HUD doing away with incentives…

I was in some HUD training recently and they mentioned that most of the incentives that HUD had in place to encourage buyers ands reward buyer agents are gong away on February 1st of this year. The incentives that are being withdrawn include the $100 down financing plan as well as the owner-occupant incentive of $2,500 for buyers that HUD offered to help cover repairs, as well as the extra $500 to buyer agents. Obviously, I’m disappointed that I can no longer get the extra $500, but even more disappointing is the loss of the incentives for the buyers. Many buyers needed that extra $2,500 to put the houses in reach.

I can certainly understand that HUD maybe couldn’t keep offering these incentive forever; however, so many of these HUD houses are in sad shape that I can’t see how stopping the repairs incentive helps at all. Let’s face it, many of these places are going to be tear downs if aid like that is not pro-offered to help get them back in livable condition. Many are uninsurable, meaning that they need to be rehabilitated before they can even be occupied. And many are priced so low that they are unattractive to normal mortgage companies, who can’t make any money on loan under $30-40K. Without the $2,500 repair incentive, these become the exclusive domain of the investors and cut out the poor buyers that HUD was originally set up to serve.

Unfortunately HUD, like the FHA folks, is toughening things up in the face of increasing losses and dwindling funds, just as the people they were created to help need it the most. The new HUD rules, combined with the simultaneous tightening of credit requirements and the increase in Mortgage Insurance rates by FHA will serve to cut off the entire bottom end of house buyers from the credit and help that they need. Instead of launching programs for mortgage modifications that nobody can use or programs to try to keep homeowners in homes that they can’t afford, perhaps the Federal Government needs to look at funding for these HUD and FHA programs that were working that lack of funding is now causing to be canceled.

How they get there...

“The poor get poorer by acting rich, and the rich get richer by acting poor.” (Seen on a wall plaque) Ain’t it the truth. One major contributing factor to the current real estate crisis was the number of people who tried to act rich by over reaching on their house buying. Even today, I have to counsel many first-time buyers not to over reach and to consider the taxes that they’ll have to pay on that distressed McMansion that they covet. Most seem to think the taxes are going to magically go down and be based on what they paid for it. Not true! So, even today in the midst of the “Great Recession” we have poor trying to act rich, or at least to live like the rich.

I tries to think of examples of the rich acting poor, but mainly came up with examples of the rich acting poorly, such as the Wall Street greed to precipitated the crash that is now called the great recession. I suppose that there are at least examples of the rich acting almost normal, such as Warren Buffet’s apparent modest lifestyle; however for every Buffet there are hundreds of stockbrokers and bankers getting outrageous bonuses and living large out on Long Island or on Monterey Bay.

There are all sorts of sayings and plenty of advice for trying to find happiness and contentment with what one has in life. There is even religion-based advice to give away some of what you have in life, in order to find fulfillment. The best advice is likely to be happy with who you are and what you have and get on with life. And, if you do need a house, give me a call and we’ll find just the right, affordable place for you.

Get strategic Renee...

The real estate crisis has been in the national news for a long time - years now – however, last night on NBC News with Brian Williams they did a report on owners seeing walking away as the best option. Implicit in that strategy and explicitly reported by Williams is the failure of any of the Federal programs to provide much real help in the face of such large value loses by homeowners.

Also reported was the use of so-called “strategic defaults” by some large banks in the face of value losses on building that they bought with mortgages. Somehow they are able to see their own strategic defaults as being different than the defaults of their borrowers. The rationale seemed to be that it happens all the time in business transactions and is an expected part of the business. Not so, apparently with the loans to their homebuyer clients.

That sort of double-think (sort of like double talk, only impacting the thought process) – the do as I say, not as I do mentality – is a part of the problem keeping banks from embracing the Federal loan modification programs. They really see their defaulting homeowners as deadbeats and themselves as savvy businessmen. As long as that is their attitude, none of the Federal programs that have been released is likely to work.

The news report claimed that fully 25% of all mortgages are under water. Perhaps a figure that is too optimistic and it went on to speculate about the impact if all of those people decided to just walk away. In truth, that is the logical thing for all of those people to do. The only thing keeping this boat afloat right now is the lingering sense or right and wrong that most of those homeowner had instilled in them as they were growing up – the ethic that says, “I borrowed the money, I should do everything that I can to pay it back.”

Every financial advisor that I’ve talked to says they are counseling their clients very hard against crippling themselves financially by trying to keep up with a losing proposition. They advise that it is much better to abandon this ship now than to strip all of your retirement and college fund savings to try to keep up with ARMs that have reset and put homeowners behind the eight ball. They are honest with clients about the damage of walking away, but the damage of staying too long can be worse.

So, unlike an earlier post that have here titled “Just walk away Renee” I must now advise Renee to consider a strategic default. If it’s good enough for Morgan Stanley and Tishman Speyer (one of the largest real estate companies in New York) it’s good enough for Renee. This way Renee can avoid the ethical stigma that she might otherwise pin on herself by saying, “it’s not personal, it’s just business.” Where have I heard that line before?

There's no way around it...

“The best way out is always through.” (Robert Frost) from the Jack’s Winning Words Blog. How true. We often use terms like getting around something or over something, which both have the underlying premise that one is avoiding going through that something. Well, in life, it is seldom possible to go around or over the obstacles that stand between us and our goals – we need to work our way through them. For many that is a daunting thought. It means that you really can’t avoid doing those things that you abhor, that you just have to drive straight ahead and work your way through them.

So, rather than wasting a lot time trying to come up with creative ways to avoid doing what needs to be done or trying to convince yourself that avoiding what needs to be done, in hopes that those things can be by-passed; it’s time to suck it up and dive into those tasks. Maybe you can get through them by using the baby-steps approach. Take that list of 100 people that you need to call and break it down into 10 lists of 10 people. Each list won’t look as daunting then. Or maybe you were planning to update your Web site. Do it one page at a time, instead of all at once. Or maybe you planned start blogging and just couldn’t think or what to write about. Start by adding a comment someone else’s blog and then think about how something you’ve read in another blog or in the news applies to your local market and write about that.

The point is to work your way through whatever is standing in your way to success. These are often relatively simple tasks that have just become huge roadblocks in our on imaginations. Just tell yourself – “There is no way around it – I must go through it.”

It's what you do when you get up...

