For those of you looking for the actual bulletin 09-09 put out by Uncle Sam for kicking the servicers in the behind to get them moving on short sales... Here it is!
Short Sale Directive 09-09
I've read all 40+ pages and its a real page turner! Not!
The bottom line - Treasury is asking the banks - as politely and meekly as you would expect - to Please make short sales easier.
Wednesday, December 02, 2009
Tuesday, December 01, 2009
Exciting New Short Sale Rules Coming!
Courtesy Tim Harris and Inman News...
Here is the info:
1- No reduced commissions! Lenders can’t ask or demand brokers lower their fees.
2- Lenders to PRE-APPROVE short sales.
3- Lenders must FULLY RELEASE borrowers from any future obligation (no more deficiency judgment fear!)
4- No more money out of pocket demands from second lien holders….or any payback of the debt what-so-ever.
5- Borrowers who do a short sale will be PAID up to $1500 to do a short sale!
6- Seconds to receive no more than $3,000 TOTAL from the sale.
From Inman News Features:
The Obama administration has released long-awaited guidelines for a program that will provide incentives for loan servicers and homeowners to engage in short sales when borrowers who are eligible for the Home Affordable Modification Program (HAMP) don’t qualify for a loan mod.
The guidelines prohibit loan servicers from demanding that real estate brokerages reduce the commission stated in the listing agreement as a condition of approving a short sale — a practice that’s been a sore point with many real estate agents.
Troubled borrowers interested in exploring a short sale will also be allowed to receive preapproved short-sale terms prior to the property listing, and servicers must agree to fully release them from future liability if the sale goes through.
The incentive program, which includes payments to second-lien holders who often stand in the way of short sales, was announced in May, but issuance of the guidelines was stalled over legal concerns.
Troubled borrowers who agree to a short sale or deed-in-lieu of foreclosure will receive up to $1,500 to assist with their relocation expenses. Loan servicers and investors who sign off on payments to subordinate lien holders will earn up to $1,000 for successfully completing a short sale or deed-in-lieu.
Subordinate lien holders are limited to recovering no more than $3,000 from sale proceeds, although those who object to the cap can engage in short sales outside the program.
Jeff Lischer, the National Association of Realtors’ managing director of regulatory policy, told the groups’ members last month at their annual conference in San Diego that the incentives should make a difference but won’t be a cure-all for foreclosures.
Here is the info:
1- No reduced commissions! Lenders can’t ask or demand brokers lower their fees.
2- Lenders to PRE-APPROVE short sales.
3- Lenders must FULLY RELEASE borrowers from any future obligation (no more deficiency judgment fear!)
4- No more money out of pocket demands from second lien holders….or any payback of the debt what-so-ever.
5- Borrowers who do a short sale will be PAID up to $1500 to do a short sale!
6- Seconds to receive no more than $3,000 TOTAL from the sale.
From Inman News Features:
The Obama administration has released long-awaited guidelines for a program that will provide incentives for loan servicers and homeowners to engage in short sales when borrowers who are eligible for the Home Affordable Modification Program (HAMP) don’t qualify for a loan mod.
The guidelines prohibit loan servicers from demanding that real estate brokerages reduce the commission stated in the listing agreement as a condition of approving a short sale — a practice that’s been a sore point with many real estate agents.
Troubled borrowers interested in exploring a short sale will also be allowed to receive preapproved short-sale terms prior to the property listing, and servicers must agree to fully release them from future liability if the sale goes through.
The incentive program, which includes payments to second-lien holders who often stand in the way of short sales, was announced in May, but issuance of the guidelines was stalled over legal concerns.
Troubled borrowers who agree to a short sale or deed-in-lieu of foreclosure will receive up to $1,500 to assist with their relocation expenses. Loan servicers and investors who sign off on payments to subordinate lien holders will earn up to $1,000 for successfully completing a short sale or deed-in-lieu.
Subordinate lien holders are limited to recovering no more than $3,000 from sale proceeds, although those who object to the cap can engage in short sales outside the program.
Jeff Lischer, the National Association of Realtors’ managing director of regulatory policy, told the groups’ members last month at their annual conference in San Diego that the incentives should make a difference but won’t be a cure-all for foreclosures.
Thursday, September 24, 2009
Sunday, September 20, 2009
Investor Group News
Check out our October Investor Group meeting! We are honored to have Michael Gerber, Author of The E-myth Revisited, as our speaker! See our website at www.NSDREI.org for details on attending!
Thursday, August 27, 2009
Ready, Fire, Aim!
From my Friend Steve Brant, REO Broker and Accidental Landlord!
Obama says “Fire, now get ready and aim” we need to protect tenants.
I attended the REOMAC dinner this last week in Denver. What’s REOMAC and why are they having dinners and what does this have to do with our current President, you might ask? Or better yet, why is it important to you? REOMAC stands for Real Estate Owned Managers Association of California. What started out as a small group in 1985 for California REO asset managers in now a national organization that serves over 5000 individuals nationwide.
