The California Association of Realtors (C.A.R.) announced its sponsoring a bill that will prevent California homeowners from going into foreclosure if they have negotiated a short sale with their lender or servicer.
Assembly Bill 1745 (Torres, D-Pomona) prevents lenders or servicers from recording a notice of sale if a short sale has been approved. The bill is scheduled for hearing on April 30 by the Assembly Banking and Finance Committee.
The bill would also allow the mortgagee, trustee, beneficiary, or authorized agent to withdraw a short sale approval if a condition in which approval was granted has changed. The bill would require a written notice to the seller no less than 3 days before withdrawing approval, with an explanation of the decision change.
California Attorney General Kamala D. Harris recently introduced her Homeowner Bill of Rights, one of which had a similar provision that prevents dual tracking, or the practice in which a lender proceeds with a foreclosure on a homeowner who is also trying to pursue a loan modification.
Legislators delayed voting on the bill last week before Harris was scheduled to testify. ABC News 10 reported that the California Bankers Associationopposed the ban on dual tracking stating it only delays the inevitable.
Friday, April 27, 2012
Sunday, March 04, 2012
Is it time to buy?
We are hearing this question non stop in today's financial media. Warren Buffet says he'd buy a hundred thousand single family houses. Donald Trump says "don't know what to do? - go buy a house!". Even Robert Shiller of the industry standard Case - Shiller report says it probably would not be a mistake to buy now.
So what does Diana Olick say? For once, Ms. Olick and I are far apart with our opinions. Diana declares (and rightly so) that real estate is a local business. However, she then states that the middle price range ($250,000 to $500,000) may be poised for big action. Citing historic interest rates and the debatable fact that the housing market has bottomed, Ms. Olick seems to have succumbed to the mass hysteria of economic optimism, particularly as regards to housing.
I feel quite the opposite. It is my opinion that the economy, and hence consumers, are still too fragile, and therefore unable to buy for some time to come. Even with the slight relaxation of underwriting standards, the truly "organic" buyer (non investor, non all cash buyer) is not ready to move. Possibly trapped in an upside down property already, or just not able to qualify for a home that would be worth jumping through dozens of flaming hoops, the desire is not there.
Folks have been calling the bottom and rushing back into the market for 3 years, only to see more equity and capital go up in smoke in a continuing decline of values.
Of course, the credibility of these optimistic experts is hard to argue. However, I am reminded of a saying my mother used on me for years when I was a child. "Just because your friend Donnie jumped off the bridge, should you?" No mom, I guess not...
So what does Diana Olick say? For once, Ms. Olick and I are far apart with our opinions. Diana declares (and rightly so) that real estate is a local business. However, she then states that the middle price range ($250,000 to $500,000) may be poised for big action. Citing historic interest rates and the debatable fact that the housing market has bottomed, Ms. Olick seems to have succumbed to the mass hysteria of economic optimism, particularly as regards to housing.
I feel quite the opposite. It is my opinion that the economy, and hence consumers, are still too fragile, and therefore unable to buy for some time to come. Even with the slight relaxation of underwriting standards, the truly "organic" buyer (non investor, non all cash buyer) is not ready to move. Possibly trapped in an upside down property already, or just not able to qualify for a home that would be worth jumping through dozens of flaming hoops, the desire is not there.
Folks have been calling the bottom and rushing back into the market for 3 years, only to see more equity and capital go up in smoke in a continuing decline of values.
Of course, the credibility of these optimistic experts is hard to argue. However, I am reminded of a saying my mother used on me for years when I was a child. "Just because your friend Donnie jumped off the bridge, should you?" No mom, I guess not...
Thursday, February 16, 2012
Privatized Gains, Socialized Losses
Courtesy Barry Ritholtz "The Big Picture"
The esteemed former Fed Chairman, Paul Volcker, introduced a very simple regulatory concept that bears his name: The Volcker Rule. It was part of the Dodd-Frank regulatory reforms passed after the financial crisis of 2008-09.
There has been enormous pushback against what should be a simple piece of prophylactic rules on proprietary trading by depository banks (see this Jamie Dimon commentary as an example). Why? The profits of speculation goes to banks, driving bonuses and compensation; but the ultimate risk of loss lay with the FDIC and taxpayer. If the banks blow up, someone else besides the banker pays.
Privatized gains, socialized losses.
I want to take a few moments to briefly explain why this rule is so important to taxpayers, especially following the collapse of MF Global and the loss of billions of client assets.
Recall the basic facts of MFG: Management engaged in leveraged speculations with monies — whether it was their own or clients became irrelevant as the losses were so great as to wipe out much more capital than the bank actually had. Billions in losses meant MFG was insolvent and was wound down. On the winning sides of those trades were folks like JPM and George Soros. It is neither their duty nor obligation to verify whose money is on the other side of the trade — the clearing firms make sure the trade settles.
Those trade settlements are the only possible outcome. Why? Imagine a burglar robs a house of cash, goes to a casino and loses the money playing Roulette. The Casino settles that bet, it clears — and the burgled homeowner can never recover the money. Exchanges work the same way. They simply cannot validate the capital sources of every transaction. In the case of MFG, he money wasn’t even burgled — it was simply entrusted to an entity that became so insolvent thru excess speculation that even money in “Segregated accounts” was highly compromised.
And therein lay the dirty little secret of modern banking: THERE IS NO SUCH THING AS A SEGREGATED ACCOUNT. It is simply a helpful way to think about money and banking; it does not exist in the real world.
Consider your basic bank account — checking, savings, passbook, etc. We go through massive contortions to create an illusion that your money is yours, that its safe and sound in a bank with your name on it, in your own virtual safe deposit box. But that is simply not the reality of modern banking. What you perceive as “your money” is little more than an electronic journal on the banks accounting ledgers.
Fractional reserve banking means that the $100 you deposit is lent out — only $10 of your $100 is kept in reserve. Under normal circumstances, with thousands of depositors and millions of dollars, the banks have no trouble giving customers who ask for their money back the full amount at anytime. But it is not as if your money is sitting in an account waiting for you — you merely have a claim on those monies, and that claim is insured by the FDIC, and backed by taxpayers (theoretically).
You are, in fact, a counter-party to your bank.
In the old days, banks were boring. 3-6-3 banking meant borrowing at 3%, lending at 6%, be on the links at 3pm. It was simple. Banks were a utility, making reliable steady money, so long as they didn’t do anything too stupid to screw it up. Glass Steagall, the depression era legislation, prevented them from engaging in the sort of risky Wall Street speculation that caused so much trouble over the years. Think MFGlobal to get a better understanding of what is involved.
Thanks to the sheer ideological idiocy of Phil Gramm, enabled by the corruption of former Treasury Secretary Robert Rubin and the hubris of former Treasury Secretary Larry Summers, Glass Steagall was repealed. Thus, banks could be as stupid as they want to be — and you get to foot the bill.
What does all this have to do with the Volcker rule and MF Global? It is quite simple: Today’s post Glass Steagall repeal Bankers engage in leveraged speculation that potentially could blow the bank up. They did it to themselves with sub-prime mortgages; have no doubt that someone is working on the next ‘financial innovation’ whose losses will be even bigger and better than RMBS and CDOs.