“It’s not how you fall; it’s what you do after you get up.” (Scott Hamilton) – from the Jack’s Winning Words Blog. Scott was commenting on a fall by a figure skater. Everyone experiences a fall now and then. The recovery is the important thing. It’s not just in the sports world, but it’s in the world in general.

Last year was a fall down year for me in real estate. I actually sold more houses than ever, but made less money at it – barely above a subsistence level – and I was in the top quartile of my local agency. Imagine the plight of the people below me. So, this year what I do to get up and after I get up is important.

I just had my management one-on-one to go over my goals and potential activities for the year. Both my manager and I recognized an alarming similarity to last years meeting –same old goals, same old “this is what I plan to do” set of tried and true stuff – mailings, open houses, floor time, etc. And, as she pointed out, “we keep talking about this, but you never seem to do anything about it, but talk. I don’t want to listen to you just talk any more.” Ouch – but the honest truth.

Then we had a more frank conversation. If I do the same things again this year, why would I expect much different results? The obvious answer is that I shouldn’t. So, I asked her to help me by acting like a coach and maybe giving me the kick in the pants that I need every now and then to get off the dime. She agreed and we decided on weekly meeting for a while at the start of the year, until I develop some new habits.

Now I will admit that I don’t particularly like having to do this. I had become way too comfortable in the little rut that I got myself into, but that rut was not leading to success, it was headed straight down hill towards a dead-end in my career. So, I need someone to yell at me every now than then AND to say “good job” when I do the right things. We all need encouragement and many of us probably need more than that – a little of the stick every now and then, to go with the carrot.

OK, it’s a new year and I’m back up on my skates. With t a little help from my new coach, I know this will be a better year for me. Maybe, if you fell down last year, you can find a coach, too. It doesn’t have to be a fancy, paid professional life coach, just someone that you feel you can trust and who will push you to achieve your goals. It’s up to your what you do when you get up.

Only in Detroit...

In a recent issue of the Detroit Free Press it was reported that a Wayne County Judge rules that it was OK for convicted felon Charles Beckham to work for Mayor Bing as an aide. A Detroit citizen had challenged Beckham’s employment as a violation of a state law barring felons convicted of bribery from serving in government positions. Beckham was convicted of racketeering, extortion and mail fraud in 1984 in a Federal case involving rigging a City sludge-hauling contract. The County judge opined that since he was convicted under a Federal law, the State law barring him from public appointments did not apply. Come on judge this guy wasn't convicted of stealing a box of paperclips from the supply room - this was a felony, racketeering and extortion and more.

Hmmmm. So, let’s say that Richard Reid, the Shoe Bomber, gets out of jail some day. Since he was convicted under Federal anti-terrorism laws, he’d apparently still qualify under this judge's interpretation of things for an appointment to the Detroit City government staff. The fact that Reid is also inept at what he did might just be a bonus in Detroit, where inept governance s rewarded. Could things get any sillier? Apparently they could, since this story was buried behind all of the latest stories about ex-Mayor Kwame Kilpatrick and various of his cronies who are being prosecuted or investigated by the Feds. The DFP reported on ten cases of investigations, prosecutions and/or convictions of various “players” from the Kilpatrick era (including ex City Council President Monica Conyers who is awaiting sentencing) and many more investigations continue.

In an editorial piece in the same paper, Free Press Deputy Editorial Page Editor Brian Dickersen makes a surprisingly disappointing case for saying “enough already, let’s get this behind us and get on with life.” Dickersen argues that the Federal prosecutors office is spread thin and spending entirely too much time going after the Kilpatrick posse. I suppose that is true. They could be focusing upon other crimes, which heaven knows there is plenty of in the City; however, there shouldn’t be a message sent to those who profited so greatly through corruption during the Kwame reign that if they can hold out long enough the Feds will just go away. Instead of saying “enough already”, the citizens of Detroit need to stand up and say “enough is enough.”

Hopefully Detroiters did that when the elected Dave Bing (his questionable judgment on hiring Beckham aside) to a full term. The new City Council also looks to be an improvement over the ever-bickering and tiara wearing side show of the past few years. Hopefully the new Council will spend more time on the business of the citizens of Detroit and less time giving Jay Leno monologue material. Then, if Robert Bobb can get the power he needs to clean up the mess in the public schools, maybe Detroit real has a future after all.

New roles to play in the new reality…

One of the many fascinating reports that I get on a regular basis is the Brookings Institute Metropolitan Policy Program Update – a report on urban areas and the governmental policies and programs that impact them. The latest report is entitled "The Suburbanization of Poverty." Here is an excerpt from that report:

An analysis of the location of poverty in America, particularly in the nation’s 95 largest metro areas in 2000, 2007, and 2008 reveals that:

- By 2008, suburbs were home to the largest and fastest-growing poor population in the country. Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall.


- Midwestern cities and suburbs experienced by far the largest poverty rate increases over the decade. Led by increasing poverty in auto manufacturing metro areas—like Grand Rapids and Youngstown—Midwestern city and suburban poverty rates climbed 3.0 and 2.2 percentage points, respectively. At the same time, Northeastern metros—led by New York and Worcester— actually saw poverty rates in their primary cities decline, while collectively their suburbs experienced a slight increase.


-In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level. More individuals lived in families with incomes between 100 and 200 percent of poverty line (52.5 million) than below the poverty line (39.1 million) in 2008. Between 2000 and 2008, large suburbs saw the fastest growing low-income populations across community types and the greatest uptick in the share of the population living under 200 percent of poverty.


-Western cities and Florida suburbs were among the first to see the effects of the “Great Recession” translate into significant increases in poverty between 2007 and 2008. Sun Belt metro areas hit hardest by the collapse of the housing market saw significant gains in poverty between 2007 and 2008, with suburban increases clustered in Florida metro areas—like Miami, Tampa, and Palm Bay—and city poverty increases most prevalent in Western metro areas— like Los Angeles, Riverside, and Phoenix. Based on increases in unemployment over the past year, Sun Belt metro areas are also likely to experience the largest increases in poverty in 2009.

What does this all mean to Realtors and should we have strategies to deal with this phenomenon? At a “gut feel” level many of us who live and work in suburban areas around large cities have probably already felt this happening. Median home prices have been falling for the last few years as some of the main causes of creeping suburban poverty reached us – layoffs, downsizing, plant closings and the attendant foreclosures and value loses in the neighborhoods that we service.