REOMAC holds two big conferences each year and also smaller functions called “dinners” that take place in different cities across the US. As an REO Broker, I attend a good number of these functions, to learn (usually from other REO brokers), to educate others and to visit with current and new customers.
At each Dinner there is always a topic of discussion with a panel of “experts” that are charged with explaining the topic and their best practices. For this dinner in Denver the topic of discussion was evictions. There were four people on the panel, Tonya Willis an evictions specialist with LPS, Ty Miller a SVP at First American (a title company), Nelson Reed a real estate agent, and Cie Mathies a VP of Evictions for an Asset Management out sourcing company, IAS.
Their goal was to dissect the new pro-tenant law in regards to evictions called the PTAFA and how this affects the different players in the chain. This law is valid until December 21, 2012.
There was not a whole heck of a lot in regards to guidance on this new law. They did cover the basics such as.
• Leases survive the foreclosure – meaning that a tenant could stay at least until the end of the lease. They would have to pay the new owner the agreed upon rent.
• Month to Month leases entitle a tenant 90-days notice before eviction.
• Section 8 tenants can stay indefinitely.
Like most laws that are created from a reactionary perspective (think airport security) this law has ridiculous mandates that seem downright un-American. Let me provide an example.
Suppose you are a tenant occupying a property. You decided to stop paying rent because you saw that the mortgagor was going through foreclosure and thought, if he isn’t paying why should I? Seems reasonable, no? (As a tenant, you would find out the property is in foreclosure because it is mandated by foreclosure law that the foreclosed property receives no less than 3 written notices posted or delivered via certified mail up to 3 months prior to the trustee sale.) After a period of 9 months of rent free living (due to moratoriums and other delays) the day finally comes when your home is sold in a foreclosure auction and the lender who has been out payments for the last year is now the official owner.
They send a guy like me out to the property. I give you some documents that explain your options. Those options consist of:
1. Cash for Keys – Just like it says the owner (bank) will offer you the tenant cash (a large sum of money) for your keys (to vacate the property) in 30-45 days. This amount is usually 2 times the normal rent. I have personally offered an occupant as mandated by the bank “no less than $8800.”
2. Start paying your lease – start paying to the new owner the agreed upon amount in your rental agreement. You do not owe any back or unpaid rent.
3. Stay in the home rent free for the next 90 days and vacate at your own expense.
After a month of reviewing the information you decide you want to continue renting. I review your lease and see that it is valid for another 9 months. I put all the paperwork together and now the Bank is your landlord. In the meantime the property is going to be marketed for sale. Once sold, the new owner who buys the property is required to honor the lease if they don’t want to occupy the property themselves.
If they do choose to occupy the property themselves, guess what, you get to stay in this house rent free for another 90 days. All in all you were able to stay in your current rental for over a year without paying a dime in rent.
What is crazy about this new law particularly in California is that like most laws in regards to foreclosures, we look to blame the one entity that really doesn’t exercise their voice and just takes most of the punishment, the banks/investors.
I can see myself slowly digressing to reveal my anger at a system that encourages cheating, doesn’t hold people accountable and treats most Americans as if they are stupid, so before I go down that path let me just summarize.
There is a new Tenant law in place that offers relief to the 3% of tenants that deserve it and the 97% of tenants that don’t.
This law hurts real estate values because is forces the new owner, a guy like you and me that wants to buy this property, to follow these overly protective measures and lose at minimum 90 days but most likely 4 months of rent.
Now you may ask me; Steve what about the situation where the tenant is a 90 year old woman with frail health and limited options, doesn’t this law protect her? Protection is the wrong word; there are many stop gaps in place to prevent undue hardship to unsuspecting tenants particularly those that fall into a class like elderly or infirmed. But these measures were already in place. This new law protects the people that like to take advantage of the system.
What they should do is place a law that says if you are a landlord and you have received a notice of default for not paying your mortgage than collecting rent is a felony. This way unethical landlords aren’t making money, tenants get a little break and we don’t take another kick at the already wobbling bank that is kneeling in submission. But that’s just a thought.
Steve Brant, CEO
Designated REO power broker
NRBA national REO brokers association
REOMAC Attendee
RESNET member
REOTRANS member
888.654.7770
Obama says “Fire, now get ready and aim” we need to protect tenants.
I attended the REOMAC dinner this last week in Denver. What’s REOMAC and why are they having dinners and what does this have to do with our current President, you might ask? Or better yet, why is it important to you? REOMAC stands for Real Estate Owned Managers Association of California. What started out as a small group in 1985 for California REO asset managers in now a national organization that serves over 5000 individuals nationwide.
REOMAC holds two big conferences each year and also smaller functions called “dinners” that take place in different cities across the US. As an REO Broker, I attend a good number of these functions, to learn (usually from other REO brokers), to educate others and to visit with current and new customers.