When the next bank blows up — note I said when and not if — their depositors will become counter-parties. Those depositors are you, just like MF Global’s. Only, you as counter-part are not first in line with a claim on the monies — the folks on the other side of the trade get first dibs.
So this bank blows up, the trades settle, the counter party banks/brokers get paid, and whatever is left (if anything) goes to depositors. The FDIC will make good up to $250,000. FDIC’s budgets comes from a small fee on banks. If the losses are great enough, it will exceed their budget and so the taxpayer than makes up the difference.
The risks and rewards are, to use a big word, “asymmetric.” Hit a home run as a trader or banker, collect a huge bonus. Lose it all and then some, and the taxpayer is on the hook. Anyone who fails to see the simple math of this either spends their days shilling for banks or are acting as CEO mouthpieces.
Privatized gains, socialized losses.
The esteemed former Fed Chairman, Paul Volcker, introduced a very simple regulatory concept that bears his name: The Volcker Rule. It was part of the Dodd-Frank regulatory reforms passed after the financial crisis of 2008-09.
There has been enormous pushback against what should be a simple piece of prophylactic rules on proprietary trading by depository banks (see this Jamie Dimon commentary as an example). Why? The profits of speculation goes to banks, driving bonuses and compensation; but the ultimate risk of loss lay with the FDIC and taxpayer. If the banks blow up, someone else besides the banker pays.
Privatized gains, socialized losses.
I want to take a few moments to briefly explain why this rule is so important to taxpayers, especially following the collapse of MF Global and the loss of billions of client assets.
Recall the basic facts of MFG: Management engaged in leveraged speculations with monies — whether it was their own or clients became irrelevant as the losses were so great as to wipe out much more capital than the bank actually had. Billions in losses meant MFG was insolvent and was wound down. On the winning sides of those trades were folks like JPM and George Soros. It is neither their duty nor obligation to verify whose money is on the other side of the trade — the clearing firms make sure the trade settles.
Those trade settlements are the only possible outcome. Why? Imagine a burglar robs a house of cash, goes to a casino and loses the money playing Roulette. The Casino settles that bet, it clears — and the burgled homeowner can never recover the money. Exchanges work the same way. They simply cannot validate the capital sources of every transaction. In the case of MFG, he money wasn’t even burgled — it was simply entrusted to an entity that became so insolvent thru excess speculation that even money in “Segregated accounts” was highly compromised.
And therein lay the dirty little secret of modern banking: THERE IS NO SUCH THING AS A SEGREGATED ACCOUNT. It is simply a helpful way to think about money and banking; it does not exist in the real world.
Consider your basic bank account — checking, savings, passbook, etc. We go through massive contortions to create an illusion that your money is yours, that its safe and sound in a bank with your name on it, in your own virtual safe deposit box. But that is simply not the reality of modern banking. What you perceive as “your money” is little more than an electronic journal on the banks accounting ledgers.
Fractional reserve banking means that the $100 you deposit is lent out — only $10 of your $100 is kept in reserve. Under normal circumstances, with thousands of depositors and millions of dollars, the banks have no trouble giving customers who ask for their money back the full amount at anytime. But it is not as if your money is sitting in an account waiting for you — you merely have a claim on those monies, and that claim is insured by the FDIC, and backed by taxpayers (theoretically).
You are, in fact, a counter-party to your bank.
In the old days, banks were boring. 3-6-3 banking meant borrowing at 3%, lending at 6%, be on the links at 3pm. It was simple. Banks were a utility, making reliable steady money, so long as they didn’t do anything too stupid to screw it up. Glass Steagall, the depression era legislation, prevented them from engaging in the sort of risky Wall Street speculation that caused so much trouble over the years. Think MFGlobal to get a better understanding of what is involved.
Thanks to the sheer ideological idiocy of Phil Gramm, enabled by the corruption of former Treasury Secretary Robert Rubin and the hubris of former Treasury Secretary Larry Summers, Glass Steagall was repealed. Thus, banks could be as stupid as they want to be — and you get to foot the bill.
What does all this have to do with the Volcker rule and MF Global? It is quite simple: Today’s post Glass Steagall repeal Bankers engage in leveraged speculation that potentially could blow the bank up. They did it to themselves with sub-prime mortgages; have no doubt that someone is working on the next ‘financial innovation’ whose losses will be even bigger and better than RMBS and CDOs.
When the next bank blows up — note I said when and not if — their depositors will become counter-parties. Those depositors are you, just like MF Global’s. Only, you as counter-part are not first in line with a claim on the monies — the folks on the other side of the trade get first dibs.
So this bank blows up, the trades settle, the counter party banks/brokers get paid, and whatever is left (if anything) goes to depositors. The FDIC will make good up to $250,000. FDIC’s budgets comes from a small fee on banks. If the losses are great enough, it will exceed their budget and so the taxpayer than makes up the difference.
The risks and rewards are, to use a big word, “asymmetric.” Hit a home run as a trader or banker, collect a huge bonus. Lose it all and then some, and the taxpayer is on the hook. Anyone who fails to see the simple math of this either spends their days shilling for banks or are acting as CEO mouthpieces.
Privatized gains, socialized losses.
Tuesday, January 31, 2012
Case Shiller - "We're Going Down!"
Data released this morning by Standard & Poor’s for its S&P/Case-Shiller home price index showed declines in November of 3.6 percent for the 10-city composite and 3.7 percent for the 20-city composite when compared to price levels from a year earlier.
Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent, holding constant with the annual declines reported for October of -3.2 percent for the 10-city composite and -3.4 percent for the 20-city measurement.
Eighteen cities’ annual returns were in negative territory in November. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent, Atlanta continued to post the lowest annual results.
In addition to both composites, 13 of the 20 metros included in S&P’s study saw their annual returns worsen compared to October’s data. New York and Tampa saw no change in annual returns in November, while Charlotte, Cleveland, Denver, Minneapolis, and Phoenix saw their annual rates improve.
“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” said David Blitzer, chairman of the index committee for S&P. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.”
Both the 10- and 20-city composites of the closely watched index posted declines of 1.3 percent between October and November. Among the 20 cities tracked, 19 saw average home prices slip month-over-month. The only positive was Phoenix, where prices rose 0.6 percent from October to November.
Stiff says in the monthly data too, Atlanta stands out in terms of relative weakness. Home prices there were down 2.5 percent over the month of November, after having fallen by 5.0 percent in October.
Atlanta, along with Las Vegas, Seattle, and Tampa all reached new cycle lows in November, according to Stiff.
The 10-city and 20-city composite readings are holding above their cycle lows hit last spring by +1.0 percent and +0.6 percent, respectively.
Measured from their June/July 2006 peaks through November 2011, the decline for both the 10-city composite and 20-city composite is -32.9 percent.
As of November 2011, S&P says, average home prices across the United States are back to the levels they were at in mid-2003.
For the hard-hit metros of Atlanta, Cleveland, Detroit, and Las Vegas, average home prices are below their January 2000 levels.
Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent, holding constant with the annual declines reported for October of -3.2 percent for the 10-city composite and -3.4 percent for the 20-city measurement.
Eighteen cities’ annual returns were in negative territory in November. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent, Atlanta continued to post the lowest annual results.
