March 29, 2010 - Weekly Real Estate Industry Kick-Off
Don’t Miss Out! Watson Call Tonight, 9pm EDT
Did you register yet? I guarantee you that space will fill up quickly, so register now! Jeff Watson is doing a FREE open training call tonight, Monday, March 29 at 9pm EDT. He’s going to answer any and every question you have on the short sale process.
Click here to register. Don’t wait – space is limited.
Check out this brief video, to learn more. Again, it’s tonight at 9 pm EDT, Jeff will answer your questions. All you have to do is post your question in the comment box here. He’ll cover as many questions as he can in two hours. That’s TWO full hours of Watson… If you’ve been in real estate investing, then you know that Jeff is THE short sale attorney in the U.S. He’s been on the front-lines for years…met with attorney generals, met with key executives of major underwriters and real estate brokerages, and yes, we may even get him in front of U.S. Congress.
As a full-time practicing attorney he’s impossible to nail-down. But he’s carving some out for you. So don’t miss this chance to hear from someone who’s been on the front-line of the short sale industry the past seven years. Sign up now!
This Week's Kick-Off Topics:
- Lack of Progress in Loan Mod Program Impacts Families
- Scam Artist Convicted on 160 Counts of Realty Fraud
- Treasury Defends Assistance Plans
- April 15 Brings One Small Step for Freddie, Fannie Future
- "If I'd Known That...!" Fibs Home Sellers Tell Buyers
- More Markets Head into Double Dip
- Are You Asking the Right Questions?
Lack of Progress in Loan Mod Programs Impacts Families
This is the harsh truth: four million families across the country are hoping the loan modification programs introduced by the government are going to help them sidestep foreclosure, but the reality is, more often than not, help is not coming. This leads to a sense of loss and helplessness of what to do next. Sometimes the measures get drastic. Take the Hernandez family (not their real name) from Los Angeles. Five years ago they purchased their home for $466,000 (with 20% down, 30-year fixed loan, $4,100 monthly payment). The same house is now worth $150,000. Over the last couple of years, a drastic drop in income from their family business left them struggling to meet their monthly payments. They approached their mortgage holder, Wachovia, and requested a loan mod. The TARP program and the government’s $75 billion program to stave off foreclosure were in place already. Wachovia requested 60 pages in application paperwork, followed by months of requests for more paperwork. Nine months later, Wells Fargo took over Wachovia, and they lost the Hernandez’s paperwork, so they had to basically start from scratch, and it all had to be resubmitted. Finally, Wells Fargo offered to “help” by increasing their monthly payment to $4,200. Huh? They later offered a reduction to $3,800 for one year, with the difference being paid back the following year. At their breaking point, eventually the family just surrendered and let the house go into foreclosure. They have since found a local non-profit organization who has agreed to try and help with either a loan modification or short sale. Unfortunately this scene is repeating itself again and again, with millions of families needing help out of their desperate situation.
Scam Artist Convicted on 160 Counts of Realty Fraud
This story is awful, but fortunately this guy was stopped before he could hurt more families: the foreclosure crisis has brought scam artists out of hiding, hoping to take advantage of distressed homeowners looking for a way out. Last week, a jury in San Diego convicted William Hutchings on 160 counts of conspiracy, rent-skimming, grand theft and failing to follow state mortgage laws. He was accused of tricking hundreds of homeowners facing foreclosure into signing over their home deeds to him. More than 400 homeowners fell victim to the scam over 17 months, with over $2 million flowing through Hutchings’ accounts. Hutchings offered his victims two “solutions” to their foreclosure problems: one involving people signing over the deeds to their homes to companies he controlled, then pay rent to him in exchange for continuing to live there or by filing a federal “land grant” or “land patent,” where they would transfer the property to the federal government, continue living there, and then get it back when creditors were frustrated by being unable to foreclose. As an aside, such land grants have not existed since the end of the Mexican-American War in 1848. In a few instances, Hutchings was even able to persuade homeowners to stop short sales or loan modification proceedings. Hutchings will be sentenced next month.
Treasury Defends Assistance Plans
Last week a government official defended the Treasury’s $75 billion effort to help struggling homeowners avoid foreclosure, saying it has already put more than one million homeowners into lower mortgage payments temporarily. Herbert Allison, assistant Treasury secretary for financial stability admitted that the program does have shortcomings, but the Treasury is constantly striving to make the program better, such as principal reductions that will help unemployed homeowners avoid foreclosure. Allison said the program "should be measured by how many eligible homeowners are able to are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing. The number of permanent modifications is one element, but not the only element of gauging the success." So the problem is with the measuring, not the plan itself. Critics counter that of the promised 4 million homeowners, only 168,700 have been helped. Democratic Representative Jackie Speier counters that the program should be shelved for a program that would allow homeowners to stay in their homes on a rent-to-own program. Speier adds that the Treasury’s program has “failed miserably,” adding that the program does not consider non-mortgage debts as a factor in the modified payments. Lawmakers were not the only ones criticizing the administration's efforts. The special inspector general for the Treasury's Troubled Asset Relief Program this week said in a report that Treasury oversold the program and it is likely to be a failure by the time it wraps up in 2012.
