HavaSue's Real Estate Today

Sellers, If "Help" comes with a bill... watch out!

2008-12-02T11:44:00.000-08:00

I've been receiving a lot of calls lately from homeowners and sellers who have gotten behind on their mortgage payments and are looking for help. While I highly recommend gathering as much information as you can, as quickly as possible, be particularly wary of persons and companies that offer an easy solution with, of course, cash paid upfront.

While no two household's difficulties are the same, there is one piece of advise that works in all situations. Gather all the information you can, decide what is the best solution for you, act quickly and under no circumstances, pay for services or promises to "fix" your situation. The last thing anyone who is experiencing cash flow problems needs, is to place their hard earned money in the hands of someone who can easily do more harm than good. Especially at a time when you need your money the most.

Generally, these persons or companies will say they can arrange to have your mortgage restructured, lowing the payments to keep you in your home. This action is best done by YOU, the homeowner. Believe me, no one carries a magic wand or has an "in" with your mortgage company. If it sounds too easy.... more than likely....it is!

It is important to remember that the mortgage company really doesn't want to foreclose on your home. However, and perhaps more importantly, the people you will be dealing with at your mortgage company are human. Worst of all, an overworked human. Several "workout" departments are now operating 24 hours a day. The key here for the homeowner, is persistence. You must be active and continually work with the lender to see what, if anything, can be done in your particular situation. Remember that many lenders are working with established guidelines. When it comes to working out a restructure, if you do not fit in the box, they will not make an exception, regardless of what has happened.

If it has been determined that they can restructure your payments, respond to your lender quickly. More than likely you will have several forms to complete, documents to sign and documentation to provide. The old saying of people like working with those they like, does apply here. If you are timely in your response, your file worker can see an end to your case and will be anxious to move it along to complete the file. So help them out. If you are one of the few who can be benefited from a restructure, act quickly, for yourself and the hundreds of others who also need your file workers time.

If, after several calls and speaking with different persons within your lender's servicing department, you realize they cannot assist you, what to do next? Again, know your options. If you are facing a foreclosure, how much time do you have? If a Notice of Trustee Sale has been posted, that is the time limit! If you have your property for sale, sit down with your Real Estate Broker and fully understand your competition. In today's market, if the home is not priced right, it will not sell. Quickly consider making a price correction. In the game of "Beat the Bank", the goal is to have a qualified buyer well in advance of the Trustee Sale. If you are concerned about losing equity, in an incorrectly priced home, the equity is already gone.

If by reducing your asking price, you now owe more then the home will sell for, consider a short sale. Ask you Real Estate Broker if this is a transaction in which they are experienced. Short sale transactions are more labor intensive and the commission to the agent is not guaranteed. While your Broker may like you as a client, they may prefer not to work on short sales. In considering a short sale the key is to price aggressively to attract the buyers to your home, but not so aggressively that you lender will refuse the offer. Once a buyer has made an offer, the seller will sign the purchase contract accepting the offer, then it's up to your lender for final approval of the short sale. It's important to note that not all situations will qualify for a short sale approval from your lender. If the homeowner has the means to make the payments and to also pay the balance of the loan after the home is sold, most likely a short sale will meet with some difficulty in being approved. The homeowner must again complete a series of forms and supply documentation. If the homeowner can demonstrate a hardship in making the payments, the lender would prefer to have the home sold via a short sale rather than foreclose. One last note here if you are considering a short sale. If you don't have a good qualified tax accountant, get one. You will want to discuss your situation with your tax accountant prior to making any firm plans in order to fully understand the tax implications of your decision.

What if your home still won't sell and the Trustee Sale date is looming? Chances are that the highest bidder on your home at the trustee sale, will be your lender. Chances are that you will need to remove yourself from the home. If this happens, make plans to move at your pace prior to the date. Leave the home undamaged, which may sound strange but, many people who find themselves having to move are understandablely angry at their lender. Damaging the home will not help the situation and it can cause you a new set of problems. While it is understandable to be angry, remember you are not alone. Thousands and thousands of Americans are facing the same problems and together we must work to see that this never happens again.

If you are experiencing difficulties in making your mortgage payments, the time to act is now. Call your lender and meet with an experienced Real Estate Broker today. We want to keep you in your home. Perhaps together, we can do that.

You want me to paid for..... What?

