fannie Mae Broker–Specialist, I can provide insight into the real world of buying and selling bank-owned properties. First, forget most of what you think you know about such transactions—you’re probably way off target.

The Devil’s in the Details . . .

If you’re assuming they just need to dump it, you are half way right. They do, they really do, but not at any price. The most common misconception is that the holder of REO property will accept any offer without consideration for the value of the collateral. I suspect you’ve been watching too much late night television. While it is true that the increased volume of foreclosed properties means a substantial increase in REO inventory, the basic business principles which govern liquidation are not changing as rapidly as they need to (or as you had hoped they would.)

Harsh New Reality

It is a harsh new reality that today’s market is being flooded with REO’s. Thousands more will be added in the months ahead as a result of the backlog which has been created because of political posturing. As a consequence, both federal agencies (HUD, VA, Fannie and Freddie) and private mortgage insurance carriers will need to adjust their guidelines during the upcoming months. Unfortunately, as a practical matter, in the meantime, they and loan servicers must operate within the guidelines of existing regulations and existing contractual stipulations until they are amended. They will be relaxed—necessity will dictate that they must be. The consequence will be a ‘let’s make a deal free-for-all.’ Good for agents and buyers—not so good for price stabilization. But it has to happen and the sooner we get to it the better.

They Don’t Know Its Value

You’re right on target with that assertion. The “local market reality” is a piece of data which is hard for the servicer to grasp when they handle properties around the country from a centralized location. The truth is, their usual resources are less than reliable. They must rely on:

• Their appraisal, and we know how likely that is to be inflated
• A $50-$75 BPO—okay, does anyone really think you’re getting an accurate evaluation with a product produced in a BPO mill? Do you really think that they are trying to determine value with that document? (They are NOT. They are fulfilling a servicing requirement to have a BPO performed.)
• Their gut instinct
• The loan amount shown in their computer—but since when has that been connected to the ACTUAL value of the property?

Hence, the market will dictate and that process takes time. If the property is ‘rejected by the market’ for an extended period of time then it is declining in both actual and perceived value. It’s in everyone’s best interest to determine fairly accurately, from the onset, what is today’s market value. Consequently, the servicer needs a current, as-is appraisal. While many appraisers were rewarded for inflating values during the boom years, they are now stuck with the unpleasant task of trying to justify vast differences between former and current value. Market correction is not enough of an explanation but the recently sold comps don’t lie. It’s worth what someone will pay for it—today—not last year.

The Law of Supply and Demand

In time (I think within the next three to four months) the inventory will be so high that the valuations will plummet and get in line with what a ready and able buyer is willing to pay a reluctant REO owner. During the boom years hundreds of thousands of houses were built across the country without any clear need based on population growth. Speculation in real estate was HOT. The jobs created, the loans generated, and false illusion of prosperity made for wonderful headlines.

I was nearly thrown out of a Foreclosure Task Force meeting in Indiana in 2006 when I dared to mention the need for a moratorium on new construction since the city had already built more than 30,000 new homes in 5 years for only 10,000 new residents. I mentioned a college business class on supply and demand. I visited Denver in 2006 and thought they were building homes for the entire United States to move there. Then I moved to Florida and quickly observed that enough new houses were being built there for the few folks who didn’t want to move to Denver or Indianapolis. Shall I mention Atlanta, Las Vegas and twenty other cities which issued building permits without checking to see where the buyers were coming from. We are paying the piper (and we will be paying for the next ten years) for allowing an excessive amount of housing to be built. We created an economic situation which will dictate FEWER aggregate occupied households as people move to sharing homes in order to survive the financial crisis created, in part, by the ‘creative financing’ used to sell the new housing stock.

In time, the newly created rental housing market (previous homeowners, now renting again) will absorb much of the current excess single family housing but we will have changed the dynamics of communities across the countries from single family, owner-occupant to rental dwellings, perhaps housing more than one family. Investors are the most likely purchasers for the glut of foreclosed homes which will hit the market during the next two years. As businessmen and women, they will make decisions based on totally different criteria than buyers who would be owner-occupants. Financial institutions will have no choice except to reconsider their options when holding costs, fines from municipalities and other constraints dictate they do something to stop the bleeding. Excess has its payback. The law of supply and demand will not be ignored; pretending it does not exist is a sure fire way to pay the piper.

Now About that Insurance and Title Work

If you do not know the difference between a ‘marketable title’ and a ‘clear title’ this would be an excellent thing for you to research if you are planning to purchase an REO property. Suffice it to say that the REO you are purchasing can have gaps in the title coverage which leave room for undisclosed liens to surface after the closing and bite the new owner in the proverbial behind. Since you will have signed numerous documents which stated that you understood that you had no recourse after closing: you will not be surprised when I tell you: YOU HAVE NO RECOURSE AFTER CLOSING.

Watch for an upcoming webinar on the HOM website: “Buying REO is Risky Business”. You might want to put that on your schedule.