At each Dinner there is always a topic of discussion with a panel of “experts” that are charged with explaining the topic and their best practices. For this dinner in Denver the topic of discussion was evictions. There were four people on the panel, Tonya Willis an evictions specialist with LPS, Ty Miller a SVP at First American (a title company), Nelson Reed a real estate agent, and Cie Mathies a VP of Evictions for an Asset Management out sourcing company, IAS.
Their goal was to dissect the new pro-tenant law in regards to evictions called the PTAFA and how this affects the different players in the chain. This law is valid until December 21, 2012.
There was not a whole heck of a lot in regards to guidance on this new law. They did cover the basics such as.
• Leases survive the foreclosure – meaning that a tenant could stay at least until the end of the lease. They would have to pay the new owner the agreed upon rent.
• Month to Month leases entitle a tenant 90-days notice before eviction.
• Section 8 tenants can stay indefinitely.
Like most laws that are created from a reactionary perspective (think airport security) this law has ridiculous mandates that seem downright un-American. Let me provide an example.
Suppose you are a tenant occupying a property. You decided to stop paying rent because you saw that the mortgagor was going through foreclosure and thought, if he isn’t paying why should I? Seems reasonable, no? (As a tenant, you would find out the property is in foreclosure because it is mandated by foreclosure law that the foreclosed property receives no less than 3 written notices posted or delivered via certified mail up to 3 months prior to the trustee sale.) After a period of 9 months of rent free living (due to moratoriums and other delays) the day finally comes when your home is sold in a foreclosure auction and the lender who has been out payments for the last year is now the official owner.
They send a guy like me out to the property. I give you some documents that explain your options. Those options consist of:
1. Cash for Keys – Just like it says the owner (bank) will offer you the tenant cash (a large sum of money) for your keys (to vacate the property) in 30-45 days. This amount is usually 2 times the normal rent. I have personally offered an occupant as mandated by the bank “no less than $8800.”
2. Start paying your lease – start paying to the new owner the agreed upon amount in your rental agreement. You do not owe any back or unpaid rent.
3. Stay in the home rent free for the next 90 days and vacate at your own expense.
After a month of reviewing the information you decide you want to continue renting. I review your lease and see that it is valid for another 9 months. I put all the paperwork together and now the Bank is your landlord. In the meantime the property is going to be marketed for sale. Once sold, the new owner who buys the property is required to honor the lease if they don’t want to occupy the property themselves.
If they do choose to occupy the property themselves, guess what, you get to stay in this house rent free for another 90 days. All in all you were able to stay in your current rental for over a year without paying a dime in rent.
What is crazy about this new law particularly in California is that like most laws in regards to foreclosures, we look to blame the one entity that really doesn’t exercise their voice and just takes most of the punishment, the banks/investors.
I can see myself slowly digressing to reveal my anger at a system that encourages cheating, doesn’t hold people accountable and treats most Americans as if they are stupid, so before I go down that path let me just summarize.
There is a new Tenant law in place that offers relief to the 3% of tenants that deserve it and the 97% of tenants that don’t.
This law hurts real estate values because is forces the new owner, a guy like you and me that wants to buy this property, to follow these overly protective measures and lose at minimum 90 days but most likely 4 months of rent.
Now you may ask me; Steve what about the situation where the tenant is a 90 year old woman with frail health and limited options, doesn’t this law protect her? Protection is the wrong word; there are many stop gaps in place to prevent undue hardship to unsuspecting tenants particularly those that fall into a class like elderly or infirmed. But these measures were already in place. This new law protects the people that like to take advantage of the system.
What they should do is place a law that says if you are a landlord and you have received a notice of default for not paying your mortgage than collecting rent is a felony. This way unethical landlords aren’t making money, tenants get a little break and we don’t take another kick at the already wobbling bank that is kneeling in submission. But that’s just a thought.
Steve Brant, CEO
Designated REO power broker
NRBA national REO brokers association
REOMAC Attendee
RESNET member
REOTRANS member
888.654.7770
Tuesday, August 11, 2009
Open Letter to Congressional Oversight Panel
Dear Ms. Warren,
Thank you for your efforts to report on the toxic asset issue in our nation.
First, let me say I believe you are fully aware of the risk that the toxic assets on (and off) the bank’s books pose to our economy. I am confident you have a “handle” on the scope and gravity of the situation. I also believe that you are able to communicate effectively with the institutions about this situation, allowing you to formulate your reports on this grave problem. Forgive my melodramatic tilt here, but it bears repeating. The situation is grave.
Please take a moment to listen to the problem of a little guy, with a small solution to a not so small part of the problem.