In addition to both composites, 13 of the 20 metros included in S&P’s study saw their annual returns worsen compared to October’s data. New York and Tampa saw no change in annual returns in November, while Charlotte, Cleveland, Denver, Minneapolis, and Phoenix saw their annual rates improve.
“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall,” said David Blitzer, chairman of the index committee for S&P. “The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.”
Both the 10- and 20-city composites of the closely watched index posted declines of 1.3 percent between October and November. Among the 20 cities tracked, 19 saw average home prices slip month-over-month. The only positive was Phoenix, where prices rose 0.6 percent from October to November.
Stiff says in the monthly data too, Atlanta stands out in terms of relative weakness. Home prices there were down 2.5 percent over the month of November, after having fallen by 5.0 percent in October.
Atlanta, along with Las Vegas, Seattle, and Tampa all reached new cycle lows in November, according to Stiff.
The 10-city and 20-city composite readings are holding above their cycle lows hit last spring by +1.0 percent and +0.6 percent, respectively.
Measured from their June/July 2006 peaks through November 2011, the decline for both the 10-city composite and 20-city composite is -32.9 percent.
As of November 2011, S&P says, average home prices across the United States are back to the levels they were at in mid-2003.
For the hard-hit metros of Atlanta, Cleveland, Detroit, and Las Vegas, average home prices are below their January 2000 levels.
Saturday, December 31, 2011
Are Lenders Greedy?
In response to an Activerain post this morning, here was my response. Note - the blogger was wondering if the lenders were being greedy by not working with longtime borrowers to ease the burden of their "alligator" mortgage:
Is it Greed? No. It is an economic rule that businesses fail. Little ones, and big ones. Their overall intent was not to rip people off, it was to be profitable.
However, times (and economies) change. The lenders have made billions of dollars of bad loans, and continue to do so. They are destined to fail. The real estate market continues to deleverage, the asset values continue to decline, and the burden of debt continues to rise.
The American taxpayer is about to get a very large tax bill, and they will pay it - till they can't.
Here is the question - what are you doing NOW to protect yourself? At my office, we are continuing to help as many people out of their no win mortgages as possible.
Is it Greed? No. It is an economic rule that businesses fail. Little ones, and big ones. Their overall intent was not to rip people off, it was to be profitable.
However, times (and economies) change. The lenders have made billions of dollars of bad loans, and continue to do so. They are destined to fail. The real estate market continues to deleverage, the asset values continue to decline, and the burden of debt continues to rise.
The American taxpayer is about to get a very large tax bill, and they will pay it - till they can't.
Here is the question - what are you doing NOW to protect yourself? At my office, we are continuing to help as many people out of their no win mortgages as possible.
Sunday, December 11, 2011
New Movement - "Occupy our Homes"!
National 'Occupy Our Homes' Day Kicks Off New Occupy Initiative
Courtesy Krista Franks - Default Servicing News
Last month the Occupy Oakland movement announced its intention to occupy vacant properties. On Tuesday, Occupy Oakland was one of 25 local Occupy groups to observe a national “Occupy Our Homes” day.
“This Tuesday, thousands will be standing up for their neighbors in a struggle against a system that places financial gain above the human need for shelter,” said a statement on the Occupytogether.org website prior to the event.
The statement referred to the trillions of dollars in loans the banks received from the Fed and the billions borrowed from taxpayers through TARP, and went on to say, “Homeowners take risks when buying homes; however, when they lose their jobs or are unable to afford their medical attention, they don’t get bailouts, they lose everything.”
Several Occupy movements made the first steps to occupy foreclosed homes or homes in the process of foreclosure.
Occupy Atlanta members started their day on courthouse steps in Fulton, Gwinnett, and DeKalb Counties.
“Over 200 Occupy Atlanta protesters descended on the Fulton County courthouse steps with whistles, sirens, drums, and blow-horns and made it as difficult as possible for the auction to continue,” according to the Occupy Atlanta website.
Protesters then visited the homes of two homeowners facing foreclosure to demonstrate their support and their intention to continue to occupy the homes despite foreclosure actions.
“This is only the beginning of the fight against Foreclosure and lack of housing in America,” states the Occupy Atlanta website.
Occupy Brooklyn members marched through a Brooklyn neighborhood “to liberate a foreclosed home,” according to their website.
Like the Occupy Atlanta movement, Occupy Brooklyn made it clear that this is just the beginning of a new initiative for the movement.
“This action is part of a national kick-off for a new frontier for the occupy movement: the liberation of vacant bank-owned homes for those in need,” stated a post on the Occupy Brooklyn website.
©2011 DS News. All Rights Reserved.
Courtesy Krista Franks - Default Servicing News
Last month the Occupy Oakland movement announced its intention to occupy vacant properties. On Tuesday, Occupy Oakland was one of 25 local Occupy groups to observe a national “Occupy Our Homes” day.
“This Tuesday, thousands will be standing up for their neighbors in a struggle against a system that places financial gain above the human need for shelter,” said a statement on the Occupytogether.org website prior to the event.
The statement referred to the trillions of dollars in loans the banks received from the Fed and the billions borrowed from taxpayers through TARP, and went on to say, “Homeowners take risks when buying homes; however, when they lose their jobs or are unable to afford their medical attention, they don’t get bailouts, they lose everything.”
Several Occupy movements made the first steps to occupy foreclosed homes or homes in the process of foreclosure.
Occupy Atlanta members started their day on courthouse steps in Fulton, Gwinnett, and DeKalb Counties.
“Over 200 Occupy Atlanta protesters descended on the Fulton County courthouse steps with whistles, sirens, drums, and blow-horns and made it as difficult as possible for the auction to continue,” according to the Occupy Atlanta website.
Protesters then visited the homes of two homeowners facing foreclosure to demonstrate their support and their intention to continue to occupy the homes despite foreclosure actions.
“This is only the beginning of the fight against Foreclosure and lack of housing in America,” states the Occupy Atlanta website.
Occupy Brooklyn members marched through a Brooklyn neighborhood “to liberate a foreclosed home,” according to their website.
Like the Occupy Atlanta movement, Occupy Brooklyn made it clear that this is just the beginning of a new initiative for the movement.
“This action is part of a national kick-off for a new frontier for the occupy movement: the liberation of vacant bank-owned homes for those in need,” stated a post on the Occupy Brooklyn website.
©2011 DS News. All Rights Reserved.
Thursday, November 24, 2011
The Golden Rule in Short Sales
Below is the Article I Wrote for the NSDREI Holiday Booklet this Year...
The Personal Side of The Short Sale
By Richard Worcester
In business, as in life, there is one simple rule for dealing with people. It’s called the Golden Rule – treat people as you wish to be treated.
As a real estate professional specializing in short sale negotiations, you have to be part psychologist and part negotiator as well as a real estate professional. The mission today is much more than just selling property. Now, ultimately we must point everyone in the direction of healing and financial recovery.
The Short Sale business is one of financial distress. When meeting with a client for the first time, they are probably going to exhibit frustration, or even hopelessness. Often, they have been hounded by creditors for months or even years. Their personal relationships may be have suffered or even been destroyed by the financial distress. The may feel as if all hope is lost. I always encourage my clients to mark this meeting, this point in time, as the time when we turned things around and began the healing process.