Copyright © 2008, Home Ownership Matters, LLC. All rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Short Sale Fast Facts for Consumers

Short Sale Fast FACTS for Consumers

1. Short Sale could be your solution—but it has some pitfalls

Get informed and Get started

2. Short Sale is an Option Not a RIGHT

You will need to “qualify” for the option to dispose of the house by using a short sale.

Most lenders use the same basic criteria—what I call the “Universal Hardship Test”

• Was the default ‘trigger’ something beyond your control
• Did the trigger lead to an increase in expenses or a decrease in income?
• Are you still an occupant in the home secured by the loan?
• Have you depleted all of your assets available to make mortgage payments?
• Are you willing to pull together the documents required by the lender/guarantor to determine if they believe you qualify for a workout?
• If there is a co-borrower, are both parties committed to this workout attempt?

3. Finding a competent REALTOR could be difficult

A short sale is a Speciality transaction. You need to find a

REALTOR who:

• Works full-time—yes, even in today’s climate
• Is experienced in short sales (means they closed)
• Is familiar with your area and price point
• Whom you feel comfortable with
• Who is able to demonstrate to you what the value of your home is compared to similar homes in the neighborhood
• Has the ability to effectively market your home
• Is pleased to share with you that they have had specialized training in Short Sales (I mentioned this last, because if they haven’t mentioned by now, it is because they don’t have any—Not a good sign)

4. You can list the home for short sale—BEFORE the lender approves the

short sale—

**As long as you indicate that “all offers are subject to lender approval” This should be included on your listing contract, on the seller disclosure form and within the comments on the MLS sheet

**You can’t ACCEPT and CLOSE without the lender’s approval but you don’t have to wait to get started. Why not start today? Is your house ready? Do you have the documents needed for the hardship package?

5. Might leave you with a deficiency—which could be used to get a judgment against you

Negotiate to get the lender to agree to “waive their right to a deficiency judgment” as part of the short sale approval letter.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right to pursue you for the shortage.

If it’s not in writing—signed by an authority—you should expect them to pursue you for the shortage.

6. Foreclosure process—will most likely continue, even while you have the house on the market for sale

FHA loans which are subject to HUD regulations—require that the foreclosure process STOP while the home is marketed for short sale

Foreclosure action continues on ALL other loan types

7. Listing Termination—can be mandated by your lender when you are in default

The Lender is not a party to the listing contract and you might logically assume that therefore they had no say so about what does or does not happen with the attempt to sell your home.

Unfortunately, you would be mistaken.

Government guarantors, HUD, VA, USDA, Fannie Mae, Freddie Mac, and Rural Development have the right under Federal regulations to compel you to withdraw the listing IF:

You are cooperating with showing the property as a show of ‘good faith’

Title issues are uncovered which would prevent the transfer to a new buyer

The condition of the property is such that a sale is unlikely

You have failed to comply with request for information to determine your eligibility for a workout. Remember: This is an Option, not a RIGHT.

8. Second Liens can present a challenge—also known as a ‘stumbling block’

Second lien holders seldom initiate foreclosure; they block short sales all the time with their obstinacy. You cannot transfer real estate to a new buyer when there is a second lien holder without their cooperation.

They must either:

a. Release the lien

b. ‘Lift’ the lien and permit the closing

Usually they can be enticed to do one of these things, preferably the first. Many will accept a token payment as a settlement for the obligation if foreclosure is imminent and they stand to get nothing after the lien is wiped out. Other they may agree to an unsecured loan in exchange for

their cooperation.

Your lender may make a contribution toward getting this second released, especially if you have a government backed loan. Their regulations have a stipulated amount set aside for this purpose. Get your facts and get going.

9. Tax Implications—Didn’t Your REALTOR mention that?

When there is a deficiency (difference between what you owe on the house and what the new buyer is willing to pay for it) you are taxed on that amount as though you received it as a gift.

IRS rules require that the lender provide this information directly to IRS for tax purposes.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right

10. Now about signing those papers…….WAIT

I believe strongly that the seller of a property which is upside down would do well to pretend their fingers are broken once they have signed the listing contract and seller disclosure form until Mr. Smitherman, the supervisor at the bank, has:

a. Approved their short sale, with all continguences

b. Given them permission in writing to sign something

As a trainer, I take the position that ‘lender approval’ means getting the lender’s approval before you agree to anything with a potential buyer.

That means do not sign a purchase agreement, no matter what contingency clauses have been included by a so-called sharp REALTOR. Do not sign a counter offer. I said, ‘pretend your fingers are broken until the supervisor at the bank tells you to sign something.

If you sign BEFORE he tells you to, you are agreeing to terms which he has not yet agreed to. You cannot perform (or deliver the deed to the house) without his agreement. He may:

a. Select a difference ‘potential purchaser’

b. Counter and ask for a lot more money

c. Go ahead and foreclose, then you have nothing to sell.

Don’t get ahead of the bank. “Lender approval required” means the bank gets to decide everything: to whom we will sell, and for what amount, on what terms. Don’t allow yourself to be lulled into thinking it’s okay to make an agreement and then get his approval. That is risky business. Remember, your fingers are broken.