As a real estate agent in southern California, myself and a few of my bretheren across the country have taken on the task of helping homeowners out of their housing issues by way of short sale of their property. As you know, a short sale takes the bad paper off the books, resets the area market value, and gives a fresh start to all in a very short period of time. It does, however, discount the face value of the existing debt on the property. And herein lies the (monumental) rub…
Having done short sales for 14 years, I can tell you they are probably the most frustrating, no, infuriating, financial transaction that any real estate agent, homeowner, buyer, or affiliate professional will ever undertake. Some estimates indicate that 70-80 percent of the deals fail because of numerous factors which I will highlight here.
Lenders (a term I use to describle servicers, banks, MBS Investors, mortgage insurance companies) make it NEAR IMPOSSIBLE for the transaction to take place due to their policy of “stepping over dollars to pick up pennies”.
Here are a few of the deliberate manipulations of the little guy to extract a few more dollars:
• Insisting homeowner bring cash to the table to close the deal
• Insisting the homeowner sign a promissory note (with the obvious connotation of a future collections threat)
• Insisting on cutting real estate commissions
• Refusal to allow concessions in the transaction to settle all outstanding obligations (back taxes, HOA dues, local municipal costs)
• A systematic policy of stalling, delegating, and denying designed to take every deal to the brink so that those participants that do remain on board will agree to anything at the last minute to get the deal closed.
These policies are akin to an emergency room Doctor asking for the patients co-pay as he is about to apply the shock paddles to the patient’s heart.
While certainly there are manipulations of the system from the agent/homeowner side, I would contend that the medicine is definitely killing the patient. Again I point to the 70-80 percent transaction failure rate. These are above average agents with the intention of helping homeowners avoid foreclosure (albeit for a profit).
Ms. Warren, I implore you to recognize the potential to solve the toxic asset issue at the grass roots level. Please alert your contemporaries of this issue, and take the lenders to task on it. Here are some simple suggestions:
• Standardize the 2nd and subsequent lien holder percentage payoffs.
• Stop the policy of “going after the homeowner” with cash and promissory note threats
• Stop the policy of penalizing the professionals in the deal by cutting their commissions
• Insist on reasonable time lines for decisions. The industry is rife with stories of 10 month short sales due to lender uncooperativeness
It is my belief that if this particular problem, and the problems of those involved in it, were brought to light on a national, focused manner, and corrected, we could put a serious dent in the runaway toxic asset train. If the lenders would cooperate, in good faith, with this process, it would be a huge shot in the arm to the housing industry. We are all on the same team. Make the lenders realize that!
Thank you for your efforts to report on the toxic asset issue in our nation.
First, let me say I believe you are fully aware of the risk that the toxic assets on (and off) the bank’s books pose to our economy. I am confident you have a “handle” on the scope and gravity of the situation. I also believe that you are able to communicate effectively with the institutions about this situation, allowing you to formulate your reports on this grave problem. Forgive my melodramatic tilt here, but it bears repeating. The situation is grave.
Please take a moment to listen to the problem of a little guy, with a small solution to a not so small part of the problem.
As a real estate agent in southern California, myself and a few of my bretheren across the country have taken on the task of helping homeowners out of their housing issues by way of short sale of their property. As you know, a short sale takes the bad paper off the books, resets the area market value, and gives a fresh start to all in a very short period of time. It does, however, discount the face value of the existing debt on the property. And herein lies the (monumental) rub…
Having done short sales for 14 years, I can tell you they are probably the most frustrating, no, infuriating, financial transaction that any real estate agent, homeowner, buyer, or affiliate professional will ever undertake. Some estimates indicate that 70-80 percent of the deals fail because of numerous factors which I will highlight here.
Lenders (a term I use to describle servicers, banks, MBS Investors, mortgage insurance companies) make it NEAR IMPOSSIBLE for the transaction to take place due to their policy of “stepping over dollars to pick up pennies”.
Here are a few of the deliberate manipulations of the little guy to extract a few more dollars:
• Insisting homeowner bring cash to the table to close the deal
• Insisting the homeowner sign a promissory note (with the obvious connotation of a future collections threat)
• Insisting on cutting real estate commissions
• Refusal to allow concessions in the transaction to settle all outstanding obligations (back taxes, HOA dues, local municipal costs)
• A systematic policy of stalling, delegating, and denying designed to take every deal to the brink so that those participants that do remain on board will agree to anything at the last minute to get the deal closed.
These policies are akin to an emergency room Doctor asking for the patients co-pay as he is about to apply the shock paddles to the patient’s heart.
While certainly there are manipulations of the system from the agent/homeowner side, I would contend that the medicine is definitely killing the patient. Again I point to the 70-80 percent transaction failure rate. These are above average agents with the intention of helping homeowners avoid foreclosure (albeit for a profit).
Ms. Warren, I implore you to recognize the potential to solve the toxic asset issue at the grass roots level. Please alert your contemporaries of this issue, and take the lenders to task on it. Here are some simple suggestions:
• Standardize the 2nd and subsequent lien holder percentage payoffs.
