As the Chairman of The Federal Reserve spaeaks about "Juicing the Economy" are we as Americans looking to what the long term will bring. If we keep making the dollar so easy to borrow as a short term stimulus to our econmy are we not devaluating the currenct abroad making foriegn products cost more to import?
Read the following article and post your thoughts...
Federal Reserve Chairman Ben Bernanke told Congress Thursday that legislators should enact a fiscal stimulus package in order to help beleaguered consumers as recession fears grow.
The comments by Bernanke, who testified before the House Budget Committee, came as a cascade of more bad news about the housing, financial and manufacturing sectors stoked calls for decisive action.
"To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so," Bernanke said.
Some economists have suggested that the economy is heading into a recession or may already be in one. Stocks have plummeted this year, and big banks Citigroup and Merrill Lynch reported huge quarterly losses this week resulting from bad mortgage investments.
Bernanke said that current losses from the sub prime mortgage mess were probably about $100 billion but cautioned that this figure could wind up being higher.
Former Treasury Secretary Larry Summers told lawmakers on Tuesday that Congress should consider a stimulus package of up to $150 billion. He proposed an immediate injection of $50 billion to $75 billion through a combination of tax cuts and increased spending on unemployment benefits and other programs. He also advocated that another $50 billion to $75 billion be set aside in case economic conditions weaken further.
During Thursday's hearing, Bernanke said he thought a fiscal stimulus package of up to $150 billion, would be "reasonable."
A spokesman for President Bush said Thursday that the White House also supports a short-term stimulus package.
Bernanke cautioned though that any stimulus "should be explicitly temporary" in order "to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit."
The Fed chairman said that extending some of the tax cuts engineered by Bush in 2001 and 2003, which are set to expire in 2010, could have a positive impact on the stock market today. He singled out the cut on dividend taxes as particularly key to stimulating the economy.
Bernanke stopped short of suggesting that the Bush tax cuts should be made permanent. He said he's most in favor of the "law of arithmetic" - regardless of what Congress spends on fiscal stimulus; it should make sure that it had the resources to support the package.
Rep. John Spratt, D-S.C., the chairman of the House Budget Committee, said during opening remarks that he and other members of Congress would heed Bernanke's warning about the budget deficit.
But Spratt maintained that something must be done to help consumers now. He said the economy is in a "slump" - if not an outright recession - and cited concerns about "meager" jobs growth in December.
Bernanke said "it would be a mistake to read too much into one month's data" but conceded that "developments in the labor market will bear close attention."
Nonetheless, Bernanke said a stimulus package, in addition to further actions by the Fed, could help jumpstart the economy again.
"Fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone," Bernanke said.
The Fed has already cut its key federal funds rate three times since September and is widely expected to slash this rate, which impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans, by another half of a percentage point on Jan. 30. The central bank has also loaned a combined $70 billion to banks since December through a series of three auctions.
But Rep. Paul Ryan, R-Wisc., said in an opening statement that he is concerned that further interest rate cuts could "lead to further inflation down the road" and this could be costly to the long-term health of the economy.
To that end, Bernanke said the Fed continued to remain on inflation watch.
"Some important developments have occurred on the inflation front. Most notably, the same increase in oil prices that may be a negative influence on growth is also lifting overall consumer prices," Bernanke said, adding though that "overall and core inflation should moderate this year" as food prices and energy prices ease.
Those comments echoed remarks Bernanke made last week about inflation during a speech in Washington.
Bernanke, during the question and answer session, reiterated that he did not believe the economy would enter a recession, but he did say he expected the economy to grow at a "slow pace" this year and possibly into the beginning of 2009.
But he added that the contraction in the housing market should finally begin to "wane" later this year.
Bernanke's appearance on Capitol Hill failed to impress Wall Street, however.
Bonds rallied Thursday, pushing the yield on the benchmark 10-year U.S. Treasury close to its lowest level in nearly four years. Bond prices and yields move in opposite directions and low yields are typically an indication of a sluggish economy.
And stocks fell once again after the Philadelphia Fed released a report that pointed to more weakness in the manufacturing sector, adding to recession fears. The government also reported Thursday that new home construction plunged last year.
"Bernanke didn't really say anything new today except for his emphasis on getting Congress to enact fiscal stimulus sooner rather than later. That's about the only new aspect of it," said Hank Smith, chief equity investment officer with Haverford Investments, a money management firm with $6.5 billion in assets.
