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Author Archives: Lane Bailey

I don’t know it all

And my wife would be happy to provide a list…  But, this is about real estate.  Specifically, short sales.

A short sale in real estate is selling a property below the mortgage payoff, and getting the bank to take the loss.  They are done, but they are pretty rare… and I ran across a great post about short sales from FranklyRealty.
Creative Commons Licensephoto credit: Eric I. E.

He knows a lot more about these beasts than I do.  For that reason, I don’t take on short sales.  Unfortunately, there are a lot of agents that have figured out that being a “Short Sale Expert” might be real profitable right now.  It leads to a lot of listings… which can net a lot of buyer leads.  In other words, they aren’t really worried about the short sale, just the buyers they might get while trolling the listings.  To pile on, there are a load of classes so that agents can talk the talk… even if they can’t walk the walk…  Three hours does not an expert make! 

I refer out short sales to agents that are experienced in making them happen… and they CAN happen.  They just aren’t likely to happen with “Experts” that have never done one before.

So, if you are in a short sale situation, feel free to give me a call, and I’ll find an agent that can help you… just about anywhere (I have a pretty good database).  If you are looking to buy a short sale, I can help with that too.

Honestly, for buyers, they may not represent the best deal.  Focus on the value, rather than discount from list price… that is a whole different post.

Are you a blood donor? Mud 4 Blood

Local 4wd club, GBR4WD will be hosting their 5th annual Mud 4 Blood Drive at Bass Pro Shops on Saturday, May 10th.

They have been doing this for several years, and each year’s event has been bigger than the last.  Last year they pulled in over 140 pints of blood for LifeSouth.  For several years, Mud 4 Blood was LifeSouth’s biggest one day draw.  The GBR has been unseated by another group, and wants to regain the title for the Atlanta area off-road community.

In conjunction with the blood collection, GBR, along with other local 4 wheel drive clubs, will be staging a “real world” truck show, a silent auction, scratch and dent sale from a local Jeep parts wholesaler (Omix-Ada/Rugged Ridge), and a giant raffle drawing.

Last year they gave away over $4000 in raffle prizes and door prizes.   Pit Bull tires, 4 Wheel Parts and many other vendors stepped up with incredible prizes and giveaways for the blood donors.

Omix-Ada/Rugged Ridge emptied their warehouse of scratch and dent items, and then donated the proceeds of the sale to the Jennifer Scott Memorial Fund at the March of Dimes and the GBR4WD AED (Automatic External Defibrillator) fund.

The “real world” truck show is unique.  instead of chrome and fancy paint, there will be mud and dents.  Aside from fan favorites, awards may be given for things such as “Best Use of the Color Orange”, or “Most Interesting Use of a Windshield Wiper Arm”.  In addition to real tested trail trucks, there will be rock crawlers and mud boggers.

Of course, there are kids games, food (free for donors) and loads of fun.

For more information, feel free to follow any of the links above.

Sunday is video day…

There is fast on TV, so I thought I would post up slow here…

While getting ready to watch the NASCAR Race in CA, I thought I would post up a little bit of 4wheeling in Moab, UT. The first clip is a Hummer H1 in Pritchett Canyon. H1s are very capable vehicles. The part that I think is kind funny is that the suspension barely moves. On a stock H1, that is more of a problem, but this one has air lockers front and rear, so he keeps going. Stockers need some brake dancing to send power to the wheels with traction.

The next one is a newish Jeep Wrangler JK Rubicon Unlimited playing on various trails around Moab. Please note… the suspension actually moves. Rubicons are locked front and rear from the factory…

Moab is my “Happy Place”. I can’t wait to get my project done so I can take the boys out there.

Posting from the Rain…

*** This is re-posted from my blog on Active Rain***

I heard voices…

And they were smart voices.

Wandering around in the Rain, there have been scores of bloggers pointing out that the federal government trying to “fix” the foreclosure crisis.  Now, Inman News is saying the same thing.   (the link will only be good until it goes behind the curtain)

Most families facing foreclosure today were on weak financial ground, he says, and “will defy every effort” at workouts. “Even extraordinary rewrites will beget re-default, the poorly maintained house creating deeper loss in the ultimate foreclosure, the troubled inventory overhanging the marketplace and preventing recovery,” Barnes writes.

And goes on to say…

In an effort to prevent foreclosures, consumer groups and Senate Democrats want to give bankruptcy judges the power to cram down mortgage loan modifications over the objections of lenders. (see recent blog post, and watch Inman News headlines Monday for details on how the cram down provisions in S 2136 have been rolled into a more sweeping foreclosure prevention bill, S 2636).

Supporters of cram downs say voluntary efforts by loan servicers to engage in workouts with borrowers haven’t done much to slow the pace of foreclosures, and that any increase in mortgage rates won’t be as drastic as the industry predicts.

Although Barnes didn’t address cram downs in his latest column, I thought it was interesting that he raised foreclosures and mortgage market liquidity in the same breath, and concluded that it’s the credit crunch, not foreclosures, that pose the biggest threat to a recovery.