The first thing to do is to show compassion for their situation. Enter the psychology angle… Frankly, many of us could say “there but for the grace of God go I”. Let them know the facts. Millions of people are in the same position. Maybe you have even been there yourself? It is important to let them know that you are on their side, that you are not there to judge, but to help. This is not hard to do, as the opportunistic and predatory practices of the lenders are mostly responsible. If necessary and the client so far gone, I will even tell them to adopt the attitude of “Us vs. Them”.
Once you have developed a plan with the homeowner, you have to start negotiating with the bank. Although we believe that the financial industry is mostly responsible for the housing collapse, we don’t blame or punish the individuals that we deal with at the bank when negotiating the short sale. Again, the Golden Rule applies. The people at the bank are not so different from your clients or you. They did not cause the problem. They are tasked to help clean up the mess. They have a difficult job, and if you treat them nicely and with respect, they will respond generously.
Ultimately, you will get a short sale approval and will have to put on your Real Estate Professional hat. As in all other parts of the short sale business, the best way to deal with people again is via the Golden Rule. The real estate business today is dramatically different than it was just 5 years ago. Agents, mortgage professionals, escrow and title professionals, even contractors and tradesman, are working much harder, for much less money, than the “go-go” days of 2005. The key to success in these areas is to listen, try to understand, then act. Understand what is needed, and respect the time and feelings of the party you are dealing with. Since you were a child, you have heard the saying you catch more flies with honey than vinegar.
You will notice there is one thing missing from this narrative. I have not discussed how you get paid / how much you will make. The reason for this omission is clear. It is my position that you must separate the job you are to do from the process of getting paid. Certainly, going in, it should be clear what and how you will be getting paid. But once that is established, your focus should be on helping the people and resolving the homeowner’s problem. Your paycheck has nothing to do with the client and their situation. Your goal is to help your client sell their property and get out from under this suffocating financial burden.
I have told the story many times of being in the kitchen with the clients and jumping up and down and hugging each other when we got short sale approval, as well as the story of sitting down and crying with them when we have been denied help and foreclosed upon.
Working in the short sale business is a huge emotional as well as professional commitment. A significant part of your daily job is managing your own emotional involvement and attitudes. It is very, very easy to get on an emotional roller coaster, because you care. You want to help these clients, and they are counting on you. In fact, you may feel you are their only ally in this negotiation.
So in the short sale business, as in life, remember the one simple rule. The Golden Rule. Treat others in your business as you would like to be treated. You will be surprised how much happier and successful you will be!
The Personal Side of The Short Sale
By Richard Worcester
In business, as in life, there is one simple rule for dealing with people. It’s called the Golden Rule – treat people as you wish to be treated.
As a real estate professional specializing in short sale negotiations, you have to be part psychologist and part negotiator as well as a real estate professional. The mission today is much more than just selling property. Now, ultimately we must point everyone in the direction of healing and financial recovery.
The Short Sale business is one of financial distress. When meeting with a client for the first time, they are probably going to exhibit frustration, or even hopelessness. Often, they have been hounded by creditors for months or even years. Their personal relationships may be have suffered or even been destroyed by the financial distress. The may feel as if all hope is lost. I always encourage my clients to mark this meeting, this point in time, as the time when we turned things around and began the healing process.
The first thing to do is to show compassion for their situation. Enter the psychology angle… Frankly, many of us could say “there but for the grace of God go I”. Let them know the facts. Millions of people are in the same position. Maybe you have even been there yourself? It is important to let them know that you are on their side, that you are not there to judge, but to help. This is not hard to do, as the opportunistic and predatory practices of the lenders are mostly responsible. If necessary and the client so far gone, I will even tell them to adopt the attitude of “Us vs. Them”.
Once you have developed a plan with the homeowner, you have to start negotiating with the bank. Although we believe that the financial industry is mostly responsible for the housing collapse, we don’t blame or punish the individuals that we deal with at the bank when negotiating the short sale. Again, the Golden Rule applies. The people at the bank are not so different from your clients or you. They did not cause the problem. They are tasked to help clean up the mess. They have a difficult job, and if you treat them nicely and with respect, they will respond generously.
Ultimately, you will get a short sale approval and will have to put on your Real Estate Professional hat. As in all other parts of the short sale business, the best way to deal with people again is via the Golden Rule. The real estate business today is dramatically different than it was just 5 years ago. Agents, mortgage professionals, escrow and title professionals, even contractors and tradesman, are working much harder, for much less money, than the “go-go” days of 2005. The key to success in these areas is to listen, try to understand, then act. Understand what is needed, and respect the time and feelings of the party you are dealing with. Since you were a child, you have heard the saying you catch more flies with honey than vinegar.
You will notice there is one thing missing from this narrative. I have not discussed how you get paid / how much you will make. The reason for this omission is clear. It is my position that you must separate the job you are to do from the process of getting paid. Certainly, going in, it should be clear what and how you will be getting paid. But once that is established, your focus should be on helping the people and resolving the homeowner’s problem. Your paycheck has nothing to do with the client and their situation. Your goal is to help your client sell their property and get out from under this suffocating financial burden.
I have told the story many times of being in the kitchen with the clients and jumping up and down and hugging each other when we got short sale approval, as well as the story of sitting down and crying with them when we have been denied help and foreclosed upon.
Working in the short sale business is a huge emotional as well as professional commitment. A significant part of your daily job is managing your own emotional involvement and attitudes. It is very, very easy to get on an emotional roller coaster, because you care. You want to help these clients, and they are counting on you. In fact, you may feel you are their only ally in this negotiation.
So in the short sale business, as in life, remember the one simple rule. The Golden Rule. Treat others in your business as you would like to be treated. You will be surprised how much happier and successful you will be!
Sunday, January 02, 2011
Servicers at the Root of the Housing Crisis Now
Courtesy the New York Times
All the revelations this year about dubious practices in the mortgage servicing arena — think robo-signers and forged signatures — have rightly raised borrowers’ fears that companies handling their loans may not be operating on the up and up.
But borrowers aren’t the only ones concerned about potential mischief. Investors who hold mortgage securities are increasingly worried that servicers may be putting their interests ahead of those who own the loans.
A servicer might, for example, deny a loan modification to a borrower because it also owns a second mortgage on the same property and doesn’t want to write down that asset, as required in a modification. Levying outsize default fees is another tactic — the fees typically go to the servicer, not the lender, but they can still propel a property into foreclosure more quickly. And foreclosures aren’t a good outcome for investors.
Last week, a jury in federal district court in Reno, Nev., awarded a group of 50 mortgage investors $5.1 million in punitive damages against defendants in a loan servicing case. Although the numbers in the case aren’t large, its facts are fascinating. Indeed, the case exposed some of the tricks of the servicers’ trade.
The case is also notable because the main defendant, Silar Advisors, was one of the institutions that struck a deal in 2009 with the Federal Deposit Insurance Corporation to buy the assets of a notorious failed bank, IndyMac. Of the $5.1 million in damages awarded in the case, Silar must pay $3 million.
John W. Bickel II, a co-founder of Bickel & Brewer in Dallas, represented the investors in the case. Because he represents an additional 1,450 investors whose loans were serviced by Silar, he said more suits like this one would follow soon.
Loan servicers act as intermediaries between borrowers and their lenders, collecting monthly payments and real estate taxes and forwarding them to the appropriate parties. As long as borrowers meet their payments, such operations typically run smoothly.