As I have opined many time before this is not a temporary thing but a fundamental reset of the American way of life in many of these neighborhoods and even in states like Michigan. Our automotive industry has been decimated, our manufacturing jobs outsourced or moved to other states. Our population is in decline and our housing market is in a shambles. Our unemployment rate remains the highest in the nation at more than 14%. Most large builders have exited the state or gone bankrupt and our home values have decline over 30% in the last three years. Michigan’s Realtors cannot just ignore all of that. Other Realtor groups in other states have their own versions of what has happened to their local markets.

So what are we to do? Should we put our tails between our legs and slink away? Should we put our licenses in escrow and hang it up? How are we to deal with this suburbanization of poverty that we are now a part of?

I think people in the industry will do several things to deal with this crisis; some of which have already started to happen in many parts of the country. There are already reports out of Texas of builders regrouping and starting to build smaller, more affordable housing, which the reduced earning power of this new reality will dictate. No more McMansions with big, energy wasting “volume rooms.” Housing starts there are now averaging 400-500 Sq Ft less space according to reports that I have read.

Realtor’s have responded to the need to refocus, too. The median home price of sold homes has fallen dramatically in the last couple of years and it is not going to jump back up. Realtors are getting used to making a living off a significantly lower median sale price. In many areas the days of the second home are over and certainly we are seeing serious downsizing efforts in almost every economic group, some of it labeled “greening”, but downsizing none the less, so Realtors are adapting to sell smaller homes.

We’ll also have to learn to sell to a whole new generation of buyers. The Boomer boom is over and most of them, while wanting to downsize for retirement, are trapped in their McMansions for now. The Gen-X crowd is so fearful of losing the jobs that they have that they've settled in for a while in the homes that they own. So, we’ll have to focus our efforts on the Millennials –the 20 or 30-somethings who will make up the bulk of the buyer pool for a while. For the most part they are the first-time buyers who fueled the mini-boomlet that we saw the the end of last year.

These are not people who put a lost of trust in institutions or traditions. They are the “wired-generation” who spend an great deal of time on-line, in front of video games or communicating electronically. They used to be on Facebook until we got there and took it over. Now they are elsewhere. We think that they Tweet on Twitter and they think it’s cute that we think that. They are elsewhere, texting each other about our Tweeting. They are also a generation that has accepted that they will have less, not more than their parents or grandparents and have moved on. They are no necessarily the "Green Generation",that too is a movement co-opted by their elders; however, they are into "less is more" and "life is about things other than just possessions", so maybe they are more green than those who run around exchanging their old light bulbs for florescent bulbs.

As much as they would like to believe that they no longer need us, because they have access to all of the information that they need on the Internet, they still need someone to integrate and interpret all of the data that they can access on the net and someone to set up the appointments and show them houses and someone to help write and negotiate the deals. When they look at Realtors they see a profession dominated by people who look like their parents or grandparents. What they don’t need is another parent telling them what to do. There's a fine line between being a trusted advisor and becoming an overbearing father/mother-figure. That’s the role we’ve been asked to play – the trusted advisor. Let’s try not to blow it.

So, for many of us, it means figuring out how to either sell a lot more less expensive houses to maintain the income levels that we’ve enjoyed or perhaps to learn to live within the means of a reduced income stream. It also means learning to work with a new and different set of buyers who have different demand and different dreams than we are used to servicing. Some will be better able than others to cope with these changes, so expect also a great turnover of the people that you’ve been used to working with in the field. The Chinese saying/curse “May you live in interesting times” has come true in our time. Deal with it.

A shades of grey society…

Have we become a “shades of grey” society, not longer able to discern moral black and white?

I live in Milford, a small Midwestern village in southeastern Michigan. I live on a corner across the street from a grade school. My corner has a four way stop. It has signs in all four corners and a big lighted overhead sign that says S-T-O-P on all four sides and above that is a flashing red light for each direction. Yet everyday, all day long, people ignore those signs and the flashing light and roll though this intersection, sometimes slowing quite a bit, sometimes not. Just a block further west on my street is a four way stop that only has the signs, and people quite often ignore them altogether and don’t even slow down.

Is this a sign of a society that no longer recognized black and white – stop and go – obey the laws? I think so. While the example of the stop sign may initially seem trivial, it begs the question of people making value judgments about how much to obey the law and maybe which laws to obey – making decisions of shades of grey. Perhaps they have fallen in that pattern because they know that there is no enforcement of those laws – in my 10 years of living here, I can count on one hand the number of times that I’ve seen the local police out enforcing these stop signs and ticketing people; for ignoring them. How sad it would be to think that only through strict enforcement could we get peo-ple to obey the laws of the land - to do the right things.

But, how is this any different than people committing mortgage fraud or defrauding the government out of the first-time tax credit or falsely claiming a hardship for short sales purposes? Some of those people might claim the same type shades of grey defense as the scofflaw who run the stop sign – “I didn’t see anyone else around so it seemed OK to go on through.” Perhaps they say that they felt it was OK to cheat the bank, since the bank had screwed the original owners somehow. They were, after all, just getting even for the little guys of the world. Of maybe they’d say, “I was just trying to get back some of the money that the government took away from me in the first place.”

Whatever convoluted logic people try to use when defending their “shades of grey” moral decisions just doesn’t hold up under any kind of scrutiny. The fact is if the sign says STOP then you must actually stop. If the tax refund rules say you can’t have owned a house within X-number of years, then you can’t play the game of saying that you wife owned and not you. You can’t claim a hardship for short sales purposes while sitting in your vacation home, martini in hand, with your Bimmer out front and your loaded 401K and IRA still in the bank. Yet it happens every day.

In Michigan they actually have finally arrested people who put in (and were paid) claims for first time homebuyer tax refunds and they have never bought anything! Whay did they do it? Because they thought no one was policing the program. Sadly, for the most part, they were probably right. What we aren’t seeing is homeowners who strip foreclosed houses going to jail. Isn’t that against the law, or is it a shade of grey OK? We aren’t seeing a lot of sleazy operators who prey on the unsophisticated with credit workout schemes doing the perp-walk on nightly TV. Is their sleazy bilking of the unsuspecting somehow OK – a shade of grey? And we’re not seeing the Wall Street clowns who lost all of our money on stupid derivative bets saying anything other than “oops, my bad” in front of Congressional hearings. Does being rich make it OK to have cheated millions of people out of their life savings? Was Enron just another shade of grey?