• Stop the policy of “going after the homeowner” with cash and promissory note threats
• Stop the policy of penalizing the professionals in the deal by cutting their commissions
• Insist on reasonable time lines for decisions. The industry is rife with stories of 10 month short sales due to lender uncooperativeness
It is my belief that if this particular problem, and the problems of those involved in it, were brought to light on a national, focused manner, and corrected, we could put a serious dent in the runaway toxic asset train. If the lenders would cooperate, in good faith, with this process, it would be a huge shot in the arm to the housing industry. We are all on the same team. Make the lenders realize that!
Saturday, July 18, 2009
Some Notes on the Joys and Terrors of Short Sales
May 24 Del Mar Hilton
I know your first reaction (as is mine) is always to say "Well don't they know if they don't take this - they'll get nothing?" The short answer is - yes they know - and NO, they don't care. It is a well planned out process of delays, distraction, and deliberate misinformation designed to take legitimate deals to the brink so that they can get the parties involved to agree to anything within their means.
We are all very emotionally invested in this process and hanging by a thread, while they (the banks) seem to just fritter away the day playing stupid. Again, they are not stupid. When this technique no longer works for them, they will change it. In the meantime, in their eyes anyway, it works. There will be last second surprises that will have to be addressed. They may ask for a promissory note from the seller, they may ask the agents to give up a little commission, they may refuse to pay this close cost or that.
The decisionmakers spend 75% of their time in meetings justifying why they took 10 cents on the dollar or whatever. If they can squeeze just one more drop of blood out of that turnip, they are heroes and slapping each other on the back.
That is the reality of it. I have a minimum of 20 of these things going at all times. Some lenders are better than others. Countrywide is the worst by far, with Chase (WAMU) being the next worst. The others have their moments.
There are quite a few agents and investors out there claiming to be short sale experts, claiming minimum trouble low stress deals. The reality is, the majority of all short sale attempts by agents end up in foreclosure. It's not because of paperwork, or because of lack of buyers. It is because the last mile is the toughest and people always lose their heads. Agents, buyers, homeowners, etc. They just can't take the anxiety and they snap. Recognize this and be prepared for it.
Brinksmanship is a HUGE part of this business. Try not to get involved emotionally. And don't do the business if you can't handle frustration and anxiety - if you take it personally. You will make mistakes. Admit them, learn from them, and work hard. It takes a bulldog to do this business!
I know your first reaction (as is mine) is always to say "Well don't they know if they don't take this - they'll get nothing?" The short answer is - yes they know - and NO, they don't care. It is a well planned out process of delays, distraction, and deliberate misinformation designed to take legitimate deals to the brink so that they can get the parties involved to agree to anything within their means.
We are all very emotionally invested in this process and hanging by a thread, while they (the banks) seem to just fritter away the day playing stupid. Again, they are not stupid. When this technique no longer works for them, they will change it. In the meantime, in their eyes anyway, it works. There will be last second surprises that will have to be addressed. They may ask for a promissory note from the seller, they may ask the agents to give up a little commission, they may refuse to pay this close cost or that.
The decisionmakers spend 75% of their time in meetings justifying why they took 10 cents on the dollar or whatever. If they can squeeze just one more drop of blood out of that turnip, they are heroes and slapping each other on the back.
That is the reality of it. I have a minimum of 20 of these things going at all times. Some lenders are better than others. Countrywide is the worst by far, with Chase (WAMU) being the next worst. The others have their moments.
There are quite a few agents and investors out there claiming to be short sale experts, claiming minimum trouble low stress deals. The reality is, the majority of all short sale attempts by agents end up in foreclosure. It's not because of paperwork, or because of lack of buyers. It is because the last mile is the toughest and people always lose their heads. Agents, buyers, homeowners, etc. They just can't take the anxiety and they snap. Recognize this and be prepared for it.
Brinksmanship is a HUGE part of this business. Try not to get involved emotionally. And don't do the business if you can't handle frustration and anxiety - if you take it personally. You will make mistakes. Admit them, learn from them, and work hard. It takes a bulldog to do this business!
Friday, July 17, 2009
Investor Bulletin - Watch your Back!
My thoughts on Steve Dexter's talk Tuesday night at SDCIA (San Diego Creative Investors).
First, let me set the mood. Attendance seemed down, though I have not been at SDCIA for a couple of meetings. Ryan Broley can probably speak better on a trend there. Haves and Wants seemed subdued too. Bill Tan told me after the meeting that people had complained to him that he was being too negative in his preparation remarks so he tried to be more upbeat. And as for Steve the speaker, he commands the audience with his down home style and booming voice like no other.
As for what he said - well, he thinks it is going to be ugly. He has the usual set of charts showing the subprime and option arm mortgage tops and resets, and a lot of new data which all confirm the same thing. Unemployment is going up, consumer spending is minimal, and the national and state deficits are so far out of control it is scary.
