In these tough times it is sometimes very difficult to just let go and move on with life. Agents are pulling out all stops and trying everything that they can think of to save deals. I can’t blame them for trying and sometimes the extra effort or new approach might actually turn up something that works. But, other times it amounts to beating a dead horse and it’s time to let go and move on. Sometimes, no matter how many suggestions one can make about trying something different for financing or taking a different approach to dealing with an inspection issue; there just isn’t any way to save the deal.
Sometimes agents get so involved that they start taking lost deals personally. It’s not about them. It’s all about the clients involved; and, no matter how hard the two agents work in the middle, if the two clients involved don’t agree there is no deal. Now, I understand that sometimes clients need to be counseled and educated and even cajoled a bit to stop over analyzing everything and make a decision. Who hasn’t hit that type of client? But the, “we’ve got to make this work,” mentality that sometimes sets in between the agents in a deal can end up doing a disservice to one or both clients. It’s the clients who need a win-win out of the deal, not the agents.
The frustrations of the current market have exacerbated the tendency on the part of some agents to view every deal as a “must win at any cost” game. Having to deal with short-sales in particular has increased the agents’ “stake” in the game, since so much behind the scenes work is involved that most agents on both sides don’t want to see that effort go unrewarded by a closing. It’s that win at any cost mentality that can lead to agents taking shortcuts in the process or making marginal ethical decisions, sometimes on behalf of an unsuspecting client.
In these trying times it is all the more important to be able to step back and let things go when that is the best thing to do. Sure there are gong to be disappointed clients, on both sides of the failed deal; however, dealing with a disappointed client is much better than dealing with an angry client who feels that his/her agent led them astray or wasn’t acting in their best interests. It’s not about us. It’s about the clients and meeting their needs. So, when you’ve given it your best effort but the deal is still going south, remember the words of that classic Beatles song and “Let it be, let it be.”
Monday, November 22, 2010
Sunday, November 21, 2010
The games we play...
There is a popular definition of insanity that goes, ‘doing the same thing over and over and expecting different results.’ In real estate these days that definition might be better stated as, ‘doing the same thing over and over and expecting the same results.’ The market we are in is just insane. Each sale is a whole new adventure, with a steep learning curve and no predictable end result. What few “conventional” sales there are these days are subject to the whims of ever changing mortgage and insurance rules, as well as the interpretive magic of those wizards behind the curtains – the underwriters. Even long-time mortgage agents can’t predict what will happen when a loan request is sent to underwriting.
And what about short-sales and foreclosures? This is about as lawless a landscape as can exist in what is supposed to be a business environment. Business is normally done under a set of accepted norms and rules that everyone buys into and understands. Not so with short-sales and foreclosures. There are no norms or rules, except those that each bank makes up as they go along. Each bank has its own set of procedures and creates its own set of requirements, which become its rules (for that sale anyway). And, within each bank, individual asset managers (or whatever term is used by the bank for the people in charge of dealing with distressed assets) seem to have wide latitude (sort of like the notorious underwriters) to set requirements for each sale.
The result is a game, although not a game where anyone appears to have any fun playing. The game starts out when an offer is tossed into the black hole that is the bank’s short-sale process or maybe their foreclosure process. The players are instructed to stand around and await an answer. How long should one expect to wait? Players are not told. What things will the bank evaluate about the offer to make their decision? Players are not told. What other terms and conditions may the bank impose on the sale? Many times players are not told ahead of the decision; but, sometimes players are given a peak at those terms and conditions. How can a player find out the status of the decision making process? Most times even the listing agent player is not told. Just be patient and wait for your answer is the answer.
The game was recently thrown into even great turmoil (seems hard to imagine it getting any worse) by the legal challenges to the foreclosure processes being used in many states. That, in turn was exacerbated by the whole securitization process for pools of home mortgages, which left the question of who really owns the mortgage on each home open to further debate and legal action. Who has the right to take foreclosure action on assets within those pools of home mortgages that have been turned into securities? The players aren’t told and the banks who packaged and sold the securities don’t know. Even the holders of those securities are too sure about that, but the inquiring minds of the Attorneys General of several states would like to know.
So, what’s a Realtor to do when facing this mess? I think the biggest thing that we need to do is to focus upon counseling and educating our clients (both sellers and buyers) that they are facing an uncertain process that will take an undetermined amount of time and has a very unclear outcome. Client-players who decide to play this game should be prepared to respond to or deal with what may seem like unreasonable requests from the lender(s) involved. Client players may have to make the decision to sink money for inspections or loan processing or repairs into the process, with no guarantee of success. They may be asked to pay for services that have nothing to do with the sale or their mortgage. They may be asked to assume debt obligations that they did not incur, but which come with the property. Realtor-players will often be asked, after the deal is struck to reduce their compensation, even though these are the most time consuming sales that they work upon. It’s all a part of the game. Good luck. Let the games begin.
And what about short-sales and foreclosures? This is about as lawless a landscape as can exist in what is supposed to be a business environment. Business is normally done under a set of accepted norms and rules that everyone buys into and understands. Not so with short-sales and foreclosures. There are no norms or rules, except those that each bank makes up as they go along. Each bank has its own set of procedures and creates its own set of requirements, which become its rules (for that sale anyway). And, within each bank, individual asset managers (or whatever term is used by the bank for the people in charge of dealing with distressed assets) seem to have wide latitude (sort of like the notorious underwriters) to set requirements for each sale.
The result is a game, although not a game where anyone appears to have any fun playing. The game starts out when an offer is tossed into the black hole that is the bank’s short-sale process or maybe their foreclosure process. The players are instructed to stand around and await an answer. How long should one expect to wait? Players are not told. What things will the bank evaluate about the offer to make their decision? Players are not told. What other terms and conditions may the bank impose on the sale? Many times players are not told ahead of the decision; but, sometimes players are given a peak at those terms and conditions. How can a player find out the status of the decision making process? Most times even the listing agent player is not told. Just be patient and wait for your answer is the answer.
The game was recently thrown into even great turmoil (seems hard to imagine it getting any worse) by the legal challenges to the foreclosure processes being used in many states. That, in turn was exacerbated by the whole securitization process for pools of home mortgages, which left the question of who really owns the mortgage on each home open to further debate and legal action. Who has the right to take foreclosure action on assets within those pools of home mortgages that have been turned into securities? The players aren’t told and the banks who packaged and sold the securities don’t know. Even the holders of those securities are too sure about that, but the inquiring minds of the Attorneys General of several states would like to know.
So, what’s a Realtor to do when facing this mess? I think the biggest thing that we need to do is to focus upon counseling and educating our clients (both sellers and buyers) that they are facing an uncertain process that will take an undetermined amount of time and has a very unclear outcome. Client-players who decide to play this game should be prepared to respond to or deal with what may seem like unreasonable requests from the lender(s) involved. Client players may have to make the decision to sink money for inspections or loan processing or repairs into the process, with no guarantee of success. They may be asked to pay for services that have nothing to do with the sale or their mortgage. They may be asked to assume debt obligations that they did not incur, but which come with the property. Realtor-players will often be asked, after the deal is struck to reduce their compensation, even though these are the most time consuming sales that they work upon. It’s all a part of the game. Good luck. Let the games begin.
Thursday, November 18, 2010
True real estate reality wouldn’t make for great TV…
I’ve been watching the shows on HGTV a lot lately, especially the Property Virgins show. It’s interesting how editing can make the process look a lot better than it is in reality. I must give the producers credit though, they do mention in the show that the couple being featured may have looked at 20 – 30 homes during the process, even though they only normally show three homes in each episode.
They also at least bring up issues like waiting for answers on offers, especially bank owned or short-sale properties. I guess it wouldn’t be very good TV if you couldn’t compress months into the 30 minute show window. It would be very boring to actually watch months pass while the buyers are waiting for an answer from the bank, as we do all the time in the real world.
I always wonder what role the hostess on that show is really playing in those deals. She can’t be licensed as a Realtor® in the 4-5 states that I’ve seen her show houses in on the program; at least I don’t think so. I suppose they have a licensed Realtor behind the scenes on each deal. It just makes for good TV to have her gong from Miami on one show to Boston on the next and Toronto on the next. It would be great if we Realtors could do that, but we can’t.
They also seem to compress time a little too much some times, such as when they have the couple sit there while she supposedly goes and presents the offer, retuning a short while later with a counter offer or an acceptance. Would that things actually worked like that and worked that quickly.
Still it’s good reality TV and does show quite a bit about the real estate process and the role that the Realtor plays in the process. One aspect of house hunting that turns up on the show quite often is the buyers changing their minds about what they want in the middle of the search. That happens all the time.
Sometimes buyers realize during the hunt that some things on their wish list are just not gong to be possible within their budget constraints. Sometimes it’s because, when they find a house with all of the features they say they wanted; they see that they don’t really like them after all. Sometime they begin to realize the amount of work that might be involved in really buying that fixer-upper that they specified.
For whatever reason, buyers often end up happily buying a home that is completely different than what they described in the beginning of the process. That happens a lot when they start out looking at foreclosed homes and get tired of walking through cold, dark houses that have been badly damaged by irate ex-owners.
I like some of the other shows too. The one on income properties is informative. Some of the remodeling and staging shows also have great ideas and some are a little over the top. Still one can get something from all of these shows and for a Realtor it’s sort of a “busman’s holiday” thing to sit there and watch others do what you also knows how to do.
I sometimes yell at the people on the shows, if they do or say something really stupid, but that’s all part of watching TV for me; which is why my wife doesn’t like to watch with me. All-in-all I’d rater sit there and watch those show that most of the inane comedies and tired old formula cop shows, even if I know going in how each show’s going to end. Just once they should probably have the young couple fire the agent or have the agent tell the young couple that they really aren’t ready to buy and have her fire them as clients. Now that would be good TV.
They also at least bring up issues like waiting for answers on offers, especially bank owned or short-sale properties. I guess it wouldn’t be very good TV if you couldn’t compress months into the 30 minute show window. It would be very boring to actually watch months pass while the buyers are waiting for an answer from the bank, as we do all the time in the real world.
I always wonder what role the hostess on that show is really playing in those deals. She can’t be licensed as a Realtor® in the 4-5 states that I’ve seen her show houses in on the program; at least I don’t think so. I suppose they have a licensed Realtor behind the scenes on each deal. It just makes for good TV to have her gong from Miami on one show to Boston on the next and Toronto on the next. It would be great if we Realtors could do that, but we can’t.
They also seem to compress time a little too much some times, such as when they have the couple sit there while she supposedly goes and presents the offer, retuning a short while later with a counter offer or an acceptance. Would that things actually worked like that and worked that quickly.
Still it’s good reality TV and does show quite a bit about the real estate process and the role that the Realtor plays in the process. One aspect of house hunting that turns up on the show quite often is the buyers changing their minds about what they want in the middle of the search. That happens all the time.
Sometimes buyers realize during the hunt that some things on their wish list are just not gong to be possible within their budget constraints. Sometimes it’s because, when they find a house with all of the features they say they wanted; they see that they don’t really like them after all. Sometime they begin to realize the amount of work that might be involved in really buying that fixer-upper that they specified.
For whatever reason, buyers often end up happily buying a home that is completely different than what they described in the beginning of the process. That happens a lot when they start out looking at foreclosed homes and get tired of walking through cold, dark houses that have been badly damaged by irate ex-owners.
I like some of the other shows too. The one on income properties is informative. Some of the remodeling and staging shows also have great ideas and some are a little over the top. Still one can get something from all of these shows and for a Realtor it’s sort of a “busman’s holiday” thing to sit there and watch others do what you also knows how to do.
I sometimes yell at the people on the shows, if they do or say something really stupid, but that’s all part of watching TV for me; which is why my wife doesn’t like to watch with me. All-in-all I’d rater sit there and watch those show that most of the inane comedies and tired old formula cop shows, even if I know going in how each show’s going to end. Just once they should probably have the young couple fire the agent or have the agent tell the young couple that they really aren’t ready to buy and have her fire them as clients. Now that would be good TV.
Wednesday, November 17, 2010
Boomers dealing with the new reality.
From IconoCulture comes this report about things impacting the older generation – the so-called boomers and matures. Iconoculture is a consumer data collection and reporting company. You can sign up to receive their weekly posts about what's happening in teh world of consumers at http://www.iconoculture.com/ .
WHAT'S HAPPENING
According to figures from the U.S. government, personal incomes declined significantly in September 2010. Personal income dropped by $16 billion, and disposable income fell even more — a whopping $20 billion. That led to unexpectedly weak consumer spending during the same period (WalletPop.com, 1 November 2010).
With incomes flat or falling, continuing unemployment and the depressed housing market, the outlook for consumers going into the holiday season is not a happy one.
WHAT THIS MEANS TO BUSINESS
Consumer spending is the main engine of growth in the U.S. economy. As long as that stays depressed, recovery will be slow and painful.
Americans seem to be retrenching in deeper thrift mode as the economy sputters.
The following remarks added by this author –
WHAT THIS MEANS TO REAL ESTATE
The bottom line from all this is that the much anticipated and bally-hooed great Boomer migration just isn’t going to happen. Boomers were supposed to be buying retirement hoes by now, but most are stuck in underwater homes that they can’t sell, much less consider buying anything else. Many Boomers were in the older groups that got laid off and found that they were now too old or over qualified for the jobs in this new economy.
Lots of Boomers burned through their savings, savings that had been ear-marked for those retirement homes or they used it to pay for their kids colleges. Now they are broke and stuck where they are, unable to find jobs that pay at the high levels of their last, pre-bust employment. In any event, they are now adjusting to the new reality of the situation of the economy and the country. That is not an easy or pretty adjustment for most. The “me” generation is not used to sacrifice or having to make the tough economic decision that current conditions demand.
One thing that this has meant to real estate is that many Boomers have delayed any plans for their retirement homes. They have not listed their McMansions because they can’t afford the losses involved. But they are tapped out and can’t afford to purchase a second property that might have been their retirement home. They are frozen in place and likely to stay in that state for some time.