Defaults and foreclosures, however, complicate servicers’ duties. As the Silar matter shows, borrower difficulties also open the door to improprieties.
Because loan servicers operate behind the scenes, it’s hard for investors who own these mortgages to monitor fee-gouging. In addition, the servicing contracts make it difficult to fire administrators — under a typical arrangement, investors holding at least 51 percent of the loans must agree on termination.
In short, loan servicing is a perfect setup for administrators who want to take advantage of both borrowers and lenders.
Troubles for investors in the Silar matter began back in 2006 when the USA Commercial Mortgage Company went bankrupt. Founded in 1989, the company had underwritten and serviced short-term commercial real estate loans. It sold them to private investors, typically older people who hoped to live off the income generated by the loans. At the time of its bankruptcy, USA Commercial serviced 115 loans worth almost $1 billion.
After the company collapsed, a small firm called Compass Partners bought the servicing rights to these assets for $8 million. A short time later, Silar Advisors, a company overseen by Robert Leeds, a former Goldman Sachs executive, got involved by financing Compass. Compass/Silar began servicing the loans for the investors.
Almost immediately, the plaintiffs in the suit contended, Compass/Silar started siphoning off money owed to investors holding the loans. Among the servicer’s tactics, the plaintiffs said, were improperly charging default interest, late fees and loan origination fees that reduced amounts due to investors.
The investors also said that when borrowers tried to pay off or otherwise resolve defaulted loans, Compass/Silar refused to negotiate. In other cases when Compass/Silar urged the investors to modify troubled mortgages, the servicer reaped undisclosed fees in the deals.
THE jury affirmed every claim the plaintiffs had brought against Compass/Silar, including conspiracy, as well as breach of contract, of fiduciary duty, and of good faith and fair dealing. The jury found improper actions by Compass/Silar on eight loans.
A Silar spokesman said the firm was pleased that the jury awarded only $79,000 in compensatory damages to the plaintiffs but was disappointed by the punitive-damages assessment. “The jurors are to be commended for their careful consideration of the facts in a very lengthy trial,” the spokesman said. He declined to comment as to whether Silar was currently servicing any loans.
One loan history, on a defaulted asset known as Standard Property, indicates what these investors were up against with their servicer.
In March 2007, immediately after Compass/Silar took over administration of the investors’ loans, the Standard Property mortgage had a principal value of $9.64 million. The borrower wanted to repay the loan at that time, but instead of directing it to pay principal and the accrued interest to the holder of the loan, as required by the servicing agreement, Compass/Silar arranged for the borrower to refund only the principal.
At the same time, court papers show, Compass/Silar quietly took in almost $860,000 in late fees, default interest and other costs from the Standard Property borrower. This ran afoul of the servicing agreement governing the Standard Property mortgage. The agreement stated that such fees could go to the servicer only after investors had been paid principal and accrued interest on a loan.
“No one really knows what is in the black box known as loan servicing, and most investors don’t even think of their servicer taking advantage of them,” Mr. Bickel said in an interview. “There’s not a lot of transparency, and I think this case is going to bring to the forefront the potential for abuse.”
It is obvious that we are in the litigation stage of the financial debacle of 2008. That usually means shining the light on dark corners and watching what scurries away. The view may not be pretty, but at least in this case, investors got some recompense in addition to an education.
All the revelations this year about dubious practices in the mortgage servicing arena — think robo-signers and forged signatures — have rightly raised borrowers’ fears that companies handling their loans may not be operating on the up and up.
But borrowers aren’t the only ones concerned about potential mischief. Investors who hold mortgage securities are increasingly worried that servicers may be putting their interests ahead of those who own the loans.
A servicer might, for example, deny a loan modification to a borrower because it also owns a second mortgage on the same property and doesn’t want to write down that asset, as required in a modification. Levying outsize default fees is another tactic — the fees typically go to the servicer, not the lender, but they can still propel a property into foreclosure more quickly. And foreclosures aren’t a good outcome for investors.
Last week, a jury in federal district court in Reno, Nev., awarded a group of 50 mortgage investors $5.1 million in punitive damages against defendants in a loan servicing case. Although the numbers in the case aren’t large, its facts are fascinating. Indeed, the case exposed some of the tricks of the servicers’ trade.
The case is also notable because the main defendant, Silar Advisors, was one of the institutions that struck a deal in 2009 with the Federal Deposit Insurance Corporation to buy the assets of a notorious failed bank, IndyMac. Of the $5.1 million in damages awarded in the case, Silar must pay $3 million.
John W. Bickel II, a co-founder of Bickel & Brewer in Dallas, represented the investors in the case. Because he represents an additional 1,450 investors whose loans were serviced by Silar, he said more suits like this one would follow soon.
Loan servicers act as intermediaries between borrowers and their lenders, collecting monthly payments and real estate taxes and forwarding them to the appropriate parties. As long as borrowers meet their payments, such operations typically run smoothly.
Defaults and foreclosures, however, complicate servicers’ duties. As the Silar matter shows, borrower difficulties also open the door to improprieties.
Because loan servicers operate behind the scenes, it’s hard for investors who own these mortgages to monitor fee-gouging. In addition, the servicing contracts make it difficult to fire administrators — under a typical arrangement, investors holding at least 51 percent of the loans must agree on termination.
In short, loan servicing is a perfect setup for administrators who want to take advantage of both borrowers and lenders.
Troubles for investors in the Silar matter began back in 2006 when the USA Commercial Mortgage Company went bankrupt. Founded in 1989, the company had underwritten and serviced short-term commercial real estate loans. It sold them to private investors, typically older people who hoped to live off the income generated by the loans. At the time of its bankruptcy, USA Commercial serviced 115 loans worth almost $1 billion.
After the company collapsed, a small firm called Compass Partners bought the servicing rights to these assets for $8 million. A short time later, Silar Advisors, a company overseen by Robert Leeds, a former Goldman Sachs executive, got involved by financing Compass. Compass/Silar began servicing the loans for the investors.
Almost immediately, the plaintiffs in the suit contended, Compass/Silar started siphoning off money owed to investors holding the loans. Among the servicer’s tactics, the plaintiffs said, were improperly charging default interest, late fees and loan origination fees that reduced amounts due to investors.
The investors also said that when borrowers tried to pay off or otherwise resolve defaulted loans, Compass/Silar refused to negotiate. In other cases when Compass/Silar urged the investors to modify troubled mortgages, the servicer reaped undisclosed fees in the deals.
THE jury affirmed every claim the plaintiffs had brought against Compass/Silar, including conspiracy, as well as breach of contract, of fiduciary duty, and of good faith and fair dealing. The jury found improper actions by Compass/Silar on eight loans.
A Silar spokesman said the firm was pleased that the jury awarded only $79,000 in compensatory damages to the plaintiffs but was disappointed by the punitive-damages assessment. “The jurors are to be commended for their careful consideration of the facts in a very lengthy trial,” the spokesman said. He declined to comment as to whether Silar was currently servicing any loans.
One loan history, on a defaulted asset known as Standard Property, indicates what these investors were up against with their servicer.