It is, after all, a society's collective moral values that keep it from descending into chaos. One has only to look at what often happens in the aftermath of great calamity (and which still may happen in Haiti), when morals often break down under the pressure of great suffering and despair, to see what the ultimate outcome is of a slide down the slope of graying moral standards. Maybe we need to start regaining a sense of right and wrong right outside my house by enforcing the law that resulted in the stop sign being there. If we can redefine a moral black and white at that corner, maybe we can work our way up from there.

What do you think? Do we need to be concerned about the shades of grey that currently define American morals?

Rats, now I live in a deadbeat State…

I got my 2009 corporate tax documents from my bookkeeper today and in with them was an explanation that Michigan is now a deadbeat state as far as the Federal Government is concerned, so I have to pay extra on my Federal Unemployment Insurance to make up for the fact that Michigan didn’t pay.

Of course they didn’t use the terms deadbeat in their explanation. They used the oh so much better sounding phrase that Michigan is a “credit reduction state.” They explained that what this means is that Michigan borrowed money to pay for unemployment claims which they did not pay back. In fact Michigan generously paid for extended unemployment and then didn’t pay the feds back – the state is a deadbeat.

So what does that have to do with me? Well the Feds have got to get the money from somewhere, so who do you think they’re putting the arm on? You got it – the small business taxpayers of Michigan. So it seems that politicians can just borrow from the Feds and spend money that they don’t have then not pay it back and I’m somehow liable to the Feds on my tax return. How convenient for the state government people.

Maybe I should lay myself off and put in a claim for unemployment, At least that way I’d get my money back. Do you live in a deadbeat state, too? Watch for that on your tax return if you are incorporated as a small business.

Sleazy lenders gaming the system, again...

It appears that some ever-resourceful mortgage lenders are working hard at staying one step ahead of government regulations and gaming the new GFE rules through the use of new and unregulated “worksheets” and “fee estimates”. The reason that the new GFE rules were put into effect was to corral wayward lenders who essentially lied to their clients on the GFE and then surprised them at the last minute (often at the closing table) with new or larger fees. Who hasn’t had that happen?

The problem isn’t with the majority of lenders and their agents; it’s with the sleazebags in that industry (and most of us know who they are locally). Now these sleazy operators have turned to the use of something not specifically mentioned or prohibited by the new GFE rules – so-called worksheets or fee estimates. These are presented as not being officially a GFE (after all that would have to be done under the new rules and possibly subject the sleazebags to penalties later), rather as “close estimates” of the borrower wil end up paying for the loan. Yeah, right!

Of course the regulators have taken note of the new practices and have said that they will look into it and issue new guidance, as needed. Now, I will admit that something is needed or some review of the current rules at least warranted. There does need to be a way for borrowers to get a good, honest ballpark figure from their lender about what it might cost them for a loan. The issue seems to be the “within10%” portion of the new rules. Lenders claim that they don’t always have enough information about the eventual deal to make GFE’s within the 10% allowed by the rules. That relatively narrow allowed leeway, along with the required timetable rules about changing GFE’s before closing is what the lender claim are the main issues with the new rules.

The real issue may well be that there is no reasonable enforcement mechanism for more flexible rules. If HUD had the ability to review each case for abuse or violations BEFORE each closing, then they might be able to write more flexible rules. They don’t have the manpower for that, so they have to write onerous rules for everyone, just to try to deter the few sleazebags in the business. The industry has unfortunately also shown HUD time and time again that it cannot police itself. Greed is apparently too strong of an influence and easily overcomes honesty in the sleazy operators. We shall see if the new laws requiring lender agent licensing has any effect. A few de-licensed sleazy lenders hanging from the yard arms might work wonders.

Oh crap, more of the same…

I don’t know whether it was misplaced optimism or just raw hope that drove me to believe that 2010 would be different that the very difficult 2009 year that we just competed. I wrote what turned out to be overly optimistic blogs and a newsletter articles about how it was going to be better due to various things like the extended tax credit and pent up demand to go with what I hoped would be a bottoming out and start back on the economic front.

Well, overwhelming evidence to the contrary from a number of prominent economic prognosticators leads me to believe now that we are facing more of the same for 2010. These learned men of the dismal profession opine that the Michigan real estate market is not going to be significantly different than it was in 2010. Crap!

If anything they are now saying that the situation may get a bit worse in the early going, as banks who were forced into foreclosure moratoriums by various states (Michigan being one) take action on delayed foreclosures. There is also a huge hidden inventory of already foreclosed homes that the banks have been holding off the market in hopes of stabilizing values. Those will start hitting the market soon. Then there is the looming commercial real estate crisis; which, while it does not impact my business directly, sets another bad economic tone in an already gloomy economy.

Wow, I’ve written myself into quite a corner here haven’t I? How am I going to get out? Well, I think that is the real issue here. What am I going to do about this mess in which I find myself trapped, through no fault of my own? Am I going to sit in this corner and cry about it? Am I going to give up and just climb into a foxhole until this all blows over, content to muddle along at a survival level. The answer is obvious – NO.

I have no choice but to accept the circumstances of the situation that I find myself in, because none of us can change that; however, all of us can change how we choose to react to that situation, what we do differently to change the outcome that seems inevitable if we do nothing. So that is what I will focus upon in the coming weeks and months. What I need is a plan; and not just a plan of words, but a plan of actions. I have the vision of what I want to achieve, but as Dr. Oz said recently “A vision without a plan is just a hallucination.”

Of this I am certain – if the market stays the same and I stay the same then the results that I should expect will be about the same. That is not acceptable since 2009 was essentially a survival year for me. I sold more houses than ever, but they have dropped so far in value that I made less money than ever. Time for Plan “B”. Plan B will be built on the same base of optimism that Plan A was, just with different approaches to prospecting and perhaps a more organized approach to securing listings in 2010.

I kind of wandered off into Buyer Agent land in 2009, which wasn’t bad and did result in over half of my business for the year; but which also left me with almost no inventory going into 2010 and greatly diminished advertising exposure from signage and MLS listings. Now I have to rebuild an inventory as fast as I can and get back into the swing of holding open houses and doing the other things that lead to long-term success from having listings. I missed out on the REO listings boom, so I need to build my inventory from normal listings, perhaps with a few short sale listing s thrown in because they can’t be avoided these days.

I’ll check back here from time to time to share what things I’m doing differently this year and what worked and didn’t work for me. Please feel free to share your ideas for things to do differently too.

The philosophers of Wii...