So, what are we as Realtors to do to help with all of this? Well, we definitely need to do a lot of educating. Many Boomers are still in the denial phase of dealing with how things have changed and we need to help them get past that stage and accept the new reality. Then we need to help them plan for how they can get on with retirement, albeit a much different retirement than they may have initially envisioned.
Boomers need to understand that they will likely take a loss (maybe mostly a paper loss, but still a tough thing for these folks to deal with) on the sale of their current home, but that they may make some of that back on the purchase of a retirement home. A lot depends on the “from-to” locations involved. One cannot sell in the deeply depressed Las Vegas market and expect to get whole by buying in the still relatively hot South Carolina Market. Adjustments to locations and well as expectations may need to be made.
Fortunately most retirees are at least trying to downsize somewhat. We may have to recommend that they go further down the size and amenity ladder than most had in mind. A smaller, upscale condo, with a view of the ocean may have to take the place of the ocean-front luxury condo that they had in mind. Or perhaps a smaller, 2 bedroom home within walking distance to downtown may replace the grander 3-4 bedroom retirement home with guest space for the extended family.
However we finally agree upon the level of sacrifice required by the new circumstances of our clients, we can help and we should. Retirement plans delayed do not have to become retirement plans abandoned; they just need to be adjusted and refined and a good agent needs to help their Boomer clients find happiness in their new downsized reality. Maybe that could become the catch-phrase – Downsized Realty for the new Downsized Reality.
WHAT'S HAPPENING
According to figures from the U.S. government, personal incomes declined significantly in September 2010. Personal income dropped by $16 billion, and disposable income fell even more — a whopping $20 billion. That led to unexpectedly weak consumer spending during the same period (WalletPop.com, 1 November 2010).
With incomes flat or falling, continuing unemployment and the depressed housing market, the outlook for consumers going into the holiday season is not a happy one.
WHAT THIS MEANS TO BUSINESS
Consumer spending is the main engine of growth in the U.S. economy. As long as that stays depressed, recovery will be slow and painful.
Americans seem to be retrenching in deeper thrift mode as the economy sputters.
The following remarks added by this author –
WHAT THIS MEANS TO REAL ESTATE
The bottom line from all this is that the much anticipated and bally-hooed great Boomer migration just isn’t going to happen. Boomers were supposed to be buying retirement hoes by now, but most are stuck in underwater homes that they can’t sell, much less consider buying anything else. Many Boomers were in the older groups that got laid off and found that they were now too old or over qualified for the jobs in this new economy.
Lots of Boomers burned through their savings, savings that had been ear-marked for those retirement homes or they used it to pay for their kids colleges. Now they are broke and stuck where they are, unable to find jobs that pay at the high levels of their last, pre-bust employment. In any event, they are now adjusting to the new reality of the situation of the economy and the country. That is not an easy or pretty adjustment for most. The “me” generation is not used to sacrifice or having to make the tough economic decision that current conditions demand.
One thing that this has meant to real estate is that many Boomers have delayed any plans for their retirement homes. They have not listed their McMansions because they can’t afford the losses involved. But they are tapped out and can’t afford to purchase a second property that might have been their retirement home. They are frozen in place and likely to stay in that state for some time.
So, what are we as Realtors to do to help with all of this? Well, we definitely need to do a lot of educating. Many Boomers are still in the denial phase of dealing with how things have changed and we need to help them get past that stage and accept the new reality. Then we need to help them plan for how they can get on with retirement, albeit a much different retirement than they may have initially envisioned.
Boomers need to understand that they will likely take a loss (maybe mostly a paper loss, but still a tough thing for these folks to deal with) on the sale of their current home, but that they may make some of that back on the purchase of a retirement home. A lot depends on the “from-to” locations involved. One cannot sell in the deeply depressed Las Vegas market and expect to get whole by buying in the still relatively hot South Carolina Market. Adjustments to locations and well as expectations may need to be made.
Fortunately most retirees are at least trying to downsize somewhat. We may have to recommend that they go further down the size and amenity ladder than most had in mind. A smaller, upscale condo, with a view of the ocean may have to take the place of the ocean-front luxury condo that they had in mind. Or perhaps a smaller, 2 bedroom home within walking distance to downtown may replace the grander 3-4 bedroom retirement home with guest space for the extended family.
However we finally agree upon the level of sacrifice required by the new circumstances of our clients, we can help and we should. Retirement plans delayed do not have to become retirement plans abandoned; they just need to be adjusted and refined and a good agent needs to help their Boomer clients find happiness in their new downsized reality. Maybe that could become the catch-phrase – Downsized Realty for the new Downsized Reality.
Tuesday, November 16, 2010
Turn "yucky" into "sweet" in your crawl space...
I recently did a short piece in my bi-monthly newsletter about crawl spaces and how putting in an encapsulation system can have a positive impact on the value of the home.To my great surprise, that article was the one mentioned most often by people who get my newsletter and see me at church or other places.
Crawl spaces are one of the foundation types used under homes - along with basements and concrete slabs. Crawl spaces are literally a space between the ground and the bottom of the house that are generally high enough off the ground to allow a person to crawl around under the house. Some crawl spaces are actually deep enough to walk around in under portions of the house and some are only a few inches off the ground. In many cases some or all of the major mechanical systems for the house (heater and hot water heater) may be located in the crawl space.
Crawl spaces are not something that get visited very often and thus they are the epitome of "out of sight, out of mind." That should not be the case, especially if you do not have an encapsulated crawl space. What's in or not in your crawl space can have a big impact on your living conditions within eh house itself. Unencapsulated crawl spaces allow moisture and smells to waft up through the floor and into the house. They also encourage critters to take up residence under your house. Most of the time you won't notice the critters until you get a skunk under the house. If the crawl under your home is damp there are multiple issues and mold could become one of them over time.
So, what can be done about this dirty, perhaps damp environment? If it's damp, you first need to find out why and fix that issue. It could be a simple fix like better routing of gutter discharge or is could be an issue with a source inside the house like a leak somewhere in the plumbing system. In either event, find it and fix the source of the leak before going further.
Once you have the crawl space dry find a company that does crawl space encapsulation and have them encapsulate your crawl space. They use thick polyvinyl films to create a vapor barrier between the ground and you home. Usually this barrier is run up the supports all the way to the underside of the floor. While this material has some small insulating value, it is not there for that purpose. It is there to seal out moisture. You may wish to also insulate the bottom of your house once you get the crawl space encapsulated.
Encapsulation will also discourage small critters from taking up residence under your home and will make the task of accessing any mechanicals that are under there much more pleasant. It is a relatively cheap home improvement and one that potential buyers will notice and put a positive value on, when it comes time to sell.
Crawl spaces are one of the foundation types used under homes - along with basements and concrete slabs. Crawl spaces are literally a space between the ground and the bottom of the house that are generally high enough off the ground to allow a person to crawl around under the house. Some crawl spaces are actually deep enough to walk around in under portions of the house and some are only a few inches off the ground. In many cases some or all of the major mechanical systems for the house (heater and hot water heater) may be located in the crawl space.
Crawl spaces are not something that get visited very often and thus they are the epitome of "out of sight, out of mind." That should not be the case, especially if you do not have an encapsulated crawl space. What's in or not in your crawl space can have a big impact on your living conditions within eh house itself. Unencapsulated crawl spaces allow moisture and smells to waft up through the floor and into the house. They also encourage critters to take up residence under your house. Most of the time you won't notice the critters until you get a skunk under the house. If the crawl under your home is damp there are multiple issues and mold could become one of them over time.
So, what can be done about this dirty, perhaps damp environment? If it's damp, you first need to find out why and fix that issue. It could be a simple fix like better routing of gutter discharge or is could be an issue with a source inside the house like a leak somewhere in the plumbing system. In either event, find it and fix the source of the leak before going further.
Once you have the crawl space dry find a company that does crawl space encapsulation and have them encapsulate your crawl space. They use thick polyvinyl films to create a vapor barrier between the ground and you home. Usually this barrier is run up the supports all the way to the underside of the floor. While this material has some small insulating value, it is not there for that purpose. It is there to seal out moisture. You may wish to also insulate the bottom of your house once you get the crawl space encapsulated.
Encapsulation will also discourage small critters from taking up residence under your home and will make the task of accessing any mechanicals that are under there much more pleasant. It is a relatively cheap home improvement and one that potential buyers will notice and put a positive value on, when it comes time to sell.
Monday, November 15, 2010
Is the sky really falling...again?
Let me begin by stating that I’m all for home ownership and being a Realtor®, I’m all for people buying homes – that’s how I make my living, listing and selling homes. I’m also a home owner.
Having said that; I read with interest the article in the November/December issue of REALTOR®, the bi-monthly magazine published by the National Association of Realtors (NAR), that had the front cover headline “Defending Home Ownership.” Inside the headline was “Countering the Critics.” While there were some thoughts expressed about the value to the community and the country of people owning their own homes, rather then renting; those thoughts were not fleshed out in the article.
Instead the NAR article was really just an overly simplistic explanation of the issue and some fear tactics aimed at heading off the political movement that is afoot to look at ending the mortgage interest tax credit – a sacred cow for the real estate and mortgage industries. Perhaps NAR hired some of the negative ads campaign writers from the recently completed elections to write this warning that the sky is falling.
There were of course some “facts” presented, such as the percentage of taxes that home owners pay each year (pegged at 80-90%) and an estimate by Lawrence Yun, the NAR Economist, of the potential negative impact on home values (pegged at 15% in the article), if the tax credit is removed and savvy buyers start factoring the value of homes, based upon lost tax advantages. Interestingly no facts were presented in the article about what percentage of home owners own their homes outright and thus get no benefit from this tax break.
According to Wikipedia, 67.8% of all occupied housing units are occupied by the unit's owner – the homeowner. A quick scan of Google returned the “fact” that 40% of all homeowners have no mortgage on their home, so they get no benefit from the mortgage interest deduction tax break. Do the math and that means that 59% of all people get no mortgage tax break. Put another way, as opponents of this tax credit are want to do, a minority (41%) of Americans are being given a tax subsidy by the rest of us taxpayers.
I should add in the interest of full disclosure that I am in that group with no mortgage and, thus, I get no benefit from the mortgage tax credit. I also recall the alarms that were sounded when the government stopped allowing the deduction of interest charged on credit cards. The sky was falling back then, too, and the end of credit as we knew it was direly predicted. Somehow we all survived and we’ll survive this tax policy shift if forced to do so.
What’s really under attack here? It’s not really the concept of home ownership. How many people make the decision to buy a house solely on getting that tax break? Admittedly, quite a few at the bottom end of the price ladder are heavily influenced by tax considerations. You just have look at the positive influence of the first time buyer tax credit and the negative impact on sales when it ended. Remember, too, that first-time buyers have made up between 40-50% of the overall homebuyer pool for well over a year.
So, tax policies do make a difference for first- time buyers. I can accept that; and, maybe the argument should be that we only need some form of low-end, entry-level buyer tax credit policy to get people started in the real estate market. There may also be a logical argument that the mortgage deduction incentive contributed to the housing bubble and subsequent bust by obscuring the true cost of housing and encouraging people to spend more than they really could afford. That was the good old pitch, “Hey I know the price is a stretch, but you’ll get it back in tax write-offs.”
But, does it follow that home ownership itself is under attack because the politicians are looking for more ways to pick our pockets again? Not really. The tax break is correctly identified in the article as an incentive. It was devised by the government in 1913 (along with the income tax, by the way) to provide incentive to people to own their own homes. For a good read on the topic click here. So let’s be clear. It is not a right. It is an incentive. Just like entitlement programs aren’t rights for the people who make use of them, neither is this tax break. Too many people have become confused about entitlements and incentives being “their right.” There’s probably a whole post that could be written just on that topic alone.
The NAR article had a call to action for Realtors to get out there and start pushing the advantages of home ownership. I think we all have always done that, just not primarily in tax code terms. Home ownership is a wonderful privilege in this country. I’m pretty sure that the founding fathers didn’t include any right to a tax break for that privilege. We should be espousing homeownership for reasons of security, comfort, and peace of mind – all of the things in the NAR video - not because of tax breaks. Hopefully, soon, we’ll be able to add that it’s a good investment back on the list. The sky is not falling. That’s my two cents worth.
Having said that; I read with interest the article in the November/December issue of REALTOR®, the bi-monthly magazine published by the National Association of Realtors (NAR), that had the front cover headline “Defending Home Ownership.” Inside the headline was “Countering the Critics.” While there were some thoughts expressed about the value to the community and the country of people owning their own homes, rather then renting; those thoughts were not fleshed out in the article.
Instead the NAR article was really just an overly simplistic explanation of the issue and some fear tactics aimed at heading off the political movement that is afoot to look at ending the mortgage interest tax credit – a sacred cow for the real estate and mortgage industries. Perhaps NAR hired some of the negative ads campaign writers from the recently completed elections to write this warning that the sky is falling.
There were of course some “facts” presented, such as the percentage of taxes that home owners pay each year (pegged at 80-90%) and an estimate by Lawrence Yun, the NAR Economist, of the potential negative impact on home values (pegged at 15% in the article), if the tax credit is removed and savvy buyers start factoring the value of homes, based upon lost tax advantages. Interestingly no facts were presented in the article about what percentage of home owners own their homes outright and thus get no benefit from this tax break.
According to Wikipedia, 67.8% of all occupied housing units are occupied by the unit's owner – the homeowner. A quick scan of Google returned the “fact” that 40% of all homeowners have no mortgage on their home, so they get no benefit from the mortgage interest deduction tax break. Do the math and that means that 59% of all people get no mortgage tax break. Put another way, as opponents of this tax credit are want to do, a minority (41%) of Americans are being given a tax subsidy by the rest of us taxpayers.
I should add in the interest of full disclosure that I am in that group with no mortgage and, thus, I get no benefit from the mortgage tax credit. I also recall the alarms that were sounded when the government stopped allowing the deduction of interest charged on credit cards. The sky was falling back then, too, and the end of credit as we knew it was direly predicted. Somehow we all survived and we’ll survive this tax policy shift if forced to do so.