Once of my favorite things he talked about was rail car loadings and shippings - a stat he says he just picked up from Warren Buffet. They are the lowest since the depression (i think - or maybe it was the 70's) Anyway this is an indicator of domestic economics and it is not good.
So things are bad. What can we do?
He says it is a good time to buy. Prices are down, may go lower. But you can cash flow in CA again. A good plan would be to buy 10, hold for a while till prices go back up, then sell 5 and have the others free and clear. Lather, rinse, repeat. The high end market is in trouble for a while. There is no fair priced money out there (except for hard $) for mortgages except the government. FHA, Fannie and Freddie. VA too. And those loans -(starting to be used widely about 18 months ago) are not performing well. Steve suggests you talk to everyone you know about arranging private financing. Partner with a money partner and you can score big.
Finally, Steve paints the picture as he sees it. He does not claim to be sure he is right, but most seasoned investors who have been around for more than a couple of cycles, agree with the overall premise. He urges us to be wary of the government statistics (optimistic to a fault) It is a good time to buy, the recovery (both housing and economic) is a long way off, and southern CA is the place to buy. He has been immersed in the trends and numbers of the housing market for over a decade, and has a solid feel for where we are which he presents well. Watch your pennies, stick with Real Estate but diversify a little. Watch whom you listen to - stick with the old pro's like John Schaub and Jack Fullerton, and build a portfolio because that is the best way to earn money. Mailbox money.
I concur.
Richard Worcester
Geneva Real Estate & Investments
78Homes.com | ShortSaleGroup.com
1450 N Santa Fe #C-162
Vista, CA 92083
Sales | Development | Management
Ph: 760.208.2845 | Fx: 760.454.2956
email: Rich@78Homes.com
California DRE License #00919559
California General Contractor License #874711
First, let me set the mood. Attendance seemed down, though I have not been at SDCIA for a couple of meetings. Ryan Broley can probably speak better on a trend there. Haves and Wants seemed subdued too. Bill Tan told me after the meeting that people had complained to him that he was being too negative in his preparation remarks so he tried to be more upbeat. And as for Steve the speaker, he commands the audience with his down home style and booming voice like no other.
As for what he said - well, he thinks it is going to be ugly. He has the usual set of charts showing the subprime and option arm mortgage tops and resets, and a lot of new data which all confirm the same thing. Unemployment is going up, consumer spending is minimal, and the national and state deficits are so far out of control it is scary.
Once of my favorite things he talked about was rail car loadings and shippings - a stat he says he just picked up from Warren Buffet. They are the lowest since the depression (i think - or maybe it was the 70's) Anyway this is an indicator of domestic economics and it is not good.
So things are bad. What can we do?
He says it is a good time to buy. Prices are down, may go lower. But you can cash flow in CA again. A good plan would be to buy 10, hold for a while till prices go back up, then sell 5 and have the others free and clear. Lather, rinse, repeat. The high end market is in trouble for a while. There is no fair priced money out there (except for hard $) for mortgages except the government. FHA, Fannie and Freddie. VA too. And those loans -(starting to be used widely about 18 months ago) are not performing well. Steve suggests you talk to everyone you know about arranging private financing. Partner with a money partner and you can score big.
Finally, Steve paints the picture as he sees it. He does not claim to be sure he is right, but most seasoned investors who have been around for more than a couple of cycles, agree with the overall premise. He urges us to be wary of the government statistics (optimistic to a fault) It is a good time to buy, the recovery (both housing and economic) is a long way off, and southern CA is the place to buy. He has been immersed in the trends and numbers of the housing market for over a decade, and has a solid feel for where we are which he presents well. Watch your pennies, stick with Real Estate but diversify a little. Watch whom you listen to - stick with the old pro's like John Schaub and Jack Fullerton, and build a portfolio because that is the best way to earn money. Mailbox money.
I concur.
Richard Worcester
Geneva Real Estate & Investments
78Homes.com | ShortSaleGroup.com
1450 N Santa Fe #C-162
Vista, CA 92083
Sales | Development | Management
Ph: 760.208.2845 | Fx: 760.454.2956
email: Rich@78Homes.com
California DRE License #00919559
California General Contractor License #874711
Wednesday, June 24, 2009
Check out the New Information!
In a selfless move of generosity (oh pleeeeaaassssse Rich), I am adding links to all of the industry news sites I read every day - so that you may draw your own conclusions and educate yourself.
You can thank me later....
See links on sidebar ------>>>>>
You can thank me later....
See links on sidebar ------>>>>>
Sunday, June 21, 2009
Another Great Party!
In response to inquiries as to how our 5th annual NSDREI party went last week...
Bruce Norris spoke, eloquently as usual. He highlighted the issues with appraisals (new regulations really hurting investor spreads), issues with artificially low inventory of REO's etc (moratoriums and shadow inventory), and the imminent (in his mind) wave of new REOs and their effect on prices (lower!)