In March 2007, immediately after Compass/Silar took over administration of the investors’ loans, the Standard Property mortgage had a principal value of $9.64 million. The borrower wanted to repay the loan at that time, but instead of directing it to pay principal and the accrued interest to the holder of the loan, as required by the servicing agreement, Compass/Silar arranged for the borrower to refund only the principal.
At the same time, court papers show, Compass/Silar quietly took in almost $860,000 in late fees, default interest and other costs from the Standard Property borrower. This ran afoul of the servicing agreement governing the Standard Property mortgage. The agreement stated that such fees could go to the servicer only after investors had been paid principal and accrued interest on a loan.
“No one really knows what is in the black box known as loan servicing, and most investors don’t even think of their servicer taking advantage of them,” Mr. Bickel said in an interview. “There’s not a lot of transparency, and I think this case is going to bring to the forefront the potential for abuse.”
It is obvious that we are in the litigation stage of the financial debacle of 2008. That usually means shining the light on dark corners and watching what scurries away. The view may not be pretty, but at least in this case, investors got some recompense in addition to an education.
Thursday, December 09, 2010
Change of Direction!
Hi Folks! It's time to "kick it up a notch!". For more than 4 years I have been making boring, news oriented entries to this blog. Mostly other peoples words.
After reading Seth Godin's book Tribes, I have had an epiphany. I have realized that leadership is something to be relished, cultivated and shared. Leadership by yourself, and by others.
This blog will now be my version of leadership in the arena of Real Estate Investing.
Others may be greater successes, but none will get their passion across like I will.
Welcome to the Tribe!
After reading Seth Godin's book Tribes, I have had an epiphany. I have realized that leadership is something to be relished, cultivated and shared. Leadership by yourself, and by others.
This blog will now be my version of leadership in the arena of Real Estate Investing.
Others may be greater successes, but none will get their passion across like I will.
Welcome to the Tribe!
Wednesday, December 01, 2010
Defaulted Borrowers Sue Wells Fargo
From DSNews.com
By: Joy Leopold 11/30/2010
The law firm of Harwood Feffer, LLP announced last week that it has filed a class action lawsuit against Wells Fargo Bank and its servicer, America’s Servicing Company (ASC).
The lawsuit was filed in the United States District Court for the Northern District of California.
The case alleges that ASC induced borrowers to default on their mortgages by telling them they would not be eligible for a loan modification if they were current on payments.
Harwood Feffer claims ASC induced borrowers to default on their mortgages in order to charge penalty and fees associated with the late payments.
“As a loan servicer, ASC generates a significant portion of its revenue from fees, penalties, and interest collected on the non-performing loans it services,” said Harwood Feffer in a statement.
The statement continued, “Consequently, it is in ASC’s financial interest to avoid, delay, and deny loan modifications and to pursue foreclosures because doing so will lead to increased revenue.”
According to the Home Affordable Modification Program guidelines, a borrower who has not defaulted but is distressed and believed to be facing imminent default may be eligible for a loan modification if financial hardship can be demonstrated.
“By making loan default a prerequisite for modification, without regard to whether a borrower otherwise qualified for a modification due to financial hardship, ASC caused borrowers to unnecessarily suffer ruined credit and subjected them to significant fees, penalties and interest,” alleged Harwood Feffer.
A spokesperson for Wells Fargo said he could not comment specifically on the lawsuit as it is currently under review, but said, “We believe, as we have from the beginning of this crisis, that it is in our customers’ and the country’s best interests to assist customers who can afford their homes – with some help – to remain in them. And, it is our goal to exhaust all options before moving a home to foreclosure sale.”
By: Joy Leopold 11/30/2010
The law firm of Harwood Feffer, LLP announced last week that it has filed a class action lawsuit against Wells Fargo Bank and its servicer, America’s Servicing Company (ASC).
The lawsuit was filed in the United States District Court for the Northern District of California.
The case alleges that ASC induced borrowers to default on their mortgages by telling them they would not be eligible for a loan modification if they were current on payments.
Harwood Feffer claims ASC induced borrowers to default on their mortgages in order to charge penalty and fees associated with the late payments.
“As a loan servicer, ASC generates a significant portion of its revenue from fees, penalties, and interest collected on the non-performing loans it services,” said Harwood Feffer in a statement.
The statement continued, “Consequently, it is in ASC’s financial interest to avoid, delay, and deny loan modifications and to pursue foreclosures because doing so will lead to increased revenue.”
According to the Home Affordable Modification Program guidelines, a borrower who has not defaulted but is distressed and believed to be facing imminent default may be eligible for a loan modification if financial hardship can be demonstrated.
“By making loan default a prerequisite for modification, without regard to whether a borrower otherwise qualified for a modification due to financial hardship, ASC caused borrowers to unnecessarily suffer ruined credit and subjected them to significant fees, penalties and interest,” alleged Harwood Feffer.
A spokesperson for Wells Fargo said he could not comment specifically on the lawsuit as it is currently under review, but said, “We believe, as we have from the beginning of this crisis, that it is in our customers’ and the country’s best interests to assist customers who can afford their homes – with some help – to remain in them. And, it is our goal to exhaust all options before moving a home to foreclosure sale.”
Tuesday, October 26, 2010
Great Quote!
"...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it" -Herbert Simon (June 15, 1916 – February 9, 2001)
Sunday, October 24, 2010
Our Economic Waterloo
We've all done it. We have all made the mistake of overplaying our hand in a card game, then having our heads handed to us. We have all protested too loudly to make our point - to the detriment of the greater good. We have all been wrong at one time or another in our lives.
Folks, listen... and listen well. The Banks are WRONG. The media is WRONG. The politicians are WRONG. It is clear to me that the media is as blind in these matters as the banks themselves. Whether they are unable or unwilling to admit it, whether it is accidental or deliberate, one thing is undeniable. Our economy is in terrible shape and will not improve for a LONG time if we continue on the path we are on now.
As a specialist in distressed real estate transactions, I spend every day in the trenches with the average man and his family - the so called "Joe the Plumber"'s. These folks are going down in flames in greater and greater numbers every day. Multi-billion dollar corporations that are beating estimates mean nothing to the silent majority. Slight improvements in jobless claims, and upward GDP revisions are meaningless.
Our political leaders are systematically creating false hope and legacy, and are out of touch with the truth about the economic condition of our country. The recent rash of political back room sausage making is a symptom of the failure of the system. Uncle Sam is running wild with your credit card!
When you can't succeed by the rules, change the rules. Increase taxes. Kick the can as far down the road as you can. Or at least far enough to get your lying ass re-elected. It is criminal!
But take heart. There is money to be made in this market, as in any market. Those that can act fast, in a contrary manner to the majority, will make huge returns. Those that recognize this gathering storm and take "short" action will make exponential profit. Count on it.
Folks, listen... and listen well. The Banks are WRONG. The media is WRONG. The politicians are WRONG. It is clear to me that the media is as blind in these matters as the banks themselves. Whether they are unable or unwilling to admit it, whether it is accidental or deliberate, one thing is undeniable. Our economy is in terrible shape and will not improve for a LONG time if we continue on the path we are on now.
As a specialist in distressed real estate transactions, I spend every day in the trenches with the average man and his family - the so called "Joe the Plumber"'s. These folks are going down in flames in greater and greater numbers every day. Multi-billion dollar corporations that are beating estimates mean nothing to the silent majority. Slight improvements in jobless claims, and upward GDP revisions are meaningless.