What’s really under attack here? It’s not really the concept of home ownership. How many people make the decision to buy a house solely on getting that tax break? Admittedly, quite a few at the bottom end of the price ladder are heavily influenced by tax considerations. You just have look at the positive influence of the first time buyer tax credit and the negative impact on sales when it ended. Remember, too, that first-time buyers have made up between 40-50% of the overall homebuyer pool for well over a year.
So, tax policies do make a difference for first- time buyers. I can accept that; and, maybe the argument should be that we only need some form of low-end, entry-level buyer tax credit policy to get people started in the real estate market. There may also be a logical argument that the mortgage deduction incentive contributed to the housing bubble and subsequent bust by obscuring the true cost of housing and encouraging people to spend more than they really could afford. That was the good old pitch, “Hey I know the price is a stretch, but you’ll get it back in tax write-offs.”
But, does it follow that home ownership itself is under attack because the politicians are looking for more ways to pick our pockets again? Not really. The tax break is correctly identified in the article as an incentive. It was devised by the government in 1913 (along with the income tax, by the way) to provide incentive to people to own their own homes. For a good read on the topic click here. So let’s be clear. It is not a right. It is an incentive. Just like entitlement programs aren’t rights for the people who make use of them, neither is this tax break. Too many people have become confused about entitlements and incentives being “their right.” There’s probably a whole post that could be written just on that topic alone.
The NAR article had a call to action for Realtors to get out there and start pushing the advantages of home ownership. I think we all have always done that, just not primarily in tax code terms. Home ownership is a wonderful privilege in this country. I’m pretty sure that the founding fathers didn’t include any right to a tax break for that privilege. We should be espousing homeownership for reasons of security, comfort, and peace of mind – all of the things in the NAR video - not because of tax breaks. Hopefully, soon, we’ll be able to add that it’s a good investment back on the list. The sky is not falling. That’s my two cents worth.
Saturday, November 13, 2010
Why no lawsuits about this?
There appears to be no real shame about the lousy job on short sales that a few notorious big banks are doing on short-sales. Just as there was little attempt on their part to hide their obvious disdain for earlier programs that the federal government tried to encourage loan modifications, those same big banks are showing less than expected or hoped for backing of short-sales instead of foreclosure. The initial excuses about being surprised and overwhelmed might have worked for the first year or so, but we are well into the 3rd year of this mess and those excuses just don't hold water.
What is surprising is the lack of class action law suits against these banks by their stockholders. Think about the billions that have been lost in stock value for those investors because these banks have completely mismanaged the whole distressed home process. There would seem to be a case to be made that bank management that delayed reacting to this crisis, forwhatever convoluteded reasons, have caused billions in unnecessary losses and thus caused a loss in value of the stock.
Three years in to this foreclosure mess, there are still banks that can't process a simple short-sale offer in less than 2-3 months. We Realtors all know who the worst offenders are and so do their stockholders. Three years in, we still hear the same overwhelmed and understaffed excuses. They can't sell that excuse to us and I wonder how they continue to be able to sell it to their stockholders.
I'm no lawyer and I'm just not sure what the burden of proof would have to be for a stockholder class action suit to succeed. There doesn't seen to be anything so overtly crooked going on that any kind of fraud could be proven and unfortunately management stupidity is probably not justification for a suit; however, there does seem to be enough evidence of a pattern of failure to manage the situation or mimismanagement of the situation that some punishment and compensation for stockholders from management would seem to be in order, especially from those billion dollar bonus managers who have overseen this shipwreck.
I suppose this is just another area in which corporate management is not held accountable in any meaningful way. Banks, especially those that got Federal bailout money, are making money hand over fist off the inflated credit card rates and fees that they were allowed to hike ahead o new regulations, so they are in no mood to dampen their profits by taking the haircuts that they need to take on distressed properties. It's in their interest to turn down short sales and enven to delay foreclosures, rather than take the losses.
So, we seem stuck in this twilight zone where no decision is the best decision and inaction is the best action for the banks. The feds can't seem to get them to do anything; maybe their own stockholders could.
What is surprising is the lack of class action law suits against these banks by their stockholders. Think about the billions that have been lost in stock value for those investors because these banks have completely mismanaged the whole distressed home process. There would seem to be a case to be made that bank management that delayed reacting to this crisis, forwhatever convoluteded reasons, have caused billions in unnecessary losses and thus caused a loss in value of the stock.
Three years in to this foreclosure mess, there are still banks that can't process a simple short-sale offer in less than 2-3 months. We Realtors all know who the worst offenders are and so do their stockholders. Three years in, we still hear the same overwhelmed and understaffed excuses. They can't sell that excuse to us and I wonder how they continue to be able to sell it to their stockholders.
I'm no lawyer and I'm just not sure what the burden of proof would have to be for a stockholder class action suit to succeed. There doesn't seen to be anything so overtly crooked going on that any kind of fraud could be proven and unfortunately management stupidity is probably not justification for a suit; however, there does seem to be enough evidence of a pattern of failure to manage the situation or mimismanagement of the situation that some punishment and compensation for stockholders from management would seem to be in order, especially from those billion dollar bonus managers who have overseen this shipwreck.
I suppose this is just another area in which corporate management is not held accountable in any meaningful way. Banks, especially those that got Federal bailout money, are making money hand over fist off the inflated credit card rates and fees that they were allowed to hike ahead o new regulations, so they are in no mood to dampen their profits by taking the haircuts that they need to take on distressed properties. It's in their interest to turn down short sales and enven to delay foreclosures, rather than take the losses.
So, we seem stuck in this twilight zone where no decision is the best decision and inaction is the best action for the banks. The feds can't seem to get them to do anything; maybe their own stockholders could.
Monday, November 8, 2010
FUD reigns suppreme...
Fear, uncertainty and doubt - the triumvirate that make up FUD seems to be the order of the day in the housing market and indeed in the country's mood overall.
I can't say that I blame people for being fearful about things, maybe about the future. I think the people who do the "Fear This" signs for the back of pickup trucks should do one with Senator Mitch McConell's picture on it. It's a scary thought that this guy is in any position of potential power. I try to find some small comfort in the fact that at least McConell isn't majority leader of anything yet.
Uncertainty about the future wasn't helped much by the recent elections. We now have the devil we don't know in power verses the devil we did know. Is there any more certainty about what Speaker Boehner might do than what we all saw Speaker Pelosi doing? Sure he is less likely to push through big spending bills, but is he more likely to push through a conservative social agenda or worse? I'm not sure which is worse - Pelosi and the Democrats picking my pocket or Boehner and the Tea Party Republicans picking my lifestyle options for me
Doubt about the future is hard to hide. every politician mouths the words, "America's best days are still ahead of her"; but, that's a tough call right now. I'm pretty sure that lots of good days are still ahead of us, but they will be days measured against a new and different set of standards. Many American would be hard pressed right now to state that they see their children being better off than they were, that they are handing the next generation a better place to live in than what they inherited.
The soon-to-be retired auto worker is handing the next generation jobs that start at about 1/2 what he made when he came into the plant. But, at least there are still jobs to hand off. Too many retired manufacturing workers can only relate stories about how great the jobs at the now shuttered factories used to be. Now it is the Sung Lee family in China that proudly sends the next generation off to work in the factory for a good wage.
So, FUD is the order of the day. FUD keeps people from buying that move-up house - how can you be expected to move up when you fear that you might be in the next round of layoffs. FUD keeps people from being mobile enough to go to where the jobs are - after all you can't ever be certain that you can sell your current home for anywhere near what you need to pay off the mortgage; in fact, I doubt it. And FUD is still keeping many on the sidelines because they doubt that we've bottomed out yet. Just because some economist clowns in Washington have declared that the Great Recession ended last year doesn't mean that it feels like it on Main St., USA.
So, what is the cure for FUD? Hope is the best medicine for this debilitating condition. Hope for a more stable environment. Hope for a better tomorrow. Hope is built on two things - acceptance of the here and now and faith. If you can't accept the current state, then you don't have a foundation upon which to base your hope for a better tomorrow - you are still struggling with denial. And, if you don't have faith, then you have to face the daunting task of creating that better tomorrow alone. People with faith know that they are never alone and that gives them hope. So, what's the future for us all? I'm hopeful.
I can't say that I blame people for being fearful about things, maybe about the future. I think the people who do the "Fear This" signs for the back of pickup trucks should do one with Senator Mitch McConell's picture on it. It's a scary thought that this guy is in any position of potential power. I try to find some small comfort in the fact that at least McConell isn't majority leader of anything yet.
Uncertainty about the future wasn't helped much by the recent elections. We now have the devil we don't know in power verses the devil we did know. Is there any more certainty about what Speaker Boehner might do than what we all saw Speaker Pelosi doing? Sure he is less likely to push through big spending bills, but is he more likely to push through a conservative social agenda or worse? I'm not sure which is worse - Pelosi and the Democrats picking my pocket or Boehner and the Tea Party Republicans picking my lifestyle options for me
Doubt about the future is hard to hide. every politician mouths the words, "America's best days are still ahead of her"; but, that's a tough call right now. I'm pretty sure that lots of good days are still ahead of us, but they will be days measured against a new and different set of standards. Many American would be hard pressed right now to state that they see their children being better off than they were, that they are handing the next generation a better place to live in than what they inherited.
The soon-to-be retired auto worker is handing the next generation jobs that start at about 1/2 what he made when he came into the plant. But, at least there are still jobs to hand off. Too many retired manufacturing workers can only relate stories about how great the jobs at the now shuttered factories used to be. Now it is the Sung Lee family in China that proudly sends the next generation off to work in the factory for a good wage.
So, FUD is the order of the day. FUD keeps people from buying that move-up house - how can you be expected to move up when you fear that you might be in the next round of layoffs. FUD keeps people from being mobile enough to go to where the jobs are - after all you can't ever be certain that you can sell your current home for anywhere near what you need to pay off the mortgage; in fact, I doubt it. And FUD is still keeping many on the sidelines because they doubt that we've bottomed out yet. Just because some economist clowns in Washington have declared that the Great Recession ended last year doesn't mean that it feels like it on Main St., USA.
So, what is the cure for FUD? Hope is the best medicine for this debilitating condition. Hope for a more stable environment. Hope for a better tomorrow. Hope is built on two things - acceptance of the here and now and faith. If you can't accept the current state, then you don't have a foundation upon which to base your hope for a better tomorrow - you are still struggling with denial. And, if you don't have faith, then you have to face the daunting task of creating that better tomorrow alone. People with faith know that they are never alone and that gives them hope. So, what's the future for us all? I'm hopeful.
Saturday, November 6, 2010
Is it oxymoronic?
I passed a sign along side the road today that advertised Affordable Bankruptcies. Is that an oxymoron? I think so. What would happen if the person that was trying to get an affordable bankruptcy couldn’t afford to pay for it? Would the lawyer’s fee be added to the debtors list for that bankruptcy? Inquiring minds want to know.
Certainly the term short sale is an oxymoron if not completely oxymoronic. There’s nothing short about these sales and it’s getting worse. I’ve just had a bank that my client has been waiting to hear back from for 4 months come back and tell us that we have to close in 15 days. It’s not some cheap cash sale and the bank has known all along (or should have known as lawyers are want to say) that the buyers needs to get an FHA mortgage approved. That’s just moronic. The FHA mortgage people don’t even open the appraisal request to look at it within 15 days.
And now the foreclosure market is in such disarray that the best advice for many people facing foreclosure may be to wait it out. Some of those banks may never get things straightened up to where they can actually foreclose; especially if they were one of the ones that shredded the original mortgage documents when they went to electronic forms. I think every homeowner facing foreclosure anywhere in the U.S. should demand to see the written proof that the Electronic Registrant trying to evict them actually hold the mortgage that they signed. Since they want you to show them the money, maybe you should reply “show me the mortgage.”
In other real estate news, Bloomberg reported the following - The National Association of Realtors’ index of pending home resales dropped 1.8 percent after a revised 4.4 percent gain the prior month. Compared with the same month a year ago, pending sales were down 25 percent. Moratoriums on foreclosure and stricter lending are limiting progress, the group said.
The report went on to say that purchases have steadied after a 32 percent plunge in the months following the April expiration of a government home buyer tax credit. Mortgage rates near a record low have failed to stoke demand because foreclosures are depressing prices and unemployment is stuck above 9 percent.
In Michigan we are stuck above 13% unemployment and boy do we have a foreclosure and short-sale problem in the market. Right around 50% of all home sales for 2010 have been either foreclosures or short-sales. Distressed homes still make up a large percentage of the total listed homes, too. It’s been happy hunting for first-time buyers and investors for all of 2010.
Certainly the term short sale is an oxymoron if not completely oxymoronic. There’s nothing short about these sales and it’s getting worse. I’ve just had a bank that my client has been waiting to hear back from for 4 months come back and tell us that we have to close in 15 days. It’s not some cheap cash sale and the bank has known all along (or should have known as lawyers are want to say) that the buyers needs to get an FHA mortgage approved. That’s just moronic. The FHA mortgage people don’t even open the appraisal request to look at it within 15 days.
And now the foreclosure market is in such disarray that the best advice for many people facing foreclosure may be to wait it out. Some of those banks may never get things straightened up to where they can actually foreclose; especially if they were one of the ones that shredded the original mortgage documents when they went to electronic forms. I think every homeowner facing foreclosure anywhere in the U.S. should demand to see the written proof that the Electronic Registrant trying to evict them actually hold the mortgage that they signed. Since they want you to show them the money, maybe you should reply “show me the mortgage.”
In other real estate news, Bloomberg reported the following - The National Association of Realtors’ index of pending home resales dropped 1.8 percent after a revised 4.4 percent gain the prior month. Compared with the same month a year ago, pending sales were down 25 percent. Moratoriums on foreclosure and stricter lending are limiting progress, the group said.
The report went on to say that purchases have steadied after a 32 percent plunge in the months following the April expiration of a government home buyer tax credit. Mortgage rates near a record low have failed to stoke demand because foreclosures are depressing prices and unemployment is stuck above 9 percent.