As a soldier in the trenches I took it as good news and bad news. The good news is that soon we will have a chance to pick and choose excellent assets at rock bottom prices.
The bad news is that the business we have going currently is at risk, with imminent price declines and massive inventory coming.
He touched on the problems of our State of California, however he either did not want to open that can of worms to the group at this time, or he has not researched it yet enough to speak on the matter. It is, however, as big a problem (and systemic) as we will encounter yet.
In my (not so) humble opinion.
Bruce Norris spoke, eloquently as usual. He highlighted the issues with appraisals (new regulations really hurting investor spreads), issues with artificially low inventory of REO's etc (moratoriums and shadow inventory), and the imminent (in his mind) wave of new REOs and their effect on prices (lower!)
As a soldier in the trenches I took it as good news and bad news. The good news is that soon we will have a chance to pick and choose excellent assets at rock bottom prices.
The bad news is that the business we have going currently is at risk, with imminent price declines and massive inventory coming.
He touched on the problems of our State of California, however he either did not want to open that can of worms to the group at this time, or he has not researched it yet enough to speak on the matter. It is, however, as big a problem (and systemic) as we will encounter yet.
In my (not so) humble opinion.
Thursday, May 14, 2009
The Treasury and Short Sales
Uncle Sam has told the lenders... Get your Sh(ort Sale business) together! See this amazing Fact Sheet from the Making Home Affordable website. Some of the things that are mentioned in this release:
Sellers have from 90 days to A YEAR! to sell their property
Lenders are not supposed to mess with commissions
2nd lienholders get some subsidy on their loss from Uncle Sam
Stay Tuned!
Sellers have from 90 days to A YEAR! to sell their property
Lenders are not supposed to mess with commissions
2nd lienholders get some subsidy on their loss from Uncle Sam
Stay Tuned!
Your Opinion, My Opinion, Their Opinion
Watching the media reports about the housing crisis has been a real education for me. With 50+ years on this planet, I still learn something new every day. And today, it was a big one.
What did I learn? I learned that the government, the media, and the majority of the American people do not know how bad things are in the housing market and the economy. Or maybe they know the facts but are just in denial.
An objective look at the number of job losses and the accelerating runaway train of foreclosures and bankruptcies foretells a much different future than what the spinmeisters are saying. All the kings horses (loan modifictions, streamline refinances) and all the kings men (Obama, Geitner, Bernanke) can not put Humpty Dumpty back together again.
The housing market is broken. Period. Please, don't mortgage my childrens and my grandchildrens future to save a bunch of greedy bank executives. It's time for a re-set of property values. Let the problem run its course and don't use my future money to try and stop the inevitable. Our leader is reading his own press clippings and developing an unrealistic strategy. Parting the red sea and freeing the Israelites was divine - and a worthy cause. Trying to stop the foreclosure wave would also be divine - but not worthy. This market must fix itself. We can not and should not do it.
What did I learn? I learned that the government, the media, and the majority of the American people do not know how bad things are in the housing market and the economy. Or maybe they know the facts but are just in denial.
An objective look at the number of job losses and the accelerating runaway train of foreclosures and bankruptcies foretells a much different future than what the spinmeisters are saying. All the kings horses (loan modifictions, streamline refinances) and all the kings men (Obama, Geitner, Bernanke) can not put Humpty Dumpty back together again.
The housing market is broken. Period. Please, don't mortgage my childrens and my grandchildrens future to save a bunch of greedy bank executives. It's time for a re-set of property values. Let the problem run its course and don't use my future money to try and stop the inevitable. Our leader is reading his own press clippings and developing an unrealistic strategy. Parting the red sea and freeing the Israelites was divine - and a worthy cause. Trying to stop the foreclosure wave would also be divine - but not worthy. This market must fix itself. We can not and should not do it.
Sunday, April 19, 2009
Real Estate Investor Education
Over the past year we have watched the stock market dive, while real estate has made a few interesting moves as well. So many "experts" have announced that we have hit bottom and there is nowhere to go but UP from here on out.
Let me state my position on these matters. Look out below! There is a huge crush of foreclosures yet to come on the market. With the lenders scurrying about trying to hide and/or shift their bad loans from one department to another, and the government's misguided efforts at "saving" homeowners whom should not be saved, all we really have is a guarantee of a dragging out of the process.
Homeowners whom modify thier loans to reduce their payments but still owe $500k on a now $250k house are going to eventually wake up and smell the coffee. And the lenders whom have played this bad asset shell game will shortly run out of options. Soon, the masses will cry out - "The Emporer has no clothes!"
..and then, Look out Below!
Let me state my position on these matters. Look out below! There is a huge crush of foreclosures yet to come on the market. With the lenders scurrying about trying to hide and/or shift their bad loans from one department to another, and the government's misguided efforts at "saving" homeowners whom should not be saved, all we really have is a guarantee of a dragging out of the process.