Many investors are hoping that the Fed would cut rates before its Jan. 30 meeting, Smith noted. "The market is correct in reacting this way." he said. "They want less talk and more action."
Your Middle Tennessee Real Estate Expert
Paul Moye, Broker ABR, GRI, e-PRO
paul@middletnrealty.com
www.middletnrealty.com
Thursday, January 31, 2008
Bankruptcy Code Revision A Much Needed Solution
I have been BLOGGING about this for over a year. How long does it take for our government to truly react to a problem they created when they tried to protect banks?
We hear so much about the evils of sub prime predatory lenders, how about the credit card companies who lobbied Congress for a decade to change the Bankruptcy Code to there favor. If they wanted to stop defaulting credit cards then stop issuing credit cards to people who do not pay on time, FICO 650 or above anyone?
So know we have Lenders, Investors and the Bond Market taking huge hits in the foreclosure market because of a few short sighted legislators who did not realize that home ownership is the Bedrock of our economy. They disallowed a family in a financial crisis to keep their home and while wiping out their consumer debt thinking only of the short term implications.
Look at it this way the $1.5 Billion dollar stimulus package coming from our Treasury Department later this year is almost 2x more than the total consumer credit card debt that the banks would have lost since 10/01/2005 when the new Code went into effect.
With the pending rule reversal and the proposed stimulus package we jut went "Back To The Future" with our economy.
Read the following article to gain further insight into this matter.
New Bankruptcy Laws Spur Foreclosures
Peter G. Miller
Almost 30 years have passed since the Bankruptcy Reform Act of 1978, a time when mortgages typically had a fixed-rate and unchanging monthly costs. Back then - and until 2005 - if you ran into financial trouble bankruptcy provided a way out and a fresh start.
But in 2005 declaring bankruptcy - something that was never simple, easy or pleasant to begin with - became far tougher. Under the Bankruptcy Abuse Prevention and Consumer Protection Act creditors suddenly had new protections - and borrowers didn't.
What changed? Effective October 17, 2005 most student loans can no longer be discharged. If your income exceeds the state medium you can be forced to file under Chapter 13 (a repayment program) and not Chapter 7 (a discharge and forgiveness plan). Credit debt is not forgiven if you spend at least $500 in the 60 days prior to seeking bankruptcy protection -- say a cash advance to pay off a looming mortgage payment.
Perhaps most importantly for mortgage borrowers, the 2005 legislation says homeowners must obtain credit counseling and develop a budget analysis in the 180-day period before filing for bankruptcy.
If you put all the changes together the results are predictable: Bankruptcy filings should fall and that's exactly what happened. According to court filings there were 1,597,462 bankruptcies in 2004 and 2,078,415 bankruptcies in 2005. As for 2006, bankruptcies declined 70 percent to 617,660 cases.
The falling number of bankruptcies and the rising numbers of foreclosures are related. In basic terms, under the old bankruptcy rules it was often possible to delay a foreclosure action by stalling the creditor in court and using that time to sell or refinance the property.
Curiously though, the 1978 legislation had an unusual mortgage-related requirement. It provided that while a bankruptcy court could modify and adjust various debts, including the mortgage on a vacation home, it could not modify the mortgage on a prime residence. A literal interpretation of this language was upheld in 1993 by the Supreme Count in its Nobleman decision.
"The practical effect of the current bankruptcy law is that borrowers stuck in unaffordable home loans must cure their defaults and, in addition, make monthly payments on the loans according to their terms or lose their homes. No other creditor in personal bankruptcy or business bankruptcy can leave a borrower in such a position," says a study produced jointly by the National Consumer Law Center, National Association of Consumer Bankruptcy Attorneys, Consumer Federation of America, National Association of Consumer Advocates and the Center for Responsible Lending.
Under the 2005 legislation borrowers cannot get into a bankruptcy court until they've satisfied credit counseling requirements. Unfortunately, in many jurisdictions foreclosures can be accomplished in far less than 180 days, meaning that the property can be lost before a borrower is even allowed to file a bankruptcy claim.