In what might be called the wisdom of the video game creators from the Jack’s Winning Words Blog come these tidbits of life philosophy from three game creators.

“Deal with the consequences of your actions, ‘cause life ain’t no video game.” (Ikkaku, Hosaka, & Kawabata) Jack goes on to say – This Japanese trio create video games for Nintendo. Sometimes, after we do and say certain things, we’d like to be able to push a button marked, REPLAY. Too bad! We just have to move on, hoping that we can do better the next time. (I could quickly ad, “Ain’t that the truth.” – ed.) While we can't hit a "Replay" button, I have opined here many times that the current economic crisis has in effect caused the "Reset" button to be pushed in most of our lives. We ave reset our expectations and our views of the future as we live through this calamity.

I H & K also said - “It’s takin’ whatever comes your way, the good AND the bad, that gives life flavor. It’s all the stuff rolled together that makes life worth livin’.” I suppose that I need to think about all of my grumbling about short sales and foreclosures and just accept them as things coming my way that make my life more worth living. If there is more satisfaction from overcoming great challenges than from performing the same easy tasks every day, then the current real estate profession is full of opportunities for that satisfaction. After all, helping clients through those processes does end up at the finish feeling more like a real accomplishment than a normal sale. I wouldn’t mind a few normal sales in between, however.

Finally they said - “Life is shaped by the people you meet every day.” - (I, H &K). How many new people did you meet today? We sometimes get stuck within the comfort zone of only associating with those that we already know. Get out and meet some new people today. Who knows, maybe some of them will turn into clients. The diversity of views of the people that you may know adds different insights into what’s going on around you and provides color and sparkle to what otherwise can become a grey and lifeless landscape.

While I certainly wouldn’t rank these sayings as great philosophical utterances, their focus upon things in everyday life that we might take for granted is worth pausing to reconsider and appreciate. So often we get caught up in the hustle and bustle of everyday life that we don’t do that. Not only don’t we stop to smell the roses, we don’t even see them sometimes. What a pity.
For a full page of quotes by these game developers click here.

Tough times, sure. But the "Well-Being Index" is peaking

From a recently weekly feed that I get from ICONOCULTURE comes this report on the country's feelings of well being.

WHAT'S HAPPENING

•Beginning in January 2008, Gallup research developed the Gallup-Healthways Well-Being Index. The index measures the comprehensive emotional, physical and fiscal health of American consumers on a scale of 0-100.
•During the fourth quarter of 2009, the index stood at 67.8, equal to its highest previously recorded levels. Emotional health and "daily experience of enjoyment" were both at record levels as well (Gallup.com 12.10.09).
•Analysts say the steady uptick in well-being since its low last December is a reflection of growing optimism.
•The index compares well-being across income groups, and while well-being increases with wealth, all income groups have seen an improvement in the past year.


WHAT THIS MEANS TO BUSINESS

•Well-being can be a vague thing to try to measure. But one striking thing seems certain: Americans are feeling better about themselves and their prospects even as the economy continues to struggle.
•At Iconoculture, we believe the improvement in well-being is a natural result of Americans discovering the emotional, physical and financial upside of paying down debt, spending less and generally simplifying.

WHAT THIS MEANS TO US IN REAL ESTATE

Obviously people who feel better about themselves and are optimistic about their future make for better potential home buyers. I was surprised to read that the Gallup – Healthways Well-Being Index actually rose year-over-year, even though it ended on a down-swing at the end of 2009. To see the index and read about the components that make it up and the methodology used to compute those components and the Index overall - click here.

This is fascinating stuff that we Realtors probably all need to understand better, in order to understand our customers better, or at least where their heads are at these days. As a consumer, maybe this explains why I feel a little better about things overall than I did a short while back. At least it give me some things to think about now that I can see and understand some of the components that go into the overall feeling of well being.

Brighton Michigan Market Charts

This is the last in my series of market chart posts, but remember that these charts will update automatically, so come back from time to time to see how things are doing For now they give us a good look back at the Brighton market in 2009 and how we ended the year in the Brighton, MI market. The data is from the 48114 and 48116 ZIP Codes.



This first chart looks at the trend over the year in median home sales prices (Median Sale prices dropped in Q1, then rose in Q2 and early Q3, only to fall again at year end) and the inventory that is sitting on the market (inventory tracked the Median Sale Prices all year with a huge drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit, but some may just be people getting discouraged and pulling their homes off the market.



This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we had an up market in Q1 and Q4, with a roller coater ride in activity in Q2 and Q3 and a drop off at the end. Over the year the average time it took to sell was also like a roller coaster ride but eventually stretched out from about 240 days to over 255 days - not as wide a range as the townships in Oakland County that I track.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

West Bloomfield Michigan Real Estate Market Charts

As we go into the new year these charts will update automatically; however, for now they give us a good look back at the West Bloomfield market in 2009 and how we ended the year in the West Bloomfield, MI market. The data is from the 48322, 48323 & 48324 ZIP Codes.



This first chart looks at the trend over the year in median home sales prices (Median Sale prices dropped in Q1, then stayed steady for 2 quarters and fell at year end) and the inventory that is sitting on the market (inventory tracked the Median Sale Prices all year with a huge drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit, but some may just be people getting discouraged and pulling their homes off the market.



This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we had a down and flat market in Q1 and Q2, with a spike in activity in Q3/Q4 in sync with the first-time buyer push during that timeframe and a big drop off at the end. Over the year the average time it took to sell was like a kiddie roller coaster ride but eventually stretched out from about 215 days to over 270 days.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

Lyon/South Lyon Real Estate Market Charts

As we go into the new year these charts will update automatically; however, for now they give us a good look back at the South Lyon/Lyon Twp market in 2009 and how we ended the year in the South Lyon, MI market. The data is from the 48178 ZIP Code.



This first chart looks at the trend over the year in median home sales prices (Median Sale prices fell every month during the year, with just the little upward blip in Q3 when the first-time buyer spike was hitting the overall market) and the inventory that is sitting on the market (inventory stayed fairly high almost all of the way through Q2 and then started a huge drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit, but some may just be people getting discouraged and pulling their homes off the market.



This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we had steadily rising Market Action Index, with a few downward blips or flat spots, but still trending up. Over the year the average time it took to sell was like a roller coaster ride but eventually stretched out from about 230 days to over 270 days.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

Market Charts for White Lake Michigan

As we go into the new year these charts will update automatically; however, for now they give us a good look back at the White Lake market in 2009 and how we ended the year in the White Lake, MI market. The data is from the 48283 and 48386 ZIP Codes.