In Michigan we are stuck above 13% unemployment and boy do we have a foreclosure and short-sale problem in the market. Right around 50% of all home sales for 2010 have been either foreclosures or short-sales. Distressed homes still make up a large percentage of the total listed homes, too. It’s been happy hunting for first-time buyers and investors for all of 2010.
Wednesday, November 3, 2010
Cue the fat lady...
Thank goodness the madness we call politics in America is over for this year. Pull the ads, pick up the yard signs and cue the fat lady. Now we can all have fun watching America greatest reality show - Congress in action (or maybe that should have been inaction). The Republicans won control of the House of Representatives, but they don't have control of the 800-pound gorilla in the room - the Tea Party.
All-in-all the uber conservatives did well, which speaks to the level of dissatisfaction in the electorate more than anything. It seemed a bit easier for them to campaign for things they were against than to provide any insight into what things they might do to change the status quo. There was lively debate going on as the TV commentators watched the results come in on whether or not one Tea Party winner in particular might choose to stand on principal and shut the U.S. Government down rather than vote for the necessary increase in the federal government spending cap, thus adding more debt. We shall see.
I got a kick out of the interview with the Democratic Party Chairman on one network when he was asked what the message was that he was hearing from this stinging defeat for the Democrats. His reply was classic political evasion of the topic. He replied that the American people were obviously telling all politicians that they must work together, rather than continuing the bickering and stalemate in Congress. This is like a fighter who just got his butt kicked getting up off the canvas and stating that his defeat obviously signals the need for more friendship and cooperation among pugilists, so that they can present a more unified show for the fight fans. Fights are as unlikely to move towards "Dancing with the Stars" presentations, with smiles all around; as are legislative sessions in Washington to become bipartisan love fests
So the American public fired Nancy Pelosi as Speaker of the House; but, retained Harry Reid as Majority Leader in the Senate. We also have a conservative father-son team in Congress - the Pauls, Ron and Rand. They could prove to be a hand full for the leadership of both bodies and should provide many entertaining moments in the months ahead. Maybe C-Span will become the new reality TV leader.
In Michigan we have put a non-politician businessman into the governors office, surrounded by a legislature full of amateurs. That will be interesting to watch, too. Rick Snyder ran on a theme of "hire me to be the next governor", as if the governors office is a CEO position. To a certain extent it is, and I wish him well in trying to bring good business practices into the state governing process. Good luck with the union contracts and huge pension liabilities that you've just inherited Governor.
So the "throw the bums out" movement worked in many places and now we can all watch to see if the new occupants turn out to be bums, too. I have this uneasy feeling, lurking in the back of my mind, that says telling me it's a bunch of different faces but the results at my level will largely be the same. I hope I'm wrong
.
All-in-all the uber conservatives did well, which speaks to the level of dissatisfaction in the electorate more than anything. It seemed a bit easier for them to campaign for things they were against than to provide any insight into what things they might do to change the status quo. There was lively debate going on as the TV commentators watched the results come in on whether or not one Tea Party winner in particular might choose to stand on principal and shut the U.S. Government down rather than vote for the necessary increase in the federal government spending cap, thus adding more debt. We shall see.
I got a kick out of the interview with the Democratic Party Chairman on one network when he was asked what the message was that he was hearing from this stinging defeat for the Democrats. His reply was classic political evasion of the topic. He replied that the American people were obviously telling all politicians that they must work together, rather than continuing the bickering and stalemate in Congress. This is like a fighter who just got his butt kicked getting up off the canvas and stating that his defeat obviously signals the need for more friendship and cooperation among pugilists, so that they can present a more unified show for the fight fans. Fights are as unlikely to move towards "Dancing with the Stars" presentations, with smiles all around; as are legislative sessions in Washington to become bipartisan love fests
So the American public fired Nancy Pelosi as Speaker of the House; but, retained Harry Reid as Majority Leader in the Senate. We also have a conservative father-son team in Congress - the Pauls, Ron and Rand. They could prove to be a hand full for the leadership of both bodies and should provide many entertaining moments in the months ahead. Maybe C-Span will become the new reality TV leader.
In Michigan we have put a non-politician businessman into the governors office, surrounded by a legislature full of amateurs. That will be interesting to watch, too. Rick Snyder ran on a theme of "hire me to be the next governor", as if the governors office is a CEO position. To a certain extent it is, and I wish him well in trying to bring good business practices into the state governing process. Good luck with the union contracts and huge pension liabilities that you've just inherited Governor.
So the "throw the bums out" movement worked in many places and now we can all watch to see if the new occupants turn out to be bums, too. I have this uneasy feeling, lurking in the back of my mind, that says telling me it's a bunch of different faces but the results at my level will largely be the same. I hope I'm wrong
.
Tuesday, November 2, 2010
The trouble with “guidance”…
I promise this will be the end of this election year rant. I have been receiving lots of “voting guidance” lately. Fortunately that will end tonight; however, my aversion to people attempting to guide me during any election will not end. There are few, if any, really intelligent voting information sites or articles or “guidance” available in any election and especially not in this one. All of the so-called guidance sites are not even thinly disguised attempts by highly biased groups to get people to see the world and their voting choices the same way as their group or block or cult sees it.
The message is always the same – you are intelligent and a real patriot of you see things this way and vote for our candidate; otherwise you are probably a socialist dirt bag and maybe an American-hating Al Qiada sympathizer. Or perhaps you are an ultra conservative Nazi out to make raped women have unwanted babies that threaten their very lives. Either way you are obviously unfit to call yourself an American unless you vote with us.
The real problem seems to me to be that we have, as a nation, become so polarized that is no room in the middle for thoughtful discussion of issues. You are either a conservative buffoon or a liberal idiot, with no in between - no middle ground – no moderate views allowed. You are either a Tea Party Patriot or a flaming Socialist. There are no liberal Republicans left and few conservative Democrats willing to raise their voices. Logic and civility have been quashed under the jack boots of extreme ideology.
The Tea Party has even dusted off old Joe McCarthy and said, “You know, he may have had the right idea.” So, maybe we’re ready for a Joe McCarthy for President kind of candidate. Maybe we need to elect someone so radically far right that they really would do away with the Federal Reserve and Social Security and Medicare and all of the other social and welfare programs and take the country into a kind of no-government is good government state of anarchy.
Everybody could get a gun and just hunker down at home protecting their own and shooting anyone who threatened their peace and quiet; while the Federal Government did as little as possible (aside of course from having the Army shut off the board with Mexico to stop the flow of illegals in to the country. We could seal off Fortress America from the outside world and turn inward. We wouldn’t need anything from anyone. Oh, wait; darn, North Korea has already taken that part on the global stage. Rats! We’ll have to think of something else.
Where’s that Constitution thingy. Let’s take another look at that and see if we can start fresh again. Where’s the part in there about passing a party litmus test on religion or abortion in order to be elected? And where in the Bill of Rights does it talk about entitlement programs becoming rights. Where did our insightful forefathers place the words that define providing health care for every citizen as socialism?
I guess I do need some guidance, but I’m not sure that the guidance being offered by the various political parties and activist groups provides much help. Barry Goldwater was roundly criticized by liberals when he said that “extremism in defense of liberty is no vice”, but he also said, “To disagree, one doesn't have to be disagreeable.” Barry turned out to be right about more than he was wrong about and would probably find today’s political environment to be very disagreeable.
The message is always the same – you are intelligent and a real patriot of you see things this way and vote for our candidate; otherwise you are probably a socialist dirt bag and maybe an American-hating Al Qiada sympathizer. Or perhaps you are an ultra conservative Nazi out to make raped women have unwanted babies that threaten their very lives. Either way you are obviously unfit to call yourself an American unless you vote with us.
The real problem seems to me to be that we have, as a nation, become so polarized that is no room in the middle for thoughtful discussion of issues. You are either a conservative buffoon or a liberal idiot, with no in between - no middle ground – no moderate views allowed. You are either a Tea Party Patriot or a flaming Socialist. There are no liberal Republicans left and few conservative Democrats willing to raise their voices. Logic and civility have been quashed under the jack boots of extreme ideology.
The Tea Party has even dusted off old Joe McCarthy and said, “You know, he may have had the right idea.” So, maybe we’re ready for a Joe McCarthy for President kind of candidate. Maybe we need to elect someone so radically far right that they really would do away with the Federal Reserve and Social Security and Medicare and all of the other social and welfare programs and take the country into a kind of no-government is good government state of anarchy.
Everybody could get a gun and just hunker down at home protecting their own and shooting anyone who threatened their peace and quiet; while the Federal Government did as little as possible (aside of course from having the Army shut off the board with Mexico to stop the flow of illegals in to the country. We could seal off Fortress America from the outside world and turn inward. We wouldn’t need anything from anyone. Oh, wait; darn, North Korea has already taken that part on the global stage. Rats! We’ll have to think of something else.
Where’s that Constitution thingy. Let’s take another look at that and see if we can start fresh again. Where’s the part in there about passing a party litmus test on religion or abortion in order to be elected? And where in the Bill of Rights does it talk about entitlement programs becoming rights. Where did our insightful forefathers place the words that define providing health care for every citizen as socialism?
I guess I do need some guidance, but I’m not sure that the guidance being offered by the various political parties and activist groups provides much help. Barry Goldwater was roundly criticized by liberals when he said that “extremism in defense of liberty is no vice”, but he also said, “To disagree, one doesn't have to be disagreeable.” Barry turned out to be right about more than he was wrong about and would probably find today’s political environment to be very disagreeable.
Maybe there still wisdom in some of those old sayings that came from writings even further back than our Constitution.
Monday, November 1, 2010
The moment is at hand...
The moment of truth in politics is at hand...the day we finally get to vote and bring an end to the madness of all of those rancid TV ads. The voting process is as much about ending the mud slinging as anything.
I'm one of those dreaded Independent voters, not willing to be permanently labeled with the identity of either of the political parties. As much as anything that is because both seem to have drifted off to the extreme edges of the philosophical ideologies that they espouse. Both seem to have various litmus tests that they apply to test the purity of thought and commitment that one might have towards their agendas. I refuse to play that game
I try to look at the candidates and discern how they might think out and vote on future issues, based upon their past records or public statements. That's a difficult task, given the amount of negative information, many times inaccurate or colored in its delivery, that fill the airways during the campaigns. I try to vote for the best people for the job, no matter which party they happen to align themselves with for purposes of getting on the ballot.
This year we are also seeing lots of candidates run for office who have never held elected offices before. There have been numerous articles written about whether that is a good or bad thing, with most leaning towards bad, since some level of political savvy is deemed to be a good thing. While I suppose having some understanding about how things work in government could be a good thing; many of these candidates quite correctly point out that things haven't exactly been working well for some time using the old methods. Perhaps there is value in having a bunch of new people in office who are not necessarily bound by "how things work around here."
So, tomorrow I'll go to the polls armed with what knowledge about the candidates as I've been able to discern in the din of political shouting. I'll cast my votes for some candidates from either party and maybe even for some that don't identify with either party. I'm sure that not all of the candidates that I vote for will win, but I'll feel like I did my part to uphold the original intent of the democracy that we live in - I will have voted. You should, too.
I'm one of those dreaded Independent voters, not willing to be permanently labeled with the identity of either of the political parties. As much as anything that is because both seem to have drifted off to the extreme edges of the philosophical ideologies that they espouse. Both seem to have various litmus tests that they apply to test the purity of thought and commitment that one might have towards their agendas. I refuse to play that game
I try to look at the candidates and discern how they might think out and vote on future issues, based upon their past records or public statements. That's a difficult task, given the amount of negative information, many times inaccurate or colored in its delivery, that fill the airways during the campaigns. I try to vote for the best people for the job, no matter which party they happen to align themselves with for purposes of getting on the ballot.
This year we are also seeing lots of candidates run for office who have never held elected offices before. There have been numerous articles written about whether that is a good or bad thing, with most leaning towards bad, since some level of political savvy is deemed to be a good thing. While I suppose having some understanding about how things work in government could be a good thing; many of these candidates quite correctly point out that things haven't exactly been working well for some time using the old methods. Perhaps there is value in having a bunch of new people in office who are not necessarily bound by "how things work around here."
So, tomorrow I'll go to the polls armed with what knowledge about the candidates as I've been able to discern in the din of political shouting. I'll cast my votes for some candidates from either party and maybe even for some that don't identify with either party. I'm sure that not all of the candidates that I vote for will win, but I'll feel like I did my part to uphold the original intent of the democracy that we live in - I will have voted. You should, too.
Saturday, October 30, 2010
Black, white or some shade of grey?
I’m not normally a shades-of-grey type of person. Generally if there is a clear right and wrong, a stop or go, or a black or white decision to be made I tend towards not seeing shades of grey in the situation that will allow the “little white lie” excuse. There normally aren’t any little white lies... just lies.
Having said that, the current housing situation, coupled with the horrendous economy in our area has had me thinking in shades of grey, in terms of advising clients with distressed houses. This is especially the case if they have already tried one or more of the failed federal programs to help distressed homeowners. Those programs, while well-intentioned, were ill-conceived, poorly executed and never bought into by the lenders involved.
So is it wrong to tell someone to just go ahead and ride out the foreclosure process and let the bank have the house? What about if they and you have tried everything already – a loan mod, a short-sale and appeals to the bank? Is there any rationale to advising them to strip themselves of any and all savings, retirement funds or college funds in a vain attempt to avoid the stigma of a foreclosure? I think not.
The market has already dealt with the most egregious offenders – those who vastly over-reached or lied on mortgage apps. They were the first victims of the downturn and perhaps rightfully so. Now we are seeing the people being displaced who were OK before the bottom dropped out of everything. These are people who had good jobs and got reasonable mortgages on homes that might have been inflated in value, but which represented the market at the time. These are our neighbors and friends and relatives, not a bunch of deadbeats.
Now we are seeing the results of the economy not only destroying the value of our homes but causing an unprecedented level of unemployment, with no end in sight. More and more I talk with or read about the ex-automotive engineers or factory workers in our area who have been out of work for 1-2 years, sometimes longer. They are the type of people who did burn through their 401K money or college funds trying to stay afloat and trying to keep their homes. They also are the ones that initially trusted that the federal programs to assist them would work – until they tried to use them. Now they go to Tea Party rallies and shout slogans about government being too big and taxes being too high.