"What we need today are bankruptcy laws which assure that creditors are protected from the easy loss of their investments," says Jim Saccacio, chairman and chief executive officer of RealtyTrac, the leading online marketplace for foreclosure properties. "At the same time, we need to end the imbalances found in current bankruptcy rules. The mortgage products which existed in 1978 have been supplanted with new and complex mortgage instruments, so the rules which worked in the past need to be reconsidered in the light of fresh circumstances."
Such change may well be underway. In the House, a Judiciary subcommittee has approved HR 3609, a bill introduced by Rep. Brad Miller (D-NC) and Rep. Linda Sánchez (D-CA) that would end the credit counseling requirement and also allow bankruptcy courts to modify mortgage debts on prime residences.
In the Senate, S.2136, introduced by Sen. Dick Durban (D-IL), would eliminate the credit counseling requirement and allow bankruptcy judges to modify mortgage obligations, just like the House proposal. The Durbin bill would also:
Give debtors up to 30 years, less the time the mortgage has been outstanding, to pay-off long-term real estate debt.
Allow a bankruptcy judge to convert a mortgage into fixed-rate financing "in an amount equal to the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk." In essence, a bankruptcy judge could modify a predatory loan or an exploding ARM.
Combat excessive fees charged to debtors in bankruptcy.
Maintain debtors' legal claims against predatory lenders while in bankruptcy.
Allow bankruptcy judges to rule on core issues rather than defer to arbitration.
Allow property owners over age 55 to have at least a $75,000 homestead allowance, a larger allowance than is now available in many states.
Reinforce consumer protection claims even when a borrower goes bankrupt.
If the bankruptcy reform bills had been proposed a year ago their chance of passage would have been zero. But with the number of foreclosures growing nationwide, with homes losing value in many local markets and with the presidential race now underway, bankruptcy reform has a real shot at passing.
We hear so much about the evils of sub prime predatory lenders, how about the credit card companies who lobbied Congress for a decade to change the Bankruptcy Code to there favor. If they wanted to stop defaulting credit cards then stop issuing credit cards to people who do not pay on time, FICO 650 or above anyone?
So know we have Lenders, Investors and the Bond Market taking huge hits in the foreclosure market because of a few short sighted legislators who did not realize that home ownership is the Bedrock of our economy. They disallowed a family in a financial crisis to keep their home and while wiping out their consumer debt thinking only of the short term implications.
Look at it this way the $1.5 Billion dollar stimulus package coming from our Treasury Department later this year is almost 2x more than the total consumer credit card debt that the banks would have lost since 10/01/2005 when the new Code went into effect.
With the pending rule reversal and the proposed stimulus package we jut went "Back To The Future" with our economy.
Read the following article to gain further insight into this matter.
New Bankruptcy Laws Spur Foreclosures
Peter G. Miller
Almost 30 years have passed since the Bankruptcy Reform Act of 1978, a time when mortgages typically had a fixed-rate and unchanging monthly costs. Back then - and until 2005 - if you ran into financial trouble bankruptcy provided a way out and a fresh start.
But in 2005 declaring bankruptcy - something that was never simple, easy or pleasant to begin with - became far tougher. Under the Bankruptcy Abuse Prevention and Consumer Protection Act creditors suddenly had new protections - and borrowers didn't.
What changed? Effective October 17, 2005 most student loans can no longer be discharged. If your income exceeds the state medium you can be forced to file under Chapter 13 (a repayment program) and not Chapter 7 (a discharge and forgiveness plan). Credit debt is not forgiven if you spend at least $500 in the 60 days prior to seeking bankruptcy protection -- say a cash advance to pay off a looming mortgage payment.
Perhaps most importantly for mortgage borrowers, the 2005 legislation says homeowners must obtain credit counseling and develop a budget analysis in the 180-day period before filing for bankruptcy.
If you put all the changes together the results are predictable: Bankruptcy filings should fall and that's exactly what happened. According to court filings there were 1,597,462 bankruptcies in 2004 and 2,078,415 bankruptcies in 2005. As for 2006, bankruptcies declined 70 percent to 617,660 cases.
The falling number of bankruptcies and the rising numbers of foreclosures are related. In basic terms, under the old bankruptcy rules it was often possible to delay a foreclosure action by stalling the creditor in court and using that time to sell or refinance the property.