Our political leaders are systematically creating false hope and legacy, and are out of touch with the truth about the economic condition of our country. The recent rash of political back room sausage making is a symptom of the failure of the system. Uncle Sam is running wild with your credit card!
When you can't succeed by the rules, change the rules. Increase taxes. Kick the can as far down the road as you can. Or at least far enough to get your lying ass re-elected. It is criminal!
But take heart. There is money to be made in this market, as in any market. Those that can act fast, in a contrary manner to the majority, will make huge returns. Those that recognize this gathering storm and take "short" action will make exponential profit. Count on it.
Thursday, October 14, 2010
Buy Gold and Real Estate - Quick!
I don't normally post non real estate rants, but this one is a home run...
From Charles Goyette...
Gold Market on U.S. Elections: So What?
For those of us who recognize the complicity of both Republicans and Democrats in our economic calamity, it has been satisfying to see the party establishments of each pummeled this election season. But as far as averting the currency crisis I describe in The Dollar Meltdown, the gold market says it’s too little, too late.
It’s no surprise that politicians hear only what they want to hear, but the Democrats take a new world indoor record for tone-deafness into the election. As the year opened with real unemployment at double-digit levels, all the President and the Democrat establishment could think about was passing Obamacare. They may be proud that they stayed on message, never mind that for most people a health care plan starts with a job and some savings.
With polls suggesting Republicans are set to re-take the House, it looks like the Democrats have a glass jaw to go along with that tin ear. And while scattered tea party victories gave the Republican establishment the thrashing it so richly deserved, the bad news is that none of it matters to our financial prospects. At least that’s the message from the gold market.
Who can disagree? Unless you think that Republicans will want to go into the next election cycle having taken on Social Security, Medicare, Medicaid and other entitlements, there is not much hope that they will do anything meaningful about fiscal policy. Announced on September 23, the Republican Pledge to America promised to save “at least $100 billion in the first year alone.” $100 billion a year? They can’t be serious. By the end of September, just a week later, the federal debt had already grown by another $100 billion. Of course Republicans will tinker with the hated Obamacare just enough to deliver up some form of Boehner-care. Sorry, but the chance to earn lobbyist affection and future campaign contributions trumps any thoughts about simply facing up to federal insolvency and getting government out of health care.
Some real money could be saved rolling back the American empire. Congressman Ron Paul and others calculate total war and foreign spending at about $1 trillion a year. In this context, a return of the Republicans reminds us of Talleyrand’s comment on the Bourbon dynasty that returned to the throne of France after the abdication of Napoleon: They “had learned nothing and forgotten nothing." Republicans seemed to have learned nothing and forgotten everything. Betraying a hubris not seen since Bush set off to “rid the world of evil,” the pledge from November’s likely winners includes “bringing certainty to an uncertain world.” Republicans do take their military Keynesianism seriously. Just months ago Republican congressmen came together to support President Obama’s surge in Afghanistan with a $59 billion emergency spending bill. Now they are campaigning about a “robust defense,” one category of spending that even the new members from the tea parties aren’t inclined to resist.
On the monetary front, Federal Reserve officials, having forgotten at least the French Revolution and probably the 1970’s as well, are counting on inflation to kick start economic growth. Money printing is the Fed’s old time religion, but at least they are going to the trouble of bottling it under new names: liquidity operations, deficit accommodating, and quantitative easing. When chairman Bernanke said something euphemistic last week about “additional purchases,” gold shot up again, joined by silver and oil. And the dollar moved decisively lower. It’s now down 12 percent since June, resuming its long-term slide. Markets are said to be pretty good at discounting future events. Haven’t they heard that the fiscal conservatives will re-take Washington?
It is clear that the rest of the world is similarly unimpressed by Fed euphemisms or the dollar’s prospects, no matter who wins. Like the picnic ramada at the park where people take cover for a while when it begins to rain, investors take cover with the dollar briefly during a crisis. They did so in the 2008 mortgage meltdown and again during the Euro debt crisis. But like a ramada, nobody wants to live there. Or wait out a really bad storm.
Where does one weather a currency crisis? Take a look around. Reuters reported this week on a Swiss private banker who handles clients with at least $50 million to invest that they are buying gold, sometimes by the ton, and moving it out of the financial system. According to the Financial Times, JPMorgan, having recently built a vault in Singapore, has reopened an underground gold vault in New York, while Deutsche Bank and Barclays may be opening new vaults in London. India illustrates the trend: investment demand in India has grown to 92.5 tons in the first six months of this year, compared to 25.4 tons a year earlier; this time last year India’s central bank lightened its dollar reserves substantially, taking down 200 tons of gold in one move. They aren’t alone.
Central banks around the world, long net sellers of gold reserves, have become buyers, among them China and Russia. Gold keeps making new all-time highs. And it doesn’t seem to care about the Republican’s prospects this fall.
From Charles Goyette...
Gold Market on U.S. Elections: So What?
For those of us who recognize the complicity of both Republicans and Democrats in our economic calamity, it has been satisfying to see the party establishments of each pummeled this election season. But as far as averting the currency crisis I describe in The Dollar Meltdown, the gold market says it’s too little, too late.
It’s no surprise that politicians hear only what they want to hear, but the Democrats take a new world indoor record for tone-deafness into the election. As the year opened with real unemployment at double-digit levels, all the President and the Democrat establishment could think about was passing Obamacare. They may be proud that they stayed on message, never mind that for most people a health care plan starts with a job and some savings.
With polls suggesting Republicans are set to re-take the House, it looks like the Democrats have a glass jaw to go along with that tin ear. And while scattered tea party victories gave the Republican establishment the thrashing it so richly deserved, the bad news is that none of it matters to our financial prospects. At least that’s the message from the gold market.
Who can disagree? Unless you think that Republicans will want to go into the next election cycle having taken on Social Security, Medicare, Medicaid and other entitlements, there is not much hope that they will do anything meaningful about fiscal policy. Announced on September 23, the Republican Pledge to America promised to save “at least $100 billion in the first year alone.” $100 billion a year? They can’t be serious. By the end of September, just a week later, the federal debt had already grown by another $100 billion. Of course Republicans will tinker with the hated Obamacare just enough to deliver up some form of Boehner-care. Sorry, but the chance to earn lobbyist affection and future campaign contributions trumps any thoughts about simply facing up to federal insolvency and getting government out of health care.
Some real money could be saved rolling back the American empire. Congressman Ron Paul and others calculate total war and foreign spending at about $1 trillion a year. In this context, a return of the Republicans reminds us of Talleyrand’s comment on the Bourbon dynasty that returned to the throne of France after the abdication of Napoleon: They “had learned nothing and forgotten nothing." Republicans seemed to have learned nothing and forgotten everything. Betraying a hubris not seen since Bush set off to “rid the world of evil,” the pledge from November’s likely winners includes “bringing certainty to an uncertain world.” Republicans do take their military Keynesianism seriously. Just months ago Republican congressmen came together to support President Obama’s surge in Afghanistan with a $59 billion emergency spending bill. Now they are campaigning about a “robust defense,” one category of spending that even the new members from the tea parties aren’t inclined to resist.