This first chart looks at the trend over the year in median home sales prices (Median Sale prices were relative flat right close to $200K all year with a slight "bump" in Q3/Q4 when the first-time buyer rush was on) and the inventory that is sitting on the market (inventory stayed fairly high almost all of the way through Q3 with a huge drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit.




This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we had a roller coaster ride through much of Q1/Q2 and Q3, followed by a falloff in activity in late Q4. Over the year the average time it took to sell also stretched out from about 220 days to over 280 days.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

Real Estate Market Charts for Commerce Michigan

As we go into the new year these charts will update automatically; however, for now they give us a good look back at the Commerce market in 2009 and how we ended the year in the Commerce, MI market. These charts use data only from the 48382 ZIP code.




This first chart looks at the trend over the year in median home sales prices (consistently down, with a slight uptick just after mid-year) and the inventory that is sitting on the market (up through mid-year with a huge drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit.




This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we tracked steadily up through much of Q2 and Q3, followed by a falloff in activity in late Q4. Over the year the average time it took to sell also stretched out from about 220 days to about 260 days.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

Real Estate Market Charts for Highland Michigan

As we go into the new year these charts will update automatically; however, for now they give us a good look back at the Highland market in 2009 and how we ended the year in the Highland, MI market.




This first chart looks at the trend over the year in median home sales prices (down, then back up near the end of the year) and the inventory that is sitting on the market (up through most of the year with a big drop at the end). Some of the drop in inventory can be attributed to the big rush in September and October to buy in time to qualify for the first-time buyer tax credit.




This chart shows a derived index value that the Altos Research folks call the Median Market Action Index, which measures how hot the market is in terms of sales activity level. It also shows the Average Days On Market (DOM). So, we had a spike again in market activity in the September October time frame, followed by a dramatic falloff in activity. Over the year the time it took to sell also stretched out from about 230 days to over 280 days.

By the way, the Altos Research folks define any market that has a Median Market Action Index below 30 (the scale goes from 0 to 100) as a buyers market, so obviously we spent the entire year well below that break point.

See all of the charts fro the six townships that I watch, plus Brighton, on my Milford Team Web site on the Markets Statistics Page.

Who makes these decisions about how we spell things?

One of the things that I inherited when my grandfather passed away many years ago is a nice lawyers bookcase that is full of a series of books called The Harvard Classics, published by P.F.Collier and Son in 1909. I’ve been looking at those volume lately with the resolve to finally read some, if not all of them before I go – a noble, if somewhat daunting task. These volumes apparently represented what the scholars of Harvard University thought contained the essential writings of the time, tomes with which any gentleman of letters should be acquainted. Various Harvard Professors edited them, this volume by one C. J. Bullock, PhD, professor of Economics.

I decided to start this week and had one false start in Volume 1 with the Autobiography of Benjamin Franklin. It was just too hard a read to be the one that I start on. So, I chose a second book, this one containing Wealth of Nations by Adam Smith. Actually the official title is An Inquiry into the Nature and Causes of the Wealth of Nations. Adam Smith was the premier political economist and moral philosopher of his time, which was the mid to late 1700’s. His treatise on The Wealth of Nations is generally accepted to be the foundation upon which modern economics is based. He wrote it between 1766 and 1776.

What I find fascinating about trying t o read this work – and it is a tough read, too – is how much the language has changed and how the spelling of common words has changed over time. Smith spelled choose as chuse, which various dictionaries define only as an obsolete spelling of choose, and shew (for show) much diffently than we do now. Some spellings are likely unique to the England and Scottland of Smith’s time, such as labour for labor. Some like the word artificer while still valid are just seldom used any more (it means a skilled laborer).

Much of the writing seems verbose and stilted by modern standards; however, I sometimes wonder if we haven’t become too terse in our pursuit of speed. And I wonder who makes all of the decisions about how something is spelled or if words that we use are actually really words? My wife cringes every time that I use the “word” snuck (as in the past tense of sneak), which she quickly reminds me is not an accepted word, but accepted by whom? I guess there may be official boards of lexicographers somewhere who meet in secret every now and then and decide which collections of letters actually are officially to be recognized as words. I would guess they bless not on the spelling but the definition(s) at that time – at least I chuse to believe that.

Find your invincible summer...

"In the depths of winter, I finally learned that there was in me an invincible summer.” (Albert Camus) from the Jack’s Winning Words Blog. What a great quote for this time of year, although it was meant in a much more figurative way, I’m sure. Having seen Invictus over the Holidays I can relate it to Nelson Mandella’s unwavering resolve to remain the captain of his soul while he was imprisoned.

We have certainly been living through the depths of a long real estate winter, one that claimed many victims in our business. For most this has been a character building experience and for some a journey of self-discovery. I recalled as I sat to write about this that I once wrote a report on John Steinbeck’s novel The Grapes of Wrath in which I opined that Steinbeck wasn’t just writing about the times, but was trying to show the ability of man to endure any hardships and keep going. There was within the Joad family some invincible summer that refused to be buried by the depths of winter in those times.

So here we are, quite literally in the depths of winter; enduring what for some is the longest and deepest cold snap in better than a decade and in the midst of one of the worst recessions since the Great Depression. Perhaps we are near the end of both, but all of us need to let our invincible summer come through in times like these.

I’m fortunate, as I’ve mentioned many time here before, that I’m married to a Pollyanna and work for Little Mary Sunshine, so I always have someone to turn to whenever I need a recharge of that summer spirit. When I let myself get down my wife calls me out as being like Eeyore and my manager asks what wrong with Mr. Grumpy. Obviously I can’t stay down in the face of such an onslaught of happiness and perkiness.

Life and career success coach Tony Roberts teaches a method for success based upon finding successful people and modeling what they do. The same approach works for happiness in life. Find some generally happy people and hang out with them and figure out how to model some of their upbeat behaviors. If nothing else, you’ll probably find that you can draw enough happiness from being around these people to help pull you out of the doldrums.

Sure these are tough, cold times; however, to the extent that you can keep letting your invincible summer shine through you will become a welcome beacon for people and maybe some of them will turn out to be customers. I know that few, if any are looking to deal with Mr. Grumpy; so I need to make sure that he and my Eeyore side stay firmly out of sight. Say hello to Mr. Happy, your friendly neighborhood Realtor!