So, what are we to do when a client with almost no chance of selling (even with a short-sale), asks us what they should do? Obviously we have an obligation to advise them to seek legal advice and financial counseling; but, should we also render an opinion on their options? Most of us have some level of experience with the bigger banks and how they deal with distressed home situations. A few are OK; but, most are so understaffed and overwhelmed that the whole process is broken right now. I find it hard not to empathize with the poor, tapped-out homeowner who has tried and failed to get any real relief from his/her lender.
I know that the consequences of a foreclosure are bad and I usually point them to several articles that outline what the impact, both short and long term, will be. Even a short sale has credit consequences and there are still many stories, rumors or urban legends of lenders going after short sellers for the deficiencies. So, it’s hard to find a happy ending to talk about with these people. In the end it can come down to this – do what you have to do to take care of your family and yourself in these hard times. If that means riding out a foreclosure on a house that will otherwise take you under, then so be it.
I’ll tell them about the foreclosure process, so that they understand what is coming, how much time they have left in the house, what to expect the lender to try to do and maybe point them to some advice on what you can do to start rebuilding your credit. I can help them find a place to rent for their family. I’m not going to look at them and go “tsk, tsk, what a deadbeat”; instead I’ll take a moment to reflect – “there, but by the grace of God, go I.”
Having said that, the current housing situation, coupled with the horrendous economy in our area has had me thinking in shades of grey, in terms of advising clients with distressed houses. This is especially the case if they have already tried one or more of the failed federal programs to help distressed homeowners. Those programs, while well-intentioned, were ill-conceived, poorly executed and never bought into by the lenders involved.
So is it wrong to tell someone to just go ahead and ride out the foreclosure process and let the bank have the house? What about if they and you have tried everything already – a loan mod, a short-sale and appeals to the bank? Is there any rationale to advising them to strip themselves of any and all savings, retirement funds or college funds in a vain attempt to avoid the stigma of a foreclosure? I think not.
The market has already dealt with the most egregious offenders – those who vastly over-reached or lied on mortgage apps. They were the first victims of the downturn and perhaps rightfully so. Now we are seeing the people being displaced who were OK before the bottom dropped out of everything. These are people who had good jobs and got reasonable mortgages on homes that might have been inflated in value, but which represented the market at the time. These are our neighbors and friends and relatives, not a bunch of deadbeats.
Now we are seeing the results of the economy not only destroying the value of our homes but causing an unprecedented level of unemployment, with no end in sight. More and more I talk with or read about the ex-automotive engineers or factory workers in our area who have been out of work for 1-2 years, sometimes longer. They are the type of people who did burn through their 401K money or college funds trying to stay afloat and trying to keep their homes. They also are the ones that initially trusted that the federal programs to assist them would work – until they tried to use them. Now they go to Tea Party rallies and shout slogans about government being too big and taxes being too high.
So, what are we to do when a client with almost no chance of selling (even with a short-sale), asks us what they should do? Obviously we have an obligation to advise them to seek legal advice and financial counseling; but, should we also render an opinion on their options? Most of us have some level of experience with the bigger banks and how they deal with distressed home situations. A few are OK; but, most are so understaffed and overwhelmed that the whole process is broken right now. I find it hard not to empathize with the poor, tapped-out homeowner who has tried and failed to get any real relief from his/her lender.
I know that the consequences of a foreclosure are bad and I usually point them to several articles that outline what the impact, both short and long term, will be. Even a short sale has credit consequences and there are still many stories, rumors or urban legends of lenders going after short sellers for the deficiencies. So, it’s hard to find a happy ending to talk about with these people. In the end it can come down to this – do what you have to do to take care of your family and yourself in these hard times. If that means riding out a foreclosure on a house that will otherwise take you under, then so be it.
I’ll tell them about the foreclosure process, so that they understand what is coming, how much time they have left in the house, what to expect the lender to try to do and maybe point them to some advice on what you can do to start rebuilding your credit. I can help them find a place to rent for their family. I’m not going to look at them and go “tsk, tsk, what a deadbeat”; instead I’ll take a moment to reflect – “there, but by the grace of God, go I.”
Tuesday, October 26, 2010
Do only scoundrels run?
Have you noticed that it seems that only scoundrels and scumbags run for public office - at least according to the ads being run as we near the election. There doesn't seem to be an honest person among the candidates, or so their opponents claim. Some apparently have lied about lots of important things, whether it be about their backgrounds or their military service or whether they knew (or should have known) about some malfeasance by their campaign staffs. Others have apparently voted for stuff in Washington that many (or at least their opponents) feel is bad for us or associated too closely with people in Washington that some consider to be dangerous to the well being of America.
It's a a little hard to sort out the truth in the calliope of ads, all claiming the the other guy is a crook or worse. Occasionally it seems like one candidate or another will get close to actually saying something positive about what he/she might do in Washington, if elected; however, it appears to be bad form to be too specific, since someone might try to hold you accountable for those statement later and call you a liar if you do do those things.
Of course a number of ads by so-called political action committees or other groups who are not supposedly associated with one candidate or another, try to be helpful by pointing out which candidates are likely to threaten you family and your very way of life, if they are elected. As best as I can tell, if we elect any of these bozos we're in big trouble; but don't say you heard that here. The best thing that I can say about this election is thankfully it will be over soon and we can get back to our regularly scheduled ED and laxative or stop peeing so much ads. Some how crass ads about bodily functions will be an improvement over the slime that is being spread right now.
Even judges, all the way to the top state court judges, seem happy to wallow in the mud at this time of the year, which makes the fact that judges are elected on partisan ballots even more disturbing than it already is. I'm sure that not all politicians are scoundrels or scumbags, but it does seem that a fairly large number deserve the handle during the mean season of elections. Morals and ethics seem to take a back seat to the "do anything and say anything to win" mentality. Civility would seem to be fading in our society and it is being pushed into the background along with the truth, logic and honesty. It is fortunate for the politicians that these personal traits are not required to hold the offices they are seeking either.
It's a a little hard to sort out the truth in the calliope of ads, all claiming the the other guy is a crook or worse. Occasionally it seems like one candidate or another will get close to actually saying something positive about what he/she might do in Washington, if elected; however, it appears to be bad form to be too specific, since someone might try to hold you accountable for those statement later and call you a liar if you do do those things.
Of course a number of ads by so-called political action committees or other groups who are not supposedly associated with one candidate or another, try to be helpful by pointing out which candidates are likely to threaten you family and your very way of life, if they are elected. As best as I can tell, if we elect any of these bozos we're in big trouble; but don't say you heard that here. The best thing that I can say about this election is thankfully it will be over soon and we can get back to our regularly scheduled ED and laxative or stop peeing so much ads. Some how crass ads about bodily functions will be an improvement over the slime that is being spread right now.
Even judges, all the way to the top state court judges, seem happy to wallow in the mud at this time of the year, which makes the fact that judges are elected on partisan ballots even more disturbing than it already is. I'm sure that not all politicians are scoundrels or scumbags, but it does seem that a fairly large number deserve the handle during the mean season of elections. Morals and ethics seem to take a back seat to the "do anything and say anything to win" mentality. Civility would seem to be fading in our society and it is being pushed into the background along with the truth, logic and honesty. It is fortunate for the politicians that these personal traits are not required to hold the offices they are seeking either.
Monday, October 25, 2010
Biting the bullet…
I’ve noticed for the last couple of months that more and more home sales involve prices that are less than what it appears the homeowners owe (at least from the public records anyway) and yet are shown as not short-sales. My own experience this year representing underwater homeowners verifies this trend. Many underwater homeowners are biting the bullet and bringing money to the table to close of the sale of their homes, sometime quite a bit of money.
Most of these sales involve homeowners who wanted to (or needed to) move in order to get on with life. Perhaps the sales were caused by job changes or maybe family changes (it’s amazing how that small bungalow that felt so right for just the two of you when you were first married gets feeling cramped when the second baby comes along). For whatever reasons these homeowners decided to sell, not matter what the financial consequences. So they bit the bullet, sometimes a quite large bullet, just to get out from under that first house mortgage.
In my little market area the percentage of homes sold as distressed – foreclosed or short-sales- has fallen from an average of 50+% earlier in the year to less than 40% for the last three months. That’s the good news. It’s hard to gauge accurately the number of sales that are taking place that involve loses that the seller is absorbing; however, I look at each sale to see if the sale price is at lease at or above the last recorded mortgage level (assuming that the mortgage was taken out within the last 5 years). My gut feel is that 30-40% of the non-distressed sales were made for less than what was owed. That means that those home sellers were biting the bullet and absorbing the value loss themselves.
What is the long term impact of this? Well, for one, it also means that those same people had less money available to make a down payment on something else. Either they went into an apartment or other rental property for a while or they bought something of much less value, since they had little to put down after stripping their savings to get out from under the old house. In either case the long term impact was not good. There loss on the sale will ripple through the economy one way or the other. They won’t show up in the deadbeat statistics, but they will show up in the spending less (because they had less) categories across the board.
What does this all mean? Well me often have heard or read about the “shadow inventory” of distressed homes (foreclosures or the pre-foreclosure inventory that is yet to hit the market). We also have a huge overhang of unrealized losses in America that is just not going to go away anytime soon. We have people who are hanging on, paying their mortgages and hoping/praying/waiting for the values to come back on their homes. Folks, that ain’t gonna happen. That value is gone. At best, if we return soon to historic rates of appreciation (which is certainly not guaranteed) is will take 10 years or better to regain the lost values back to the levels of 2004 (of they ever get that high again).
So, is it time to bite the bullet? Well, I would ask, “Do you have a good reason to sell now?” If so, bite away; because, it will do you little good to try a short-term wait. It’s just not going to matter. What may matter more is that whatever loss you take on the sell side you can partially make up (more than make up if you are upgrading) on the buy side. If you are downsizing because you have retired or taken a downgrade in jobs, hold on to your old house if you can (and have a good mortgage rate) or bite the bullet now and get out from under it before it drags you under. Talk to your financial advisor to figure out the best way to access the money you need to make up the difference between what you an get for it now and what you owe.
Most of these sales involve homeowners who wanted to (or needed to) move in order to get on with life. Perhaps the sales were caused by job changes or maybe family changes (it’s amazing how that small bungalow that felt so right for just the two of you when you were first married gets feeling cramped when the second baby comes along). For whatever reasons these homeowners decided to sell, not matter what the financial consequences. So they bit the bullet, sometimes a quite large bullet, just to get out from under that first house mortgage.
In my little market area the percentage of homes sold as distressed – foreclosed or short-sales- has fallen from an average of 50+% earlier in the year to less than 40% for the last three months. That’s the good news. It’s hard to gauge accurately the number of sales that are taking place that involve loses that the seller is absorbing; however, I look at each sale to see if the sale price is at lease at or above the last recorded mortgage level (assuming that the mortgage was taken out within the last 5 years). My gut feel is that 30-40% of the non-distressed sales were made for less than what was owed. That means that those home sellers were biting the bullet and absorbing the value loss themselves.
What is the long term impact of this? Well, for one, it also means that those same people had less money available to make a down payment on something else. Either they went into an apartment or other rental property for a while or they bought something of much less value, since they had little to put down after stripping their savings to get out from under the old house. In either case the long term impact was not good. There loss on the sale will ripple through the economy one way or the other. They won’t show up in the deadbeat statistics, but they will show up in the spending less (because they had less) categories across the board.
What does this all mean? Well me often have heard or read about the “shadow inventory” of distressed homes (foreclosures or the pre-foreclosure inventory that is yet to hit the market). We also have a huge overhang of unrealized losses in America that is just not going to go away anytime soon. We have people who are hanging on, paying their mortgages and hoping/praying/waiting for the values to come back on their homes. Folks, that ain’t gonna happen. That value is gone. At best, if we return soon to historic rates of appreciation (which is certainly not guaranteed) is will take 10 years or better to regain the lost values back to the levels of 2004 (of they ever get that high again).
So, is it time to bite the bullet? Well, I would ask, “Do you have a good reason to sell now?” If so, bite away; because, it will do you little good to try a short-term wait. It’s just not going to matter. What may matter more is that whatever loss you take on the sell side you can partially make up (more than make up if you are upgrading) on the buy side. If you are downsizing because you have retired or taken a downgrade in jobs, hold on to your old house if you can (and have a good mortgage rate) or bite the bullet now and get out from under it before it drags you under. Talk to your financial advisor to figure out the best way to access the money you need to make up the difference between what you an get for it now and what you owe.
Sunday, October 24, 2010
Holding companies accountable...
Being held accountable – what a concept!
Source: Dow Jones Business News, Jared A. Favole (10/20/2010)
U.S. Secretary of Housing and Urban Development Shaun Donovan said Wednesday that the onus is on banks to fix whatever foreclosure-related problems are found.
Donovan, who made the statement during a White House briefing about the matter, said problems found thus far haven’t appeared to be very serious, but the full investigation won’t be finished until the end of the year. If more serious problems are found, possible penalties could include fines and a ban against writing mortgages for more serious violations, he added
What a concept – holding those who seriously abuse the public’s trust accountable. One can only wonder what would happen if this concept caught on?
I can see it now. Headlines that read -
The U.S. Transportation Department today banned Toyota from selling cars in the United States because of serious problems with how they handled safety issues and recalls.
The top 5 U.S. investment banks were suspended today from making further sales of derivative products because of past fraudulent or inaccurate sales claims made by their employees.
Both major political parties and several large political action committees were today banned from placing any further television commercials based upon the misleading nature and blatant lies of their past commercials.
Recruiting for all of the U.S. armed forces was suspended today until the Pentagon can produce a coherent policy for gays in the military. The Pentagon immediately denied being incoherent and said of course there is room for happy people in the military.
The U.S. Supreme Court today ruled that lawyer’s fees for class-action law suits must be restricted to no more than 5% of the overall settlement amount. Over 300,000 class-action law suits were immediately dropped.