On the monetary front, Federal Reserve officials, having forgotten at least the French Revolution and probably the 1970’s as well, are counting on inflation to kick start economic growth. Money printing is the Fed’s old time religion, but at least they are going to the trouble of bottling it under new names: liquidity operations, deficit accommodating, and quantitative easing. When chairman Bernanke said something euphemistic last week about “additional purchases,” gold shot up again, joined by silver and oil. And the dollar moved decisively lower. It’s now down 12 percent since June, resuming its long-term slide. Markets are said to be pretty good at discounting future events. Haven’t they heard that the fiscal conservatives will re-take Washington?
It is clear that the rest of the world is similarly unimpressed by Fed euphemisms or the dollar’s prospects, no matter who wins. Like the picnic ramada at the park where people take cover for a while when it begins to rain, investors take cover with the dollar briefly during a crisis. They did so in the 2008 mortgage meltdown and again during the Euro debt crisis. But like a ramada, nobody wants to live there. Or wait out a really bad storm.
Where does one weather a currency crisis? Take a look around. Reuters reported this week on a Swiss private banker who handles clients with at least $50 million to invest that they are buying gold, sometimes by the ton, and moving it out of the financial system. According to the Financial Times, JPMorgan, having recently built a vault in Singapore, has reopened an underground gold vault in New York, while Deutsche Bank and Barclays may be opening new vaults in London. India illustrates the trend: investment demand in India has grown to 92.5 tons in the first six months of this year, compared to 25.4 tons a year earlier; this time last year India’s central bank lightened its dollar reserves substantially, taking down 200 tons of gold in one move. They aren’t alone.
Central banks around the world, long net sellers of gold reserves, have become buyers, among them China and Russia. Gold keeps making new all-time highs. And it doesn’t seem to care about the Republican’s prospects this fall.
Monday, September 20, 2010
Congress trying to Speed up Short Sales
From the Desk of... " This Time They are Gonna Listen to Us!"
Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.
The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.
The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).
Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.
“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”
The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of
2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.
“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.
According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.
Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.
Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.
Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.
The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.
The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).
Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.
“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”
The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of
2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.
“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.
According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.
Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.
Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.
Friday, September 17, 2010
Sunday, August 15, 2010
Former Bank Regulator William Black: U.S. Using "Really Stupid Strategy" to Hide Bank Losses - Will Produce Japanese Style Lost Decade
Folks - William Black tells is like it is. Proof again that the big banks have manipulated the system for their own survival, at the expense of the American Citizen. This article contains a short video that explains it all...
http://globaleconomicanalysis.blogspot.com/2010/08/former-bank-regulator-william-black-us.html
http://globaleconomicanalysis.blogspot.com/2010/08/former-bank-regulator-william-black-us.html
---
Thursday, August 12, 2010
Obamanomics
I read this afternoon that the drunken sailor has authorized more money to individual states for foreclosure prevention measures.
When will this madness end? Does everyone understand that the lunatic is loose with your credit card - and he's charging up a storm?
God help my kids and grandkids. We will be living with 50% + plus Tax Rates for decades to come.
Come November, vote the criminals out.
When will this madness end? Does everyone understand that the lunatic is loose with your credit card - and he's charging up a storm?
God help my kids and grandkids. We will be living with 50% + plus Tax Rates for decades to come.
Come November, vote the criminals out.
Tuesday, July 13, 2010
Short Sale Market Changes
They always say not to speak out in anger. My horoscope today said whatever happens, let it go. Well, too bad. Here goes...
The short sale business is a tough one. Lately there have been lender changes that have made it even tougher. For starters, the lenders/negotiators on the bank side have decided that the truth is optional. While this is no surprise to anyone in the business, it should not be allowed. When a family's financial destiny is on the line, the truth is mandatory. However, the lenders are now in full blown, lying, bait and switch mode.
What can we do about it? Well we can't control their actions from this side. However, we can manage expectations from our side. With that said, here is my Short Sale WARNING:
Lenders are out to get the most money they can. They don't care about the homeowners, buyers, agents, investors or anyone but themselves.
Lenders are not bound by honor or honesty. They will change the rules on you right after they make a commitment. That you can count on. While their actions are truly fraudulent and criminal, there is nobody to police them. Our government has failed us.
Lenders are owned by stockholders. The policymakers and decision makers at the lenders don't have a pot to pee in - yet they have the power to wreak havoc on the financial lives of millions of people. The owners of the lenders, the stockholders, are just along for the ride and ultimately will suffer the losses these idiot lenders have brought upon themselves.
So, in closing, if you are doing a short sale, this is what to expect. The commitments and guarantees of the lenders are worthless. All we can do is see it through to the end. Be prepared for anything. You have been warned...
Rich
The short sale business is a tough one. Lately there have been lender changes that have made it even tougher. For starters, the lenders/negotiators on the bank side have decided that the truth is optional. While this is no surprise to anyone in the business, it should not be allowed. When a family's financial destiny is on the line, the truth is mandatory. However, the lenders are now in full blown, lying, bait and switch mode.
What can we do about it? Well we can't control their actions from this side. However, we can manage expectations from our side. With that said, here is my Short Sale WARNING:
Lenders are out to get the most money they can. They don't care about the homeowners, buyers, agents, investors or anyone but themselves.
Lenders are not bound by honor or honesty. They will change the rules on you right after they make a commitment. That you can count on. While their actions are truly fraudulent and criminal, there is nobody to police them. Our government has failed us.
Lenders are owned by stockholders. The policymakers and decision makers at the lenders don't have a pot to pee in - yet they have the power to wreak havoc on the financial lives of millions of people. The owners of the lenders, the stockholders, are just along for the ride and ultimately will suffer the losses these idiot lenders have brought upon themselves.
So, in closing, if you are doing a short sale, this is what to expect. The commitments and guarantees of the lenders are worthless. All we can do is see it through to the end. Be prepared for anything. You have been warned...
Rich
Friday, July 09, 2010
1 in 7 Million Dollar Mortgages headed to Default
The Rich are biggest defaulters
According to the real estate analytics firm CoreLogic, more than 1 in 7 homeowners with mortgage loans in excess of a million dollars are seriously delinquent. Whether it's their residence, a second home or a house bought as an investment, the rich have stopped paying mortgages at a rate that greatly exceeds the rest of the population. By contrast, homeowners with cheaper housing are much more likely to keep on top of their mortgage. Only about 1 in 12 mortgages below the million-dollar mark is delinquent. CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
According to the real estate analytics firm CoreLogic, more than 1 in 7 homeowners with mortgage loans in excess of a million dollars are seriously delinquent. Whether it's their residence, a second home or a house bought as an investment, the rich have stopped paying mortgages at a rate that greatly exceeds the rest of the population. By contrast, homeowners with cheaper housing are much more likely to keep on top of their mortgage. Only about 1 in 12 mortgages below the million-dollar mark is delinquent. CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
Wednesday, June 23, 2010
Another Argument for Short Sales!
Courtesy Mortgage News Daily...
Fannie Mae announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure.
Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. (anyone want to bet whether Fannie Mae will be around in 7 years?)
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances
Here is the verbiage from the FN Bulletin:
Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements).
These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
Fannie Mae announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure.
Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. (anyone want to bet whether Fannie Mae will be around in 7 years?)
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances
Here is the verbiage from the FN Bulletin:
Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements).
These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
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