April 15 Brings One Small Step for Freddie, Fannie Future
On April 15, the Treasury Department and the Department of Housing and Urban Development will publish a list of questions seeking comment on the appropriate role of the government in housing finance, as well as the design of mortgage products and protections for consumers who use them. It’s a step forward, but a tiny one, and is a response to the growing pressure from Congress on the Obama administration to act quickly to reshape Freddie Mac and Fannie Mae. Appearing before the House Financial Services Committee on Tuesday, Treasury secretary Timothy F. Geithner, said the administration would “take a fresh, cold, hard look at the core problems” in housing finance and deliver a “comprehensive set of reforms” to Congress, but would not specify a timetable. Next week, the Federal Reserve plans to complete a $1.25 trillion program to buy mortgage-backed securities, a major test of the recovery’s staying power. If mortgage rates were to quickly rise afterward, the Fed might have to step back in. Mr. Geithner vowed in his written remarks that whatever form the overhaul takes, Fannie and Freddie would change. “Private gains will no longer be subsidized by public losses, capital and underwriting standards will be appropriate, consumer protection will be strengthened and excessive risk-taking will be restrained,” he said.
“If I’d Known That…!” Fibs Home Sellers Tell Buyers
As if home buyers don’t have enough to worry about with mortgages and financing, now there is another hurdle to watch for – sellers stretching the truth about their home in the hopes of making it more attractive to buyers. Whether exaggerating the size of the house or lot, minimizing the property taxes or utility bills or forgetting to disclose a pest problem, buyers need to be wary and do their homework. While more than 30 states have disclosure laws that cover things like leaking roofs or other problems, there is a gray area when it comes to long-ago floods or hidden mold. Given the complexity of disclosure laws, potential buyers may not hear about all the problems of a house; sellers may not even know about some of them. Often the laws don’t apply to bank-owned homes transferred in foreclosures. Buyers should hire an independent inspector or home –inspector engineer to check for some common white lies, among other things:
- Property size – sellers may exaggerate, and the true dimensions may not be learned until the lenders appraisal.
- Check inside the walls – check for signs of pests or faulty wiring, as these things may not be readily discernable from a visual inspection
- Flooding information – water and drainage problems are not always visible.
- Taxes and maintenance costs – ask to see recent bills, and check the tax assessor’s office for the most current information.
- Promised facilities – check with neighbors about promised or proposed facilities. Check titles for specifics regarding parking spaces, storage units or other included facilities or amenities.
More Markets Head into Double Dip
Recently we told you that five of the 143 markets covered by Zillow were heading to a double dip – meaning their home values showed sustained monthly increases during the year, but have been falling again for at least five months in a row. Twelve more markets have been added to the double-dip list, including Providence, RI and Boulder, CO. Here’s the complete list:
On flip side, there are 16 markets that show monthly increases. But for some of these, there is a caveat. Markets like the San Francisco, while seeing month-over-month increases, are also seeing the rate of increase slow. If that continues, home value changes could tip back into negative territory, making some additional MSAs candidates for the double dip.
Homeowners in double dip markets should not lose heart – this is nothing more than the continuation of an inevitable market correction. It’s not a new downturn, just the end of the one most markets have been experiencing since 2006.
Are You Asking the Right Questions?
Whether your business is new or old, it's important to take a step back and ask the following questions:
- How do you bring in new leads to your business every month AND keep costs low at the same time?
- What kind of business do we ultimately want to have? (In other words: How big? How fast? How much profit?)
- What do we need to have in place to achieve our objectives?
My guess is that if you're experienced, you've already asked these questions. If not, then you need to. So what is the point? Such questions help to clarify what you need to do to do to grow your business into what you envision it to be. The number one reason why businesses falter is a failure to effectively advertise, generate new leads and control costs.
So write this down and never ever forget it: Marketing is the key to success. You are not a real estate investor, you are a Marketer. You must be a good marketer or become one to be successful. The more deals you have to analyze and buy, the more properties you can make money on.
Hope your week is filled with real estate investing success.
Until next time… ~Josh
Are you ready to learn about more ways to increase your profits? Take the first step to building your real estate investment business by registering to become a Real Estate Rebel today.