They also point out…

Pavlov and Wachter’s December 2006 paper, “Aggressive Lending and Real Estate Markets,” looked at the use of ARM loans in 22 Los Angeles neighborhoods where prices fell more than 21 percent between 1990 and 1995. Perhaps not surprisingly, prices fell harder in neighborhoods where ARM loans were more prevalent. But the study’s most surprising finding was that it wasn’t the higher default rates on ARM loans that sent home prices plummeting, but their lack of availability during the downturn.

So, a lot of people that study these things are saying that the government, trying to provide relief is doing EXACTLY the wrong thing.  Of course, it is populist to go after the banks and talk about corporate greed and not personal responsibility.  (BTW, remember that those ideas are coming from both sides of the aisle).  Instead of helping people and getting us past this, it will only delay and increase the severity.

The cry of all of the people that aren’t being foreclosed are losing value is a valid one… but, is it not worse to drag the problem out and make it take a decade for price recovery than to let the market find its bottom and work through it in just two or three years?  Would those responsible borrowers and homeowners not be better served by the restoration of their equity sooner, rather than later?

Feel free to post links back to other blogs with arguments on both sides of this issue.  (Note:  I did not post links to A/R blogs that echoed this sentiment.  There are a lot.  I have read a bunch of them.  Feel free to post links to your blog.  I didn’t want to miss a good one… and there are many.)

Game on…

Stupid criminals… Stupid banks…

Two items from the REALTOR® Magazine Online Daily Brief:

A masked gunman held up an Athens, Ga., bank on Thursday, saying that he was only getting his money back after the lender had foreclosed on his home.

The man entered Regions Bank wearing a black ski mask and pointed a handgun at a teller and said, “You took my house, now I’m going to take your money,” according to Athens-Clarke police.

The man fled carrying the money in a bag. The bank plans to review foreclosure records to try to identify the man.

Source: Athens Banner-Herald, Joe Johnson (02/21/08)

And then:

A federal judge in Wilmington, Del., where many of the country’s largest companies are incorporated, says he is considering reining in mortgage companies that have been foreclosing on consumers who have brought their home loan payments up to date while they are in bankruptcy.

This week, several big mortgage lenders, including Countrywide Financial Corp. and Wells Fargo & Co., told Judge Brendan Shannon of the U.S. Bankruptcy Court that he didn’t have the power to decide whether late fees and other costs imposed by mortgage companies on bankrupt home owners are appropriate.

An attorney for several mortgage lenders, including Countrywide and Wells Fargo, said Congress recognized a “clear bright line” in the bankruptcy law, one that keeps judges from interfering with mortgage companies.

Shannon dismissed that argument saying that if it were true, he would be on a “complete fool’s errand.”

Shannon said the “surprise” charges make problems for the bankruptcy system, because home owners who have just emerged from bankruptcy can be forced back into bankruptcy to fend off foreclosure attempts.

Source: Dow Jones Newswires, Peg Brickley (02/21/08)

Why am I connecting these two stories?

Primarily because they are both related to real estate and stupid moves on the part of the subjects. In the first story, the line “You took my house, now I’m going to take your money,” ignores a very basic fact.

The bank didn’t take HIS house. They took back their house. He wasn’t paying for it. Why should they let him stay there? He made a promise to pay for the house they bought for him. And, he didn’t live up to his end of the deal. So, not only is that bank probably losing money trying to get paid back, but he adds insult to the injury by stealing some more.

And remember, this is GA. We didn’t have the value collapse that CA and some other markets have had. The interest rates have stabilized.

Of course, until this guy is caught, we won’t know the whole situation… but he sure isn’t Robin Hood.

And then there are banks acting stupid. I just don’t get it. Right now, while the banks are looking at a flood of foreclosures, and literally being run out of business under the pressure, if someone wants to get current and keep the house, the bank should be THRILLED. There are websites telling people to just walk away. And people are doing it in droves. But here are people that are trying to make good on their promises. And the banks are looking to stick it to them some more. It is flat out dumb business.

Two options:

  1. As a borrower emerges from bankruptcy, trying to keep their house and catching up on payments, the bank can slam them with extra fees and perhaps get a little revenue… or drive them back into bankruptcy… where they lose the house.
  2. As a borrower emerges from bankruptcy, trying to keep their house and catching up on payments, the bank can waive the extra fees and offer free classes in financial management.

Under the first option, the bank gets a non-performing asset (we would call that a liability now) and the lifelong anger of the borrower, their friends and relatives. Maybe even the public will start to catch wind of this… and there could be a public backlash.

Under the second option, the bank gets a consumer that is better educated, and understands that they got a helping hand and gift. They don’t have to take on the foreclosure process and instead of anger, they get admiration for being responsible. If the public gets wind of this, they could get a positive viral message from it.

Mark my words. There will be a maverick bank that will stop looking at chiseled in stone rules, and starts looking at ways to fairly deal with these people… while helping their own bottom line. They will emerge as a stronger institution with much more community goodwill.

I am a free market advocate. So, I think that strategy like this needs to come from the business, not from the government. And it only makes sense.

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