I won’t share my Pollyanna with you (she’s my wife); however, you can get a daily fix of happiness and high spirits from Little Mary Sunshine by joining our office in Milford. We’re always looking for good, upbeat people who want to be successful Realtors.

Stats Charts for MIlford

I happened upon a nice site for generating charts for real estate statistics recently - Altos Research. They provide a few free charts and many paid versions for whatever ZIP codes one can supply. Below is one such chart.



These charts are updated whenever the underlying data changes, which is nice. I've put a few of them on my Milford Team Web site - two charts for each of the townships that I cover (for now I'm just doing the free charts).

The chart above shows the dramatic drop in inventory on the Milford market, as well as the drop in the Median Sale Price over the 2009 year. Every township has similar drops in 2009.
Below is a chart showing the Average Days on Market (how long it took to sell) for Milford, as well as something that the Altos Research People call their Median Market Action Index, i.e. how "hot" was the market, how much buyer activity. You can see that the time to sell stretched out big-time and the market activity fell off at the end of the year when the tax credit was supposed to expire. The Altos people use an index range from 0 to 100 for that Activity Index, with any reading below 30 indicating a buyers market (all of the reading on this chart are down in the teens).



I guess there's no real "news" coming out of these charts. I've been tracking these trends all year for all five of the townships that I cover; however, it is a nice way to visualize the data. To see the charts for all of the townships that I cover, plus Brighton, go to my Web site http://www.themilfordteam.com/ and look on the Market Statistics Page - there will be a link there to the Charts, Charts, Charts page. There are lots of other statistics and other helpful data and information there as well.

IRS clarifications on tax credit…

Oh what webs we weave. From the National Association of Home Builders Web site came this short piece. The IRS has “clarified” its position on two scenarios that have arisen with the extension of the first-time home buyer tax credit and creation of the new repeat home buyer tax credit. With the addition of the second tax credit, there may now be a situation in which two unmarried buyers purchase a residence together where one qualifies for the $6,500 repeat buyer credit and the other qualifies for the $8,000 credit. According to the IRS, they must allocate the tax credit in a reasonable manner. The repeat buyer cannot receive a tax credit higher than $6,500 and the total amount claimed by both buyers cannot exceed $8,000. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.

That all sort of makes sense. After all, we wouldn’t want both people making claims on the same house, but what do want to bet that that won’t happen? After all there were apparently hundreds of claims for the original tax credit files by people who never bought anything.The second scenario involves the qualification status of married purchasers as repeat home buyers. In order to qualify for the repeat buyer tax credit, both individuals must have lived in the same residence for five consecutive years out of the last eight. If one spouse has lived in the house for five years and the other moved in later, after they were married, then they are both excluded from the repeat buyer tax credit.

This information has been updated on NAHB's consumer tax credit Web site, which can be found at http://www.federalhousingtaxcredit.com/.

So, apparently you’d be better off to get a quickie divorce and be able to claim your tax credit if you (like so many do) moved in with a spouse after getting married and that was five years ago or less. I guess this all makes sense on some level, but for the most part if looks like it will just encourage more fraud as people lie about these things to claim the tax credit. Somehow it seems that the rule should be that one of the two married partners must have owned and lived in the house for the last five years. There is sure to be enough fraud and abuse attempted by investor-owners without worrying about a spouse who only moved in a few years ago.

Sometimes I believe that in order to be a good bureaucratic rules writer one must first attend the Joseph Heller School of Writing, perhaps with a major in obfuscation. I’ve actually tried to read the write-ups, rules and explanations of a few of the Federal programs for homeowners and homebuyers. It tends to cause headaches.

Understanding what you don't know...

“Sometimes it proves the highest understanding not to understand.” (Gracian) BG was a 17th century Spanish Jesuit who is known for his witty maxims and a writing style called conceptism.

I could start out by saying, “I don’t understand”, but I think I do. Lots of times my wife will ask me something and I’ll take some wild guess and throw that back, to which she always says, “Why don’t you just say, I don’t know?” I don’t understand why I do that, other than thinking at the time that saying something is better than not having an answer. However there is another old saying to the affect that it being better to keep your mouth shut and have people wonder if you are ignorant than to open your mouth and remove all doubts.

In real estate, it is often the know-it-all agent who gets himself and his clients into the most trouble. There are lots and lots of situations that come up or questions that are asked for which the best answer is’ “I don’t know, but I’ll find out”; rather than blurting out some BS answer that is probably wrong and which may lead the client to make a mistake. There are also too many assumptions that can be made, conclusions that may be jumped to and “facts” that later prove to be false. I’ve had to be really careful not to go down those many misleading paths or to take my clients there. Sometimes the way to appear to be the smartest is to admit that you don’t know, but commit to do something about that.

One of the things that I’ve observed about the various managers that I’ve worked under in this business is how they deal with all of the unknowns in this business. No one knows it all, not even the manager who’s been in real estate for 20-30 years; however, most successful people in real estate seem to have developed good processes for evaluating the situations that are presented to them and then working through the various levels of law, ethics and business practices that are involved in coming to the correct conclusion. Some of the best that I’ve worked with have had to stop in the middle of a meeting about an issue and call someone else to get their insight on the issue. It is that ability to recognize their own limits, but to have thought out the process enough to know when and who to call that defines “wisdom” in my book.

So, when a client asks you that question that is seems you should know, but don’t; avoid the urge to BS the answer just to show how smart you are. Instead, show real intelligence and say, “I don’t know the answer to that, but I know how to find the answer.” You’ll be glad later that you did that and so will your client.

All we have is time...use it wisely...

“All that really belongs to us is time; even he who has nothing else has that.” (Baltasar Gracian), from my favorite source for quotes – the Jack’s Winning Words Blog. Good advice to keep in mind as we start a new business year. As Realtors, we generally all have access to most of the same tools and services that we might use in our business. Some of the things that we could use might cost too much right now, so we don’t use them. Other things that are available just might be effective in a particular market. Some agents face competition from huge teams with star Realtors at the top, while others toil away in little backwater areas without a lot of competition. Each Realtor’s situation will be a little different.

However, what we all share and what is the same for us all is time – the limited amount in each day and the amount given to each person. It’s how we each chose to use what time we have that sets up apart. If you look at the lives of enough successful people in the field of real estate or any other field, you will eventually notice something that they have in common – they all have developed systems or work habits that make the best use of the time that they have. That is a key part of their successes, along with such things as having clear and well-defined goals and the self-discipline to put into daily practice the things that they know they need to do to meet those goals.