A teacher in Ohio was actually fired today for poor performance. The teacher’s union has agreed that the teacher in question not having actually been in the classroom class over the last two years is perhaps grounds for review, but has vowed to fight the termination anyway.
Ahhh, well; we aren’t likely to see any of that, just like we aren’t likely to see any banks banned from again foisting bad loans off on consumers and then getting bailed out. But, it does make for a good headline occasionally, especially in the “feel good” election season.
Source: Dow Jones Business News, Jared A. Favole (10/20/2010)
U.S. Secretary of Housing and Urban Development Shaun Donovan said Wednesday that the onus is on banks to fix whatever foreclosure-related problems are found.
Donovan, who made the statement during a White House briefing about the matter, said problems found thus far haven’t appeared to be very serious, but the full investigation won’t be finished until the end of the year. If more serious problems are found, possible penalties could include fines and a ban against writing mortgages for more serious violations, he added
What a concept – holding those who seriously abuse the public’s trust accountable. One can only wonder what would happen if this concept caught on?
I can see it now. Headlines that read -
The U.S. Transportation Department today banned Toyota from selling cars in the United States because of serious problems with how they handled safety issues and recalls.
The top 5 U.S. investment banks were suspended today from making further sales of derivative products because of past fraudulent or inaccurate sales claims made by their employees.
Both major political parties and several large political action committees were today banned from placing any further television commercials based upon the misleading nature and blatant lies of their past commercials.
Recruiting for all of the U.S. armed forces was suspended today until the Pentagon can produce a coherent policy for gays in the military. The Pentagon immediately denied being incoherent and said of course there is room for happy people in the military.
The U.S. Supreme Court today ruled that lawyer’s fees for class-action law suits must be restricted to no more than 5% of the overall settlement amount. Over 300,000 class-action law suits were immediately dropped.
A teacher in Ohio was actually fired today for poor performance. The teacher’s union has agreed that the teacher in question not having actually been in the classroom class over the last two years is perhaps grounds for review, but has vowed to fight the termination anyway.
Ahhh, well; we aren’t likely to see any of that, just like we aren’t likely to see any banks banned from again foisting bad loans off on consumers and then getting bailed out. But, it does make for a good headline occasionally, especially in the “feel good” election season.
Saturday, October 23, 2010
Dumb and dumber...
Under the heading, “Just When You Thought Things Couldn’t Get Any Dumber” comes this story from the Washington Post -
The freeze on foreclosures is putting federal employees with security clearances in a jam.
The government monitors the finances of employees that it believes could be vulnerable to bribery or blackmail. The foreclosure freeze is preventing these workers from settling their debts, so under government guidelines they could lose their clearances.
There are more than 854,000 employees nationwide potentially affected by this, many of them in the Washington, D.C., area. John P. Mahoney, a lawyer at Tully Rinckey, who specializes in resolving security-clearance problems, says many of the affected workers have had security clearances for years.
"Now they are concerned that their clearance will be pulled, or they will be fired because their real estate investments have gone bad," Mahoney says. "It's a very emotionally charged issue."
Source: The Washington Post, Dina ElBoghdady and Dana Hedgpeth (10/20/2010)
I think it would be an absolute hoot if tomorrow’s headline story was – President Obama has been stranded in California because the pilots for Air Force One and most of his security detail have had their security clearances pulled due to foreclosures on their homes.
Or, maybe we’ll see this story – The FBI today reported that Russians posing as foreclosure rescue specialist have been caught trying to compromise sensitive defense information by promising foreclosure assistance to distressed Federal workers in the Department of Defense in return for state secrets. The Russians all had the coveted CDPE designation and most of them claimed to have a straw buyer already lined up for the properties.
It is more than a little disturbing to see that the number of supposedly irresponsible Federal employees who got themselves in financial difficulty with real estate is 854,000. But I guess that tracks the percentages of the general population. After all how many million workers does the government employ? And of that number, how many need or have security clearances?
In other news from your government at work a new plan has been hatched by the HUD people to help people who can’t find out or figure out who holds their mortgage. Under this new plan, if you can find your mortgage under the right shell you get to refinance or do a short-sale.
So far only three people out of the 142,000 that have played the game have won, but that is ahead of the conversion rate for prior federal programs for homeowners, so it has been declared to be a success.
The freeze on foreclosures is putting federal employees with security clearances in a jam.
The government monitors the finances of employees that it believes could be vulnerable to bribery or blackmail. The foreclosure freeze is preventing these workers from settling their debts, so under government guidelines they could lose their clearances.
There are more than 854,000 employees nationwide potentially affected by this, many of them in the Washington, D.C., area. John P. Mahoney, a lawyer at Tully Rinckey, who specializes in resolving security-clearance problems, says many of the affected workers have had security clearances for years.
"Now they are concerned that their clearance will be pulled, or they will be fired because their real estate investments have gone bad," Mahoney says. "It's a very emotionally charged issue."
Source: The Washington Post, Dina ElBoghdady and Dana Hedgpeth (10/20/2010)
I think it would be an absolute hoot if tomorrow’s headline story was – President Obama has been stranded in California because the pilots for Air Force One and most of his security detail have had their security clearances pulled due to foreclosures on their homes.
Or, maybe we’ll see this story – The FBI today reported that Russians posing as foreclosure rescue specialist have been caught trying to compromise sensitive defense information by promising foreclosure assistance to distressed Federal workers in the Department of Defense in return for state secrets. The Russians all had the coveted CDPE designation and most of them claimed to have a straw buyer already lined up for the properties.
It is more than a little disturbing to see that the number of supposedly irresponsible Federal employees who got themselves in financial difficulty with real estate is 854,000. But I guess that tracks the percentages of the general population. After all how many million workers does the government employ? And of that number, how many need or have security clearances?
In other news from your government at work a new plan has been hatched by the HUD people to help people who can’t find out or figure out who holds their mortgage. Under this new plan, if you can find your mortgage under the right shell you get to refinance or do a short-sale.
So far only three people out of the 142,000 that have played the game have won, but that is ahead of the conversion rate for prior federal programs for homeowners, so it has been declared to be a success.
Friday, October 22, 2010
Just do something...
“Never let what you cannot do stop you from doing what you can do.” (Stephen Pierce—Internet Marketer) from my favorite source for inspirational quotes – the Jack’s Winning Words Blog.
I’ll admit to being a worrier and what I would call an over-thinker. Sometimes I fret away the night thinking about all of the worst-case scenarios that cold occur the next day in some situation at hand (usually some confrontational situation). Usually everything works out OK, but I never seem to let an opportunity to worry pass un-worried about it. To some extent that is letting something that I cannot stop or change stop me from doing what I should be doing - perhaps getting better prepared for the situation at hand instead of just conjuring up dire consequences for scenarios that never happen.
In real estate there can be a tendency to focus on what we can’t do and let that stop us from doing what we can do. That happens a lot with short-sales where there are lots of things that are out of our control – things that we can’t do. But there are things that we can (and should) be doing, even in short-sale situations. Things like helping the seller (of that’s who we represent) get their documentation together or get in touch with a good short-sale lawyer. Or, we could be counseling the short-sale buyer on the need for patience and persistence in the process ahead.
Obviously, in real estate we cannot magically produce a buyer; however, there are tons of things that we can be doing to market the property and try to reach the buyer whom we know is out there somewhere. Perhaps we are not being allowed to properly price the house (in your opinion) for the market. That shouldn’t cause us to just shut down. It just adds to the marketing challenge. Try an ad headline like, “It wouldn’t be at this price if it wasn’t worth it.” That might intrigue some would-be buyers to take a look and that’s really what you are trying to accomplish.
Maybe you have owners or tenants in a listed property that make it difficult to show the place. That makes it all the more important to do a great job on the listing pictures and virtual tour. Maybe you could also create a YouTube video and post that, too. The point is to maximize what you can do when you run into some can’t do’s on a listing. Remember that doing something is always better than doing nothing.
I’ll admit to being a worrier and what I would call an over-thinker. Sometimes I fret away the night thinking about all of the worst-case scenarios that cold occur the next day in some situation at hand (usually some confrontational situation). Usually everything works out OK, but I never seem to let an opportunity to worry pass un-worried about it. To some extent that is letting something that I cannot stop or change stop me from doing what I should be doing - perhaps getting better prepared for the situation at hand instead of just conjuring up dire consequences for scenarios that never happen.
In real estate there can be a tendency to focus on what we can’t do and let that stop us from doing what we can do. That happens a lot with short-sales where there are lots of things that are out of our control – things that we can’t do. But there are things that we can (and should) be doing, even in short-sale situations. Things like helping the seller (of that’s who we represent) get their documentation together or get in touch with a good short-sale lawyer. Or, we could be counseling the short-sale buyer on the need for patience and persistence in the process ahead.
Obviously, in real estate we cannot magically produce a buyer; however, there are tons of things that we can be doing to market the property and try to reach the buyer whom we know is out there somewhere. Perhaps we are not being allowed to properly price the house (in your opinion) for the market. That shouldn’t cause us to just shut down. It just adds to the marketing challenge. Try an ad headline like, “It wouldn’t be at this price if it wasn’t worth it.” That might intrigue some would-be buyers to take a look and that’s really what you are trying to accomplish.
Maybe you have owners or tenants in a listed property that make it difficult to show the place. That makes it all the more important to do a great job on the listing pictures and virtual tour. Maybe you could also create a YouTube video and post that, too. The point is to maximize what you can do when you run into some can’t do’s on a listing. Remember that doing something is always better than doing nothing.
Thursday, October 21, 2010
The Distressed Homes Tar Babies
When I was a child there was a popular children's story about a character called Briar Rabbit. Now, Briar Rabbit was a feisty little bunny who was always matching wits with the fox and the bear in these stories. He was sort of an early day Road Runner to his nemesis - Wyle Coyote.
Anyway the fox and the bear came up with a plan to trap Briar Rabbit by fashioning a scarecrow out of tar and other things. They correctly guessed that Briar Rabbit would try to strike up a conversation with the scarecrow and get angry if the tar baby didn't answer.
Well it worked and Briar Rabbit took a swing at the tar baby and got stuck to it. The more he got angry and hit it with fists and feet, the more stuck he became. The tar baby had trapped the rabbit-the fox and bear had him.
It was only through his quick wit and gifted tongue that the rabbit later talked the fox and bear into not eating him but to supposedly cause him much more pain by tossing him in the briar patch (or so they were lead to believe). He happily escaped into his natural habitat-the briar patch. In a kids book of that era, that served as a happy ending.
Well today we are facing a modern day tar baby in the real estate world-distressed homes. Whether they are foreclosures or short-sales many of the homes on the market feel a lot like tar babies-the more you struggle to buy or sell them the more they suck you in to a morass that is hard to escape. The bear and the fox were replaced by Bank of America and CountryWide (and others) and they came up with tar babies of their own.
The low prices have incredible appeal for many would-be homeowners, so they take a swing at it. Then they become stuck. Stuck waiting and waiting for an answer from the banks or feeling stuck by sunk money invested in inspections and appraisals. There doesn't appear to be a way out a way to extricate oneself from the tar baby distressed house.
Even for some agents, dabbling in listing these houses they've become tar babies. Money is sunk in maintenance and marketing and all of a sudden there seems to be no way to get loose.
A very real issue is that it is increasingly hard to avoid these real estate tar babies. They make up about 1/3 of the listing on the market today and about 1/2 of all sales these days.
So, what is one to do? If you are a buyer, get a good agent who will keep as much of the tar off of you as possible. A good agent will make sure that you are not stuck in a deal that has no end in sight, by making sure that your offer has out clauses in it that allow you to walk away if you get tired of waiting.
Your agent should also protect your money by having provisions that don't require you to tie up earnest money until the bank has agreed to the deal and will insist that you have the option to wait until that bank approval before you spend your money on inspections and appraisals. Don't let the distressed home tar baby suck you in. Get a good agent and listen to their advice.
For sellers my only advice is to try to work with the bank(s) ahead of time so that you shorten the process once an offer comes in. You want the deal to stick without starting to feel like a tar baby to all concerned. To a certain extent you will probably end up feeling like your home is your own personal tar baby-one conjured up by your bank to keep you stuck. You need to be persistent and patient and persistent . Got the picture? Did I menton persistent?
As for me; well, I'm up to my armpits in tar babies. One half of my current listings are short-sales and literally all of the current offers that I have out with buyers are for foreclosed or short-sale houses. I'm stuck to these houses and to these sales (many of which have now been on-going for months with no end in sight). Please throw me back into the briar patch of a normal real estate market!
Anyway the fox and the bear came up with a plan to trap Briar Rabbit by fashioning a scarecrow out of tar and other things. They correctly guessed that Briar Rabbit would try to strike up a conversation with the scarecrow and get angry if the tar baby didn't answer.
Well it worked and Briar Rabbit took a swing at the tar baby and got stuck to it. The more he got angry and hit it with fists and feet, the more stuck he became. The tar baby had trapped the rabbit-the fox and bear had him.
It was only through his quick wit and gifted tongue that the rabbit later talked the fox and bear into not eating him but to supposedly cause him much more pain by tossing him in the briar patch (or so they were lead to believe). He happily escaped into his natural habitat-the briar patch. In a kids book of that era, that served as a happy ending.
Well today we are facing a modern day tar baby in the real estate world-distressed homes. Whether they are foreclosures or short-sales many of the homes on the market feel a lot like tar babies-the more you struggle to buy or sell them the more they suck you in to a morass that is hard to escape. The bear and the fox were replaced by Bank of America and CountryWide (and others) and they came up with tar babies of their own.
The low prices have incredible appeal for many would-be homeowners, so they take a swing at it. Then they become stuck. Stuck waiting and waiting for an answer from the banks or feeling stuck by sunk money invested in inspections and appraisals. There doesn't appear to be a way out a way to extricate oneself from the tar baby distressed house.
Even for some agents, dabbling in listing these houses they've become tar babies. Money is sunk in maintenance and marketing and all of a sudden there seems to be no way to get loose.
A very real issue is that it is increasingly hard to avoid these real estate tar babies. They make up about 1/3 of the listing on the market today and about 1/2 of all sales these days.