2008-09-24T15:14:00.001-07:00

Wow, What a week! Not only is the average homeowner paying for the greed and reckless business practices of mortgage companies and banks, we are now being asked to gamble into the future with the recent bailouts by the Feds. I believe it's time those persons responsible for the utter collapse of the mortgage industry and the sudden decline in the housing industry to be held accountable. The housing strain has crept into other financial markets as we knew it would and why has nothing been done until now. Are our policy makers asleep at the wheel or are they just that out of touch with Mr. Middle America. But, in looking back, who was really at fault? Yes, the home buyers should have known what they were getting into and yes, many of them lied about their income or assets, but, when people see a way to better their financial position, it's human nature to want to get what everyone else is getting. Buy a home, own it for a few years, sell it and make a profit. Why not, others were doing it. Can you really blame the buyers? Perhaps we should look at the other side. Who was writing these loan programs and what did they have to gain? Logically, if a loan program is written which allows a home buyer to purchase a home with no money down, a credit score of 620 and not show how they receive the income needed to repay the loan, would you think that perhaps this person may not be able to really afford the home? This question not only applied to the moment of purchase but, let's say down the road in two years, when the interest rate is now about to adjust and the 6 percent margin has now adjusted the payment up 25 percent. But Mr. Home buyer isn't worried. He is sure that the value is going to continue to go up. He is sure to reap his reward, selling the home before the rate adjusts. Can you really blame him? The system and plan was put there by the mortgage companies and banks. If Downey Savings was doing a no down payment loan with a 620 score,
Countrywide had to beat it, as did Wells and on and on. They all wanted to out do the competition and get their share of the "profit pie". Mr. Middle America never saw it coming or if he did, he was sure he would be able to get out before it was too late.

But the wave hit fast and hard. Suddenly, values are falling and you can no longer refinance or sell for what you owe, yet here comes the adjustment. The mortgage payment that was perhaps hard to manage before is now impossible to pay. But Mr. Middle America thinks, since I have no money of my own in the home, what am I loosing? And so, starts off the foreclosures. The continued decline in values starts to affect those with a vested interest in their homes. If they need to move and sell they are looking at an increased time on a market that is highly in favor of the buyer. And so, starts off the short sales. With the mortgage companies and banks now having record losses the companies that are in the business of insuring those mortgages as well as those buying them are now threatened. Many of these companies which invest in mortgage backed securities, such as those holding Mr. Middle America's investment and retirement accounts are now also on the line. So it appears that Mr. Middle America will feel the pain in several ways and for years to come. And we haven't even touched on the job losses, the strangle hold of credit for the future or the years it will take to find balance in the marketplace .

I wonder again if the policy makers didn't see it coming? No, with all the financial wizards at their disposal, they had to have known. Is it that they are that out of touch with Mr. Middle America? God forbid the answer, that they just didn't care. I do wonder, if they ever stopped to think about a moratorium on interest rate adjustments or putting programs in place within these mortgage companies to mandate hardship refinances in order to keep Mr. Middle America in his home and off the market. If the number of foreclosures across America were say, cut to a third, would the impact have been as great?

After 26 years in the real estate industry, I am angry that our policy makers saw this coming but elected to do nothing. After 26 years, I, like many in the industry saw it coming. While I do not believe that holding those accountable will, in any way, help us at this time. It will perhaps lessen the likelihood of a financial collapse in the future. Currently, nearly every person in America has or will feel this lack of responsibility, either now or at some time in the future. We will all pay for the greed and reckless business practices of those that had the power to make the wrong decisions. Why then should those that made these decisions not be held accountable? How many were affected by Enron? How many are affected today?

Below is a summary from Lawrence Yun, Chief Economist for The National Association of Realtors of recent week's events. Will this be the end of the bailouts?

$700 Billion for What?