Please share today’s blog with someone you know who is struggling and not sure what steps to take next.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

From the Desk of..."The Party's Over"

Party’s Over...Now for the Clean-up

I’ve always enjoyed entertaining. Fact is, I’d rather have 20 folks over than 5 and if 50 came for dinner—why that would be awesome. Everyone comes expecting to get their personal favorite —WHATEVER—and I aimed to please. The menu was always extensive. No one was required to bring anything to the table and surprisingly—almost no one did.

Dinner is over. Everyone had too much of everything, stuffed extra in a plastic bag and they’re out the door. I am exhausted—but happy because I gave them what they wanted. They’re happy because they:

• got what they wanted
• didn’t have to work too hard for it
• got “extra” for another day

What’s Wrong With This Picture

For starters, I am now financially depleted, exhausted and the house looks like the scene of a train wreck. Only a couple of people even offered to help with the clean-up before taking off. Fifty people can eat a lot and leave a substantial mess in their wake. Dovie, my daughter, pointed out that while I might be having fun, I was setting a bad precedent. It amazes me how long it took me to change the party rules and request contributions and help with the clean-up. My budget has improved and the house was clean when the last ten folks left. I enjoyed my parties more---can you imagine that?

Lessons Learned

Financing the entire event is expensive. It deprives others of the satisfaction of participation. It’s an amazing human phenomen—when folks don’t pay for or help to prepare food they have enormous appetites, little sense sharing fairly and unilaterally take more than they can consume. The host budget is gradually depleted and eventually the parties must cease. 100% financing is a close parallel. The real estate bubble bursting is a prime example of national over-indulgence.

Oh, What a Tangled Web We Weave . . .

Alan Greenspan in recent testimony concerning our current financial meltdown has admitted to being totally blindsided by the financial collapse. No disrespect intended, but how could the former head of the Federal Reserve believe that financial institutions would self regulate appropriately when the business model for creating mortgage securities begged you—literally begged you-to mix bad apples with good apples. After all, they were being shipped overseas tomorrow; NEXT DAY EXPRESS, early delivery guaranteed. The United States has woven a tapestry of bad appraisals, “liar loans” and no collateral into a housing market which threatens to unravel the world economy.

Party House—Closed for Repairs

Builders, mortgage brokers, large insurance firms, government backed loan program participants, Wall Street investment firms and the rest of the party givers are, shall we say, “down on their luck right now.” Based on the latest news regarding bailouts, acquisitions and financial institutions in the intensive care unit, things are not looking too good.

There are no parties scheduled for the foreseeable future. Maybe there will be a few small get-togethers for a limited number of truly qualified buyers/sellers but the orgies are a thing of the past. Sometimes the hangover is so bad that the participants swear off alcohol for the rest of their lives. Me thinks Americans have decided enmasse to go on the “lending wagon” and become, albeit by necessity, responsible partakers of mortgage financing. Likewise, I believe that financial institutions which have operated as though they could be irresponsible forever since they were selling almost all the junk they allowed to be funded have discovered that having your accounts balanced right under Wall Street’s nose is bad for business.

The Intensive Care Unit

There are so many institutions checking into the unit that it is hard to keep up. If you are not familiar with the Implod-0-meter this is a great time to check out their website at The Law Blog. The mere existence of this business is another indicator of someone who has seized an opportunity borne of this housing crisis to create a niche for themselves. The articles are timely; the information is invaluable. You have to ability to check the “condition” of the financial institutions which impact your day-to-day business. I strongly recommend that it rates a bookmark as a favorite. This site has become a personal favorite for the real deal on those institutions which are continuing to shape the real estate market. An old farm analogy: “If you forget what kind of peas you planted, just wait until they come up”. Sowing and reaping is a universal principle which applies equally as well to mortgages as it does to farm crops.

Push Your Sleeves Up . . .

Clean up requires a stiff upper lip. Let’s focus on the mortgage mess. Instead of trash bags full of refuse we have:

• tightening credit requirements
• decent interests only available with higher credit scores
• large down payment (okay, as opposed to NO down-payment)
• stricter valuation of the collateral
• verification documentation of income and assets

Truth is, none of these clean-up strategies are unreasonable. Further, had they been in place back in 2005, we wouldn’t be up to our hips in mortgage debris.

The American Challenge

We have just elected a new president. Election fatigue is finally over. The celebration party was astonishing. However, the reality is that the US is facing arguably its most difficult challenge in its history as a country. Each of us as an individual must find the strength and ingenuity we have in our genes to weather the storm ahead. We would be foolish and ill-prepared for the journey if we assumed we were headed on a pleasure trip—or off to another big bash. As our forefathers before realized, we are headed for a “New Land.” Let’s each put our shoulder to the wheel and find our inner strength to support our individual communities and our country as a whole.

Our greatest president, John F. Kennedy, said it best for all times, “Ask not what your country can do for you? Ask what you can do for your country?”

Observations From the Desk of Mildred Wilkins,
President and Founder of Home Ownership Matters, LLC.

© Copyright 2008, Home Ownership Matters, LLC. All rights reserved.
(FIS) is a registered trademark of Home Ownership Matters, LLC.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)