Homeowners whom modify thier loans to reduce their payments but still owe $500k on a now $250k house are going to eventually wake up and smell the coffee. And the lenders whom have played this bad asset shell game will shortly run out of options. Soon, the masses will cry out - "The Emporer has no clothes!"
..and then, Look out Below!
Friday, February 20, 2009
Housing...Stimulus...Bailout
Holy Cow! Could the news get any bleaker? Price declines, softening demand, and the inability to get financing. How can an investor overcome all these hurdles?
It's simple. Stick to the Plan! If you don't have one, make one! Don't invest a penny until you have educated yourself, developed an investing course of action, and reviewed the possible results. Prepare contingency plans, and then...
TAKE ACTION! I talk to real estate investors every day who have analyzed dozens of deals and techniques - but have not taken any action! Don't go to the extreme of analysis paralysis. Focus on an attractive technique or idea, and TAKE ACTION!
If you have ideas but no money - focus on raising money!
If you have good credit and no money - focus on partnering!
If you have a few bucks but not sure the best course of action - make a decision and have faith - Trust Yourself!
Be prudent, check your contingency plans, and take that leap!
If you are in trouble with something you have done/tried - make a decision and TAKE ACTION!
Call the bank, call a realtor, call a lawyer, call ME!
Things are definitely going to get worse. Maybe even much worse. Review your situation, protect yourself, and - OF COURSE - TAKE ACTION!
It's simple. Stick to the Plan! If you don't have one, make one! Don't invest a penny until you have educated yourself, developed an investing course of action, and reviewed the possible results. Prepare contingency plans, and then...
TAKE ACTION! I talk to real estate investors every day who have analyzed dozens of deals and techniques - but have not taken any action! Don't go to the extreme of analysis paralysis. Focus on an attractive technique or idea, and TAKE ACTION!
If you have ideas but no money - focus on raising money!
If you have good credit and no money - focus on partnering!
If you have a few bucks but not sure the best course of action - make a decision and have faith - Trust Yourself!
Be prudent, check your contingency plans, and take that leap!
If you are in trouble with something you have done/tried - make a decision and TAKE ACTION!
Call the bank, call a realtor, call a lawyer, call ME!
Things are definitely going to get worse. Maybe even much worse. Review your situation, protect yourself, and - OF COURSE - TAKE ACTION!
Tuesday, February 03, 2009
"Shadow" Inventory
RealtyTrac and other respected bean counters in the real estate market are trying to get the word out about a new problem in the housing market - Shadow Inventory.
Shadow Inventory are homes which have been foreclosed by the bank, are technically now on the books of the banks, but have not been listed yet in a MLS for sale.
Evidence points to unlisted inventory as high as 66% of the properties the banks have taken back!!!!
On a slightly better note - additional evidence suggests that most of the subprime paper has been dealt with - properties have been foreclosed, sold or changed hands in one way or another. However, a whole new wave of problems is starting - a bigger problem yet - of alt-a and prime paper defaults. These are by and large bigger loans and nicer properties. In an era of plummeting demand, this points to even greater losses for the banks. Ouch!
Shadow Inventory are homes which have been foreclosed by the bank, are technically now on the books of the banks, but have not been listed yet in a MLS for sale.
Evidence points to unlisted inventory as high as 66% of the properties the banks have taken back!!!!
On a slightly better note - additional evidence suggests that most of the subprime paper has been dealt with - properties have been foreclosed, sold or changed hands in one way or another. However, a whole new wave of problems is starting - a bigger problem yet - of alt-a and prime paper defaults. These are by and large bigger loans and nicer properties. In an era of plummeting demand, this points to even greater losses for the banks. Ouch!
Sunday, January 11, 2009
Realtors - Don't Trust the NAR!
We just stumbled across the very distressing story about David Lereah, the Chief Economist of the NAR during the boom and more recent real estate collapse of the real estate market in America.
The NAR fiddled while Rome was burning. It now seems Mr Lereah has had a stroke of conscience, and admits to spinning positive for the NAR, concealing his true feeling of imminent housing price collapse. His most current outlook?
"We’ve still got excess inventories, a bad economy and a credit crunch that will push prices down further, another 5% to 10% more. It’ll take a long time to get back to the peak prices we saw in many markets."
To all the Realtors, Brokers and Agents out there - do your own economic research. It appears the organization you pay millions of dollars to each year for dues, has a problem telling the truth.
The NAR fiddled while Rome was burning. It now seems Mr Lereah has had a stroke of conscience, and admits to spinning positive for the NAR, concealing his true feeling of imminent housing price collapse. His most current outlook?
"We’ve still got excess inventories, a bad economy and a credit crunch that will push prices down further, another 5% to 10% more. It’ll take a long time to get back to the peak prices we saw in many markets."
To all the Realtors, Brokers and Agents out there - do your own economic research. It appears the organization you pay millions of dollars to each year for dues, has a problem telling the truth.
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