By Lawrence Yun, Chief Economist
A massive $700 billion bill will be fast-tracked through Congress this week to give the U.S. government the authority to buy bad mortgages off the books of Wall Street firms. People are calling it the 'mother of all bailouts' and the 'biggest bailout in the history of mankind.' I am inclined to view it as the biggest sovereign wealth fund investment to date.
Several sovereign wealth funds - essentially a mutual fund run by a government for the government (or its taxpaying citizens) - have been investing in Wall Street firms and mortgage-related debts since late last year. Singapore, South Korea, United Arab Emirates, Saudi Arabia, and China were among the countries putting up a few billion dollars in the hopes of turning a big profit once the housing market recovers. Treasury Hank Paulson, a former CEO of the top U.S. investment bank Goldman Sachs and perhaps missing his old job, has now created a U.S. sovereign wealth fund that outstrips in size all other sovereign funds put together. Some may even view it simplistically as the Treasury Department going "all-in" in this $700 billion Texas Hold 'Em poker bet.
The principal goal of this new Treasury authorization is not to make money but to unclog the financial pipelines. Worries about capital inadequacy, further mortgage debt write-downs, and margin calls have hemorrhaged the movement of capital. The overnight borrowing rate has been skyrocketing, as any firm with excess cash was unwilling to lend that precious dough should it face the fate of Lehman Brothers. The very essence of capitalism - of allocating capital to its most productive use - was collapsing before our very eyes last week. The whole economy and Main Street civilians would have eventually suffered greatly from the mistakes of Wall Street.
The way to unclog the system is to buy certain mortgage backed securities off the books of financial firms. Because of illiquidity many mortgage securities, even those performing reasonably well, are being valued at pennies on the dollar if forced to sell. Let's say, for example, that you as a bank hold 100 mortgages and half of your clients are paying mortgages on time. At worst, these 100 mortgages would get at least 50 cents on the dollar. However, if you need to raise capital because of margin calls in the current panic, you would not get 50 cents but only few pennies on the dollar. These unrealistically low valuations are paralyzing the balance sheets of financial institutions and hindering the liquidity flow.
Treasury intervention will help restore the proper valuation of these illiquid assets. However, Treasury should not reward the mistakes of Wall Street by bailing out at an unreasonably high price and handing out "free money." Buying at a deeply discounted price could potentially lead to huge revenue benefits for Treasury on the behalf of taxpayers once the housing market and mortgage debt valuation recovers, but the financial firms may be unwilling to sell at unreasonably low prices. If this happens, we are back to square one. Subsequently, a delicate balance must be pursued with the goal of helping unclog the financial pipeline, but also protecting taxpayers' money.
Understandably, there will be anger and outcries from the Main Street public of this massive Wall Street 'bailout.' Politicians will feel the heat in this election year. But those same politicians have no choice: if the bill does not pass, the acute financial pain will quickly trickle down to Main Street.
The Main Street disgust of executive pay is also understandable. I will defend the '$700 billion bailout' to help stabilize the housing market and economy, but not the golden parachutes of fallen Wall Street executives. How is it that failed managers are able to get away with a fistful of dollars? The same can be said of Fannie Mae (FNMA) and Freddie Mac (FHLMC) executives. Many past managers of these government sponsored enterprises were paid a gigantic sum for running the very simple business of borrowing cheap and lending high. It was possible for Fannie and Freddie to borrow cheap on the backs of government (i.e. U.S. taxpayer) guarantees. Most of this borrowing cost advantage should have been passed onto consumers and not kept by Fannie/Freddie managers.
Hank Paulson has a tough task. He must permit capital to move around. That is the essence of capitalism. He must at the same time also protect taxpayer money. The return on the taxpayer gamble depends on two things: at what price the Treasury will buy bad mortgage debts off Wall Street books, and the future mortgage default rate. The default rate, in turn, will depend on the housing market recovery. Knowingly or not, the 75 million homeowners and 100 million taxpayers have now become the key stakeholders on the side of housing market recovery. In the end, if all goes better than anticipated, Mr. Paulson may perhaps get his own super hero figure made for returning a healthy rate of investment to taxpayers on this $700 billion gambit.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®.

A Blog Beginning

2008-09-07T11:21:00.000-07:00

Today, it's beautiful outside! Although the daily temp is expected to be 113 degrees, here in Havasu it's just gorgeous. You can really feel the fall weather coming on, which has always been my favorite time of the year. For those of you thinking, O.K. 113.... that's way too hot for me. Well, when you hear about Lake Havasu having a dry heat.... it does. Excepting, of course, the monsoon season, which we should just becoming out of. Either it's the dry heat or the higher temps simply grow on you. In any case, I wouldn't have it any other way.

Being that this is my first posting, I think I should give an idea as to what this blog will mainly consist of. Since I am an Associate Broker at Lake Havasu City Properties, this space will mainly be dedicated to the Havasu real estate business, reports on how the Lake Havasu real estate market is coming along and news from the various Havasu activities. My husband, Jim, is a Ranger for the Bureau of Land Management and is out patrolling the lake each day. On occasion, the latest and greatest news from the Lake will be included from him.

If you have any input or questions on Lake Havasu, please feel free to ask. Until next time, for now I'm office bound.