So, what is one to do? If you are a buyer, get a good agent who will keep as much of the tar off of you as possible. A good agent will make sure that you are not stuck in a deal that has no end in sight, by making sure that your offer has out clauses in it that allow you to walk away if you get tired of waiting.
Your agent should also protect your money by having provisions that don't require you to tie up earnest money until the bank has agreed to the deal and will insist that you have the option to wait until that bank approval before you spend your money on inspections and appraisals. Don't let the distressed home tar baby suck you in. Get a good agent and listen to their advice.
For sellers my only advice is to try to work with the bank(s) ahead of time so that you shorten the process once an offer comes in. You want the deal to stick without starting to feel like a tar baby to all concerned. To a certain extent you will probably end up feeling like your home is your own personal tar baby-one conjured up by your bank to keep you stuck. You need to be persistent and patient and persistent . Got the picture? Did I menton persistent?
As for me; well, I'm up to my armpits in tar babies. One half of my current listings are short-sales and literally all of the current offers that I have out with buyers are for foreclosed or short-sale houses. I'm stuck to these houses and to these sales (many of which have now been on-going for months with no end in sight). Please throw me back into the briar patch of a normal real estate market!
Wednesday, October 20, 2010
The right acronym will make it all better…
I was recently looking through the Rotarian (the magazine of Rotary International) and spotted an article on Hunger in the United States. As I read the article it became obvious that we don’t have hunger in the United States – heaven forbid. In it’s quest for better PR the federal government has decreed that, instead of hunger, we have food insecurity. In fact the estimate in this article, based upon data from the U.S Department of Agriculture is that 14.6% of U.S. households suffer from these “disruptions in eating patterns and reduced food intake due to adverse economic conditions.” George Carlin could have made an entire routine out of this topic.
Now it seems reasonable that if you disrupt a person’s eating pattern and reduce their food intake they will end up HUNGRY. How often have you seen a TV news story featuring some little waif holding out an empty plate and saying – “I’m food insecure and suffering from reduced intake. Can you help?” Maybe I’m just not looking at the right newscasts.
We used to have a federal program to deal with this issue that was called Food Stamps; however, that sounded bad, so in 2008 the U.S. Department of Agriculture renamed the program the Supplemental Nutrition Assistance Program or SNAP. So now, if you’re hungry some government worker can say, “Oh, SNAP.”
Carlin would have had a field day with that, too.
I suppose people are no longer classified as homeless Using that term is, after all, so insensitive. They are probably called shelter challenged. Maybe there’s a government program to provide temporary housing for the shelter challenged run by a division of the Housing and Urban Development Department called the Shelter Challenged Assistance & Relief Extension Service (SCARES).
Those without health care insurance would likely not be classified as uninsured; rather they are Medical Attention Deficient (MAD).
The unemployed could instead be called Currently Underemployed ResourceS (CURS) and the federal programs to help them could be lumped together and run by the Bureau of Underemployed Resources Programs (BURP).
Of course it’s all part of the larger government program that brings together the various government aid agencies into the Centralized Relief Alliance Program or CRAP.
Now it seems reasonable that if you disrupt a person’s eating pattern and reduce their food intake they will end up HUNGRY. How often have you seen a TV news story featuring some little waif holding out an empty plate and saying – “I’m food insecure and suffering from reduced intake. Can you help?” Maybe I’m just not looking at the right newscasts.
We used to have a federal program to deal with this issue that was called Food Stamps; however, that sounded bad, so in 2008 the U.S. Department of Agriculture renamed the program the Supplemental Nutrition Assistance Program or SNAP. So now, if you’re hungry some government worker can say, “Oh, SNAP.”
Carlin would have had a field day with that, too.
I suppose people are no longer classified as homeless Using that term is, after all, so insensitive. They are probably called shelter challenged. Maybe there’s a government program to provide temporary housing for the shelter challenged run by a division of the Housing and Urban Development Department called the Shelter Challenged Assistance & Relief Extension Service (SCARES).
Those without health care insurance would likely not be classified as uninsured; rather they are Medical Attention Deficient (MAD).
The unemployed could instead be called Currently Underemployed ResourceS (CURS) and the federal programs to help them could be lumped together and run by the Bureau of Underemployed Resources Programs (BURP).
Of course it’s all part of the larger government program that brings together the various government aid agencies into the Centralized Relief Alliance Program or CRAP.
Monday, October 18, 2010
Side effects may include death...
I don't know about you, but it has always struck me as something to be avoided when a particular medicine advertises that "side effects my include death." To me, that seems a bit extreme, doesn't it? These ads are usually on while I'm at the dinner table and are interspersed with adds for various products that will help one not pee at inappropriate times or allow one to defaecate after inordinately long periods.
Other dinner time advertisements feature products that tend to deal with various sensitive female issues or that all-time favorite for men - erectile dysfunction. I've searched a bit in my area and have yet to find a good source for those old bathtubs that people apparently are driven to sit in when they use these erectile dysfunction aids. Apparently libido and bathing have some weird connection
But, I digress; back to our topic if the hour. Apparently there are many ways in which some of these health products can cause death. There is the ever popular swelling of the throat and tongue, which one must assume would prevent calling out for help. Then there is internal bleeding, which would be particularly insidious, since one would not realize that one was bleeding until such time as one passed out and died. Of course many of these products just cause heart attack or stroke, which would be much more noticeable and one presumes treatable.
It would seem that companies that produce products to treat one disease or problem would not want to cause other problems, especially a problem like death. This is akin to providing an athlete's foot cure upon which you have to be warned, "may cause your foot to fall off." Who would buy that? Of maybe an antiperspirant that carried the warning, may cause your underarms to rot and your arms to fall off. Not good.
Now I understand that most really potent drugs probably have really potent potential side effects. I can accept the warning that my medicine may cause vomiting or diarrhea, But, death? I have a hard time with that side effect. And then there are those which warn not take them if you are pregnant or plan to become pregnant. How many pregnancies are unplanned events? So best just not to take them at all.
So, for me at least; I hope that I never have drugs prescribed that may have that unpleasant death side effect. Occasional irregularity I can deal with. In fact I think I saw something advertised last night during dinner that can deal with that or was that for diarrhea? I can never remember if it was for to much or too little, just that at least it apparently doesn't cause death and that's a good thing.
Other dinner time advertisements feature products that tend to deal with various sensitive female issues or that all-time favorite for men - erectile dysfunction. I've searched a bit in my area and have yet to find a good source for those old bathtubs that people apparently are driven to sit in when they use these erectile dysfunction aids. Apparently libido and bathing have some weird connection
But, I digress; back to our topic if the hour. Apparently there are many ways in which some of these health products can cause death. There is the ever popular swelling of the throat and tongue, which one must assume would prevent calling out for help. Then there is internal bleeding, which would be particularly insidious, since one would not realize that one was bleeding until such time as one passed out and died. Of course many of these products just cause heart attack or stroke, which would be much more noticeable and one presumes treatable.
It would seem that companies that produce products to treat one disease or problem would not want to cause other problems, especially a problem like death. This is akin to providing an athlete's foot cure upon which you have to be warned, "may cause your foot to fall off." Who would buy that? Of maybe an antiperspirant that carried the warning, may cause your underarms to rot and your arms to fall off. Not good.
Now I understand that most really potent drugs probably have really potent potential side effects. I can accept the warning that my medicine may cause vomiting or diarrhea, But, death? I have a hard time with that side effect. And then there are those which warn not take them if you are pregnant or plan to become pregnant. How many pregnancies are unplanned events? So best just not to take them at all.
So, for me at least; I hope that I never have drugs prescribed that may have that unpleasant death side effect. Occasional irregularity I can deal with. In fact I think I saw something advertised last night during dinner that can deal with that or was that for diarrhea? I can never remember if it was for to much or too little, just that at least it apparently doesn't cause death and that's a good thing.
Sunday, October 17, 2010
Must we be a zero-sum society?
This is somewhat of a continuation of the thought process from my last post about not playing the sucker in the derivatives game that many large, sophisticated financial are playing. That is just one example of the zero-sum society that we've become; where, in order for there to be a winner, there must also be a loser, so that the sum is zero +1 and -1.
There are all too many easy examples that could be sited, mostly around our sports and leisure act ivies where things are designed so that somebody wins and thus somebody else loses - the sum is neatly kept at zero. There are very few examples to site for non-zero-sum games, since all games seem to be designed to identify a winner in the end (thus relegating one or more others in the game to the role of losers).
People aren't born as zero-sum players. That is a behavior that is taught to children at a very early age. Young children don't pick it up right away and thus may be content with games that no one really wins or losses but everyone has fun playing. It doesn't take long; however, for parents to change the mindset of the young by their behaviour - egging their little ones on to beat Tommy or do better than Amy. They are instilling the winner/loser relationship that is needed to be a zero-sum player later in life. I'm sure that parents see it something positive and good preparation for life, but it is a shame that the youthful innocence that might otherwise allow the child to feel good just about the chance to play with other children is stripped away and the need to beat someone else at whatever you're doing is substituted. The children never even realize that they've been robbed of that innocence that comes from not worrying about competing. So we are lead from blissful ignorance into a life of ignorant competition - a zero-sum existence. How sad.
Schools tried to break the zero-sum equation by shifting from a grading-based system that forced some to be winners (at the top of the curve) and some to be losers (at the other end). The movement that said you're all winners just for trying made lots of kids feel better for a short while, until their parents interceded and demanded a return to the zero-sum game. You just can't get into the best colleges by feeling good about yourself.
The work environment has always been a zero-sum game. When Apple wins in the market someone else (usually lots of others) lose. When China wins in manufacturing, lots and lots of U.S. factory workers lose. Every sales situation has a winner and one or more losers. Every promotion means that others were passed over. Every new product that is developed usually puts some older product out to pasture. It's all zero-sum.
Religion, to the extent that the teachings of most religions are embraced is one source of escape fro the zero-sum game. You don't have to be better than anyone else to embrace religion; however, the zero-sum mentality has crept back to the forefront in the lives of many people who righteously proclaim their faith. These people tend to proclaim that those who do not believe exactly as they do are losers in the game of religion. And, of course, in the larger religious picture we have many different religions all claiming that whatever deity they embrace is the one and only true deity and thus all others are losers because they don't believe in the one true deity.
Women seem to be better at figuring out ways to do things together without the need to boil it down to a zero-sum game. Men will almost always figure out some way to turn almost anything into a competition, with a winner to be determined somehow. Women on the other hand can form groups, tackle problems and/or be nurturing and supportive of each other, without the need for there to be a winner and a bunch of losers. That is a wonderful trait that we men should try hard to figure out (maybe we could beat the women at it. Oops!)
Wow, this zero-sum thing is bigger than I thought. I guess we're not just a zero-sum society, we're a zero-sum people. I better go off and find someone that I can beat at something, so I can good about myself. Maybe there's another way to look at things that's not zero-sum - I think it's called win-win. What a concept!
Thursday, October 14, 2010
Don't be the sucker...
I've been reading about some of the more exotic financial instruments that were (and in many cases still are) available which contributed to the financial crisis. Many of these so-called derivatives or derivative-based bonds were based on one very plain assumption - somewhere there had to be a loser, a patsy, a sucker. Almost all of them are based upon paying out to shift risk to someone else - in the final analysis that is the sucker. In many cases leading up to the big crash those suckers were financial institutions - banks both foreign and domestic which had money to invest and little to know knowledge about what they were investing in. In most cases those banks really represented the assets of their investors and depositors - the ultimate suckers in the string.
Recently there have been stories about individual investors, people like you and me, getting lured into the sucker role by the promised high returns on some of these Wall Street inventions. Most of the funds or investment vehicles have fancy sounding names and none that I know of has the word sucker in the name; but they might as well. They are all sucker bets. The individual investor has about as much chance of making a return as you would playing three card Monty on a New York street corner or finding the pea under the shell at the next corner.
So why do people play this sucker game? Because somebody with a fancy sounding title and maybe even a fancy Harvard degree and working for a big New York investment banking company is promising 8-19-13% returns on your money. And what about risk? Heck, why do you think they call them hedge funds, they are there to hedge against risk. True enough; but, whose risk are they hedging? Not the individual investor, because they are at the end of the risk hedge value chain - they are the suckers who take on the risk. If the bottom drops out of a hedged investment way up at the top, everybody down the line collects against the hedge - except, of course the suckers at the end.
My take on all of this is that it is best not to be cast in the role of the sucker, even if the rewards look good in the beginning. There is no end game that makes sense if you are playing the sucker. The truly sad part of all of this is that a whole bunch of really well educated people, who really do understand this all, know exactly what they are doing to the suckers downstream and they are OK with that. Apparently courses in ethics and morals were not a part of the curriculum at their fancy schools. Rather than the golden rule "Do unto others as you would have them do unto you"; these folks live by the motos "There a sucker born every minute" and He who has the gold rules." Sad, sad, sad.
Recently there have been stories about individual investors, people like you and me, getting lured into the sucker role by the promised high returns on some of these Wall Street inventions. Most of the funds or investment vehicles have fancy sounding names and none that I know of has the word sucker in the name; but they might as well. They are all sucker bets. The individual investor has about as much chance of making a return as you would playing three card Monty on a New York street corner or finding the pea under the shell at the next corner.
So why do people play this sucker game? Because somebody with a fancy sounding title and maybe even a fancy Harvard degree and working for a big New York investment banking company is promising 8-19-13% returns on your money. And what about risk? Heck, why do you think they call them hedge funds, they are there to hedge against risk. True enough; but, whose risk are they hedging? Not the individual investor, because they are at the end of the risk hedge value chain - they are the suckers who take on the risk. If the bottom drops out of a hedged investment way up at the top, everybody down the line collects against the hedge - except, of course the suckers at the end.
My take on all of this is that it is best not to be cast in the role of the sucker, even if the rewards look good in the beginning. There is no end game that makes sense if you are playing the sucker. The truly sad part of all of this is that a whole bunch of really well educated people, who really do understand this all, know exactly what they are doing to the suckers downstream and they are OK with that. Apparently courses in ethics and morals were not a part of the curriculum at their fancy schools. Rather than the golden rule "Do unto others as you would have them do unto you"; these folks live by the motos "There a sucker born every minute" and He who has the gold rules." Sad, sad, sad.