It is that commitment to the best daily use of time, through the implementation of systems and practices that differentiates the truly successful from the wanta-bes. I find that I have the intellect to understand what I need to do, but not necessarily the will to commit to actually doing those things – I’m still a wanta-be. I plan to work hard this year to change that shortcoming in my own personality.

The main shortcoming that I need to work on is my aversion to prospecting, when that involves cold calling. I like doing mailings and working on my Web presence and I actually enjoy talking to people once I’ve met them; however, making cold calls on people that I’ve not met is something that just scares the bejesus out of me and I can’t force myself to do it. I suppose it’s that old fear of rejection thing, since cold calling offers such a high probability of being turned down. I’m also not comfortable with using scripts when making calls. They always sound artificial to me.

I’ve just mailed my latest newsletter to the 500+ people on my mailing list and in that letter I told everyone that I’d be calling them to see how they like the newsletter and to make sure that they still want to receive it. That exercise should help, since I have some relationship (or had) with everyone on that list. At least I can convince myself that these are not cold-calls, but rather friendly follow-ups after years of sending newsletters. For me it’s a start and good use of my time.

The modern day wanderers…

There was a sixties song by Dion and the Belmonts called The Wanderer, also an ancient English poem called the Wanderer and a 1979 greaser film called The Wanderers based on the novel by Richard Price written in 1974. Now in many towns and villages across America there are modern versions of wanderers – in this case people who spend their days just wandering around, sometimes keeping to themselves and sometimes talking to themselves or to no one in particular.

A great deal of this was caused by the budget cuts of the 70’s and 80’s that resulted in the shutdown of most psychiatric care facilities and resulted in patients being sent back to their communities to live. There are literally hundreds of people wandering the streets of local towns who otherwise would have been under care in one of those facilities. These are not the stereotypical "street people" who actually live on the streets, most have nice quarters in groups homes; nor are they bums or beggars, they just have no where else to go and nothing else to do, so they wander about.

Most of these wanderers are harmless albeit maybe a bit scary to kids and mothers who might encounter them on the streets. The majorities in my little village tend to be middle-aged men who spend their days walking about the town in conversation with themselves or speaking to no one. While generally harmless, their behavior nonetheless evokes fear in some and derision in others. In our little town kids, as they are want to do, sometimes taunt these wanderers, which occasionally provokes a response that requires intervention. Many of these people are on medications for various issues and one can generally tell if one of them has missed his meds.

There is certainly nothing wrong with trying to reintegrate these people back into their communities; however, one has to ask if the system wasn’t too thoroughly dismantled and maybe much too quickly. There is very little left in the way of care to offer these people; nowhere to have them get the help that they may need. The state decided that it was going to get out of the business of providing that care and so it did, with little thought to where these folks would end up. And so they have become the wanderers, seeking something on the streets of our towns that they will never find – help.

I’m not sure that there is an answer to this issue, just as there is no easy answer to the homeless people who might also be wandering the streets and sleeping in doorways. As a society we have failed these people as we have failed the homeless, the hungry and the uninsured ill. It is easy to turn the other way and mutter a “tsk-tsk” under our breath when we see these wanderers on our streets. It is way harder to think about what we can do as individuals and as a community and society to take better care of these less fortunate people. What does your community do to provide care for its wanderers?

Understanding the new short sale rules

As we enter a new year, there are lots of new rules in real estate that take affect.
There is much general misunderstanding of the impact of a short sale on one’s ability to get a new mortgage and how soon that can occur. From the Blog - http://timandjulieharris.com/ comes the following explaination of the recently released FHA rules on that topic.

The Department of Housing and Urban Development (HUD) released a letter to lenders regarding borrower eligibility for a new Federal Housing Administration (FHA) mortgage after pursuing a short sale.

Download the new guidelines (available to download here)

Here is the actual language from the new FHA Guidelines:
FHA Guidance on Short Sales Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to take advantage of declining market conditions, and purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.
Reference: For detailed information on converting existing principal residences into rental properties, see 4155.1 4.E.4.g

Here is the exception:
Guidance on Borrowers current at the time of Short Sale Borrowers are considered eligible for a new FHA-insured mortgage if they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and the proceeds from the short sale serve as payment in full.
Reference: For detailed information, see “Short Sales” at 4155.1 4.C.2.l.
Translation: I had to read that a few times…here is the translation. If the homeowner/ borrower didn’t miss any payments prior to doing the short sale AND their overall credit history will allow…they CAN buy immediately following a short sale using FHA financing. The focus seems to be on rewarding those who made their payments on time..and did a short sale VS. those who missed payments prior to a short sale.

More info:
Guidance on Borrowers in default at the time of Short Sale Borrowers in default on their mortgage at the time of the short sale (or pre- foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances.

Reference: For detailed information, see “Short Sales”, at 4155.1 4.C.2.l.
Translation: Borrowers CAN use a new FHA-insured mortgage if they were current on their previous mortgage and other debts at the time of the short sale and if the proceeds from the short sale serve as payment in full.

Bottom line, missed payments = no FHA financing…for 3 YEARS. If a borrower executes a short sale while in default on their mortgage would not be eligible for a FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Some lenders can make exceptions if the default was due to circumstances beyond the borrower’s control such as the death of the primary wage earner.

Anyone eligible for the Home Affordable Foreclosure Alternatives program (HAFA) would not be eligible for a new FHA-insured mortgage for three years. WHY? Because to qualify for HAFA the homeowners has to MISS PAYMENTS! Under HAFA, the US Treasury Department provides incentives to servicers, banks and investors to pursue a short sale for seriously delinquent borrowers.

So what does this mean for you? Well for one there is lots of bad advice out there that instructs people to stop making mortgage payments as a means of getting the attention of your bank. It is true that many banks initially refuse to talk to homeowners who are current on their payments about loan modifications or other alternatives, including short sales. You must be persistent to get past the first layer of bank bureaucracy and get to the people who can discuss your situation with you. You must also have a REAL hardship, not just be teed off that your home has lost value. In general, I would say, it is best to have the help of people in the real estate business who have been trained and have experience in dealing with the lenders in short sale situations. I have aligned myself with one such full-time negotiator to provide that help. You can read more about short sales and the process and help that is available on my Web site - MIShortSales.net.