Wednesday, October 13, 2010
Odds and ends...
Some days I don't hit upon any particular theme for this missive and this is one of those days.
I'm not sure what to make of the brouhaha over the fact that several states have now caused many of the big banks to declare a moratorium on foreclosures. On the one hand there is certainly evidence that some banks may have not properly processed some paperwork for some foreclosures. How many banks or foreclosures were involved? No one seems to know, not even the banks themselves. So the solution seems to be to throw out the entire barrel of apples because one apple has been discovered to be bad. A typical political solution, good for press coverage and photo ops. I don't think anyone has claimed that the foreclosures in question should not have happened, but just whether the bank minions followed the law and procedures to the letter. So, now we are all in a sort of limbo state on whether foreclosures will proceed or not. It just adds to the mess.
Right now short-sales are an even bigger mess. More and more delinquent homeowners are being advised or encouraged to try a short sale as a means of avoiding foreclosure. That has just exacerbated the problems of banks being short handled in their distressed assets departments. I am now three months in to two short sale offers with clients and there is no end in site on either offer. The listing agents send in the offers and all of the necessary hardship documentation and it just seems to fall into a black hole at the banks, especially if the bank is Bank of America, which is hands down the worst to try to work with. One of the two that I'm involved with was also a case where there are two loans - a primary mortgage and an equity line of credit. Having two banks to deal with takes the frustration to a whole other level and is a scenario that none of the Federal programs really addressed.
Right now does seem to be a good time to list your house, if you have to sell; at least in this area it is. I say that because we went through months and months of declining values and declining inventory locally. Now the value plunge as stopped (or at least slowed to an almost imperceptible pace) and inventory is near all time lows in many price bands or housing categories. The low inventory has occurred for many reasons; but, a main reason was that people were holding their homes off the market and waiting for the market to turn around. It's hard to make the call that we are at that point, but by the tie we can say that for sure it will be something that we look back upon and ask ourselves why we didn't jump in then. So jump in now. We are either there (at the inflection point for this market) or darned close.
I had some feedback today from a buyer who has been looking for condos and looking to financing his buy. He told me that he finds it darned near impossible to find a bank that will loan on a condo. I'll have to check that out. I just listed a condo for sale (and lease) and it woud be good to know ahead if potentiasl buyers are goign to run into that problem. More on that as I find out.
I'm not sure what to make of the brouhaha over the fact that several states have now caused many of the big banks to declare a moratorium on foreclosures. On the one hand there is certainly evidence that some banks may have not properly processed some paperwork for some foreclosures. How many banks or foreclosures were involved? No one seems to know, not even the banks themselves. So the solution seems to be to throw out the entire barrel of apples because one apple has been discovered to be bad. A typical political solution, good for press coverage and photo ops. I don't think anyone has claimed that the foreclosures in question should not have happened, but just whether the bank minions followed the law and procedures to the letter. So, now we are all in a sort of limbo state on whether foreclosures will proceed or not. It just adds to the mess.
Right now short-sales are an even bigger mess. More and more delinquent homeowners are being advised or encouraged to try a short sale as a means of avoiding foreclosure. That has just exacerbated the problems of banks being short handled in their distressed assets departments. I am now three months in to two short sale offers with clients and there is no end in site on either offer. The listing agents send in the offers and all of the necessary hardship documentation and it just seems to fall into a black hole at the banks, especially if the bank is Bank of America, which is hands down the worst to try to work with. One of the two that I'm involved with was also a case where there are two loans - a primary mortgage and an equity line of credit. Having two banks to deal with takes the frustration to a whole other level and is a scenario that none of the Federal programs really addressed.
Right now does seem to be a good time to list your house, if you have to sell; at least in this area it is. I say that because we went through months and months of declining values and declining inventory locally. Now the value plunge as stopped (or at least slowed to an almost imperceptible pace) and inventory is near all time lows in many price bands or housing categories. The low inventory has occurred for many reasons; but, a main reason was that people were holding their homes off the market and waiting for the market to turn around. It's hard to make the call that we are at that point, but by the tie we can say that for sure it will be something that we look back upon and ask ourselves why we didn't jump in then. So jump in now. We are either there (at the inflection point for this market) or darned close.
I had some feedback today from a buyer who has been looking for condos and looking to financing his buy. He told me that he finds it darned near impossible to find a bank that will loan on a condo. I'll have to check that out. I just listed a condo for sale (and lease) and it woud be good to know ahead if potentiasl buyers are goign to run into that problem. More on that as I find out.
Monday, October 11, 2010
Don't fear have hope...
“Things never go so well that one should have no fear, and never so ill that one should have no hope.” (Turkish Proverb) from my favorite source for inspirational quotes - the Jack's Winning Words blog.
I suppose that we are in the mode of things gong so ill in real estate that what one is left with is primarily hope for the better. I'm not sure what the impact of the recent calls for a foreclosure moratorium will be on the market. Things are so screwed up right now that no one seems to be really sure what is happening from day to day. The only certain thing is that we need to get this whole mess behind us and that means getting all of these distressed houses out in the open and sold off. Delaying the inevitable doesn't seem like a good idea.
The banks need to either foreclose them and get them sold off or take their haircuts now by forgiving the lost part of the equity involved and refinancing the homes for those who want to stay and can afford a lesser payment. That obvious solution seems to be one that just gets little public discussion and has no traction with politicians. I suspect it's mainly because the big banks are also big political contributors and the politicians would rather play to them than to their so-called constituents.
But, hey. as the Turkish proverb says, we can still have hope. Failing that we have the upcoming ultimate reality show to watch for a while - the November elections. It's sort of like being at a movie marathon where the movie "Dumb and Dumber" is playing constantly.
I suppose that we are in the mode of things gong so ill in real estate that what one is left with is primarily hope for the better. I'm not sure what the impact of the recent calls for a foreclosure moratorium will be on the market. Things are so screwed up right now that no one seems to be really sure what is happening from day to day. The only certain thing is that we need to get this whole mess behind us and that means getting all of these distressed houses out in the open and sold off. Delaying the inevitable doesn't seem like a good idea.
The banks need to either foreclose them and get them sold off or take their haircuts now by forgiving the lost part of the equity involved and refinancing the homes for those who want to stay and can afford a lesser payment. That obvious solution seems to be one that just gets little public discussion and has no traction with politicians. I suspect it's mainly because the big banks are also big political contributors and the politicians would rather play to them than to their so-called constituents.
But, hey. as the Turkish proverb says, we can still have hope. Failing that we have the upcoming ultimate reality show to watch for a while - the November elections. It's sort of like being at a movie marathon where the movie "Dumb and Dumber" is playing constantly.
Friday, October 8, 2010
Rodin would have loved short-sales
“Patience is also a form of action.” (Auguste Rodin). Rodin, the famous sculptor, could have named his statue "The Thinker" waiting on the bank to respond to short-sale an offer. In fact Rodin may have sculpted the entire process without realizing it. See below.
Stage 1 -
Stage 1 -
I just put in an offer and now we're waiting for a rely.
Stage 2 -
What the hell have I gotten myself into?
Stage 3 -
The hell with it. I'm out of here.
There are many other Rodin statues that show people in grotesque positions which might also be appropriate in various stages of the short sale process, depending upon the bank(s) involved. Who knew that Rodin was so prescient?
There are many other Rodin statues that show people in grotesque positions which might also be appropriate in various stages of the short sale process, depending upon the bank(s) involved. Who knew that Rodin was so prescient?
Tuesday, October 5, 2010
Situational ethics...
It's time for another rant about this topic. I walk my dog every morning, usually between 5:30 and 6 AM. That means that I'm out walking him in the dark these days. But, dark or light, it seems that motorists at that hour of the day (if the truth be told at almost any hours of the day) seem to think that the stop signs of Milford are under some sort of sundown rule - that is they don't matter is it's dark.
Now, there are two stop signs on the two block between Union St and Main St - the one at Union and Summit has a street light and a large, illuminated, four-faced stop sign over the intersection, with a flashing red light. The other, at Main and Summit, just has the four signs on the corners, with no illumination or flasher. Perhaps I could understand if someone did not see the signs on that corner and ran the stop; but, they also run the stop at Union and Summit. Just about every day I see people just barely slowing down enough to see if there is traffic approaching from the side street and then bombing on through the intersection. In many cases at the other corner they don't even slow down
I see this as just one indicator that many in our society have become enamored with situational ethics. They don't see it as right and wrong, black or white; they just see it as "what's in it for me and what's the chances that I'll get caught?" In Milford the chances of getting stopped for a traffic violation are extremely low. Our gendarmes are apparently all busy dealing with the major crimes that happen in the community or perhaps still engaged in the search for Jimmy Hoffa
I think this is really just an indicator of a larger social problem...the rise of situational ethics. It would seem that more and more people see the laws of the land as something to be evaluated within a personal context and some determination be made if they are going to obey those laws at that time and in that situation. The premise that our laws would be obeyed by the citizenry was never really based upon the presence of police to enforce those laws...there just aren't enough police available to do that. Instead, our laws are based on the assumption that the citizens will voluntarily obey them, once enacted. Our tax code is based upon much the same principle; although the IRS has done a better PR job of building fear of getting caught if you cheat on your taxes. In truth the IRS has little enforcement capability and relies heavily on computerized models to try to spot scofflaws.
Aside from those examples, where I run into situational ethics the most is in the business world. In real estate we have all sorts of unethical behaviours, usually associated with people who are taking advantage of those already down on their luck and in trouble on their mortgages. Of course, some of those homeowners got into that position by lying on their mortgage applications in the first place and that was another case of applying situational ethics. I hit lots of cases of "don't ask...don't tell" situational ethics in real estate. Usually it's the homeowner asking me if they really have to reveal some secret that they know about their home on the Seller's Disclosure (the answer is YES) or a buyer trying to game the Fannie Mae preference for owner-occupied sales (YES, you do actually have to live there, if you claim to be buying it to live in or face a $5,000 fine).
I learned long ago that situational ethics is a quagmire to be avoided. Like lying in general, situational ethics immediately puts you in the mode of having to remember whatever story you made up to justify to yourself or others what you just did. It's not worth it. Honesty and transparency are the best way to a good night's sleep every night (not that I believe that the guy who ran the stop sign this morning is going to lie awake tonight thinking about it, but the guy who cheated a client today or lied to his/her boss today might
So, if you call me to be your Realtor, don't ask me if you really have to reveal that you made improvements to your home without the proper permits. You already know what the answer is and what I'm likely to tell you. If you're a buyer, don't tell me that you don't plan to tell the mortgage company that your wife just got laid off but you plan to go ahead with the purchase anyway. If you're another agent, don't ask me to reveal my client's financial situation so that you can better help your client in the negotiations or don't tell me about your client's "little white lies" and expect me to keep the secret. I just don't work like that. I actually stop at the sign (well, most of the time anyway).
Now, there are two stop signs on the two block between Union St and Main St - the one at Union and Summit has a street light and a large, illuminated, four-faced stop sign over the intersection, with a flashing red light. The other, at Main and Summit, just has the four signs on the corners, with no illumination or flasher. Perhaps I could understand if someone did not see the signs on that corner and ran the stop; but, they also run the stop at Union and Summit. Just about every day I see people just barely slowing down enough to see if there is traffic approaching from the side street and then bombing on through the intersection. In many cases at the other corner they don't even slow down
I see this as just one indicator that many in our society have become enamored with situational ethics. They don't see it as right and wrong, black or white; they just see it as "what's in it for me and what's the chances that I'll get caught?" In Milford the chances of getting stopped for a traffic violation are extremely low. Our gendarmes are apparently all busy dealing with the major crimes that happen in the community or perhaps still engaged in the search for Jimmy Hoffa
I think this is really just an indicator of a larger social problem...the rise of situational ethics. It would seem that more and more people see the laws of the land as something to be evaluated within a personal context and some determination be made if they are going to obey those laws at that time and in that situation. The premise that our laws would be obeyed by the citizenry was never really based upon the presence of police to enforce those laws...there just aren't enough police available to do that. Instead, our laws are based on the assumption that the citizens will voluntarily obey them, once enacted. Our tax code is based upon much the same principle; although the IRS has done a better PR job of building fear of getting caught if you cheat on your taxes. In truth the IRS has little enforcement capability and relies heavily on computerized models to try to spot scofflaws.
Aside from those examples, where I run into situational ethics the most is in the business world. In real estate we have all sorts of unethical behaviours, usually associated with people who are taking advantage of those already down on their luck and in trouble on their mortgages. Of course, some of those homeowners got into that position by lying on their mortgage applications in the first place and that was another case of applying situational ethics. I hit lots of cases of "don't ask...don't tell" situational ethics in real estate. Usually it's the homeowner asking me if they really have to reveal some secret that they know about their home on the Seller's Disclosure (the answer is YES) or a buyer trying to game the Fannie Mae preference for owner-occupied sales (YES, you do actually have to live there, if you claim to be buying it to live in or face a $5,000 fine).
I learned long ago that situational ethics is a quagmire to be avoided. Like lying in general, situational ethics immediately puts you in the mode of having to remember whatever story you made up to justify to yourself or others what you just did. It's not worth it. Honesty and transparency are the best way to a good night's sleep every night (not that I believe that the guy who ran the stop sign this morning is going to lie awake tonight thinking about it, but the guy who cheated a client today or lied to his/her boss today might
So, if you call me to be your Realtor, don't ask me if you really have to reveal that you made improvements to your home without the proper permits. You already know what the answer is and what I'm likely to tell you. If you're a buyer, don't tell me that you don't plan to tell the mortgage company that your wife just got laid off but you plan to go ahead with the purchase anyway. If you're another agent, don't ask me to reveal my client's financial situation so that you can better help your client in the negotiations or don't tell me about your client's "little white lies" and expect me to keep the secret. I just don't work like that. I actually stop at the sign (well, most of the time anyway).
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