Curiously though, the 1978 legislation had an unusual mortgage-related requirement. It provided that while a bankruptcy court could modify and adjust various debts, including the mortgage on a vacation home, it could not modify the mortgage on a prime residence. A literal interpretation of this language was upheld in 1993 by the Supreme Count in its Nobleman decision.
"The practical effect of the current bankruptcy law is that borrowers stuck in unaffordable home loans must cure their defaults and, in addition, make monthly payments on the loans according to their terms or lose their homes. No other creditor in personal bankruptcy or business bankruptcy can leave a borrower in such a position," says a study produced jointly by the National Consumer Law Center, National Association of Consumer Bankruptcy Attorneys, Consumer Federation of America, National Association of Consumer Advocates and the Center for Responsible Lending.
Under the 2005 legislation borrowers cannot get into a bankruptcy court until they've satisfied credit counseling requirements. Unfortunately, in many jurisdictions foreclosures can be accomplished in far less than 180 days, meaning that the property can be lost before a borrower is even allowed to file a bankruptcy claim.
"What we need today are bankruptcy laws which assure that creditors are protected from the easy loss of their investments," says Jim Saccacio, chairman and chief executive officer of RealtyTrac, the leading online marketplace for foreclosure properties. "At the same time, we need to end the imbalances found in current bankruptcy rules. The mortgage products which existed in 1978 have been supplanted with new and complex mortgage instruments, so the rules which worked in the past need to be reconsidered in the light of fresh circumstances."
Such change may well be underway. In the House, a Judiciary subcommittee has approved HR 3609, a bill introduced by Rep. Brad Miller (D-NC) and Rep. Linda Sánchez (D-CA) that would end the credit counseling requirement and also allow bankruptcy courts to modify mortgage debts on prime residences.
In the Senate, S.2136, introduced by Sen. Dick Durban (D-IL), would eliminate the credit counseling requirement and allow bankruptcy judges to modify mortgage obligations, just like the House proposal. The Durbin bill would also:
Give debtors up to 30 years, less the time the mortgage has been outstanding, to pay-off long-term real estate debt.
Allow a bankruptcy judge to convert a mortgage into fixed-rate financing "in an amount equal to the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk." In essence, a bankruptcy judge could modify a predatory loan or an exploding ARM.
Combat excessive fees charged to debtors in bankruptcy.
Maintain debtors' legal claims against predatory lenders while in bankruptcy.
Allow bankruptcy judges to rule on core issues rather than defer to arbitration.
Allow property owners over age 55 to have at least a $75,000 homestead allowance, a larger allowance than is now available in many states.
Reinforce consumer protection claims even when a borrower goes bankrupt.
If the bankruptcy reform bills had been proposed a year ago their chance of passage would have been zero. But with the number of foreclosures growing nationwide, with homes losing value in many local markets and with the presidential race now underway, bankruptcy reform has a real shot at passing.
HUD vs. REO A New comers Guide
This BLOG is not meant for a seasoned agent or investor, it is a basic explanation of the differences between the two types of foreclosure sale properties.
HUD Homes
Housing & Urban Development owned properties obtained primarily through the default of an FHA or VA Loan and in some rare cases government backed block grant loans for urban revitalization. These properties are primarily marketed through a Regional Sales Company such as First Preston, Pyramid Realty and or a local service providing brokerage. These properties are typically sold on a Bid Process and require the assistance of a licensed real estate agent. HUD properties do not sell to the highest bidder but the highest Net Yield for the property. In certain markets such as revitalization areas there are instances when individual bidders who work for the local Police, Fire or Schools bids are given special priority. Generally an Owner Occupant will always prevail over an investor despite Net Yield as HUD's main goal is individual home ownership.
REO Homes
These are bank / lender owned homes that have been foreclosed on and are being marketed by a local real estate brokerage on behalf of the bank / lender. These homes are sold primarily in As-IS condition with the Buyer assuming all risk for the condition. REO properties are sold with a clear title where all liens have been cured or remedied. This is also a Net Yield business where the Buyer who offers the most money with the least costs to the lender / bank will be the new owner. Lenders offer no preference as a rule to owner occupants over investors except in rare occasions where the bank / lender may have numerous properties mortgaged on their books in that specific area. A good example would be a Condo or PUD where 1 lender was the primary or prevailing lender. At that point the bank / lender may take a lower Net Yield to keep the property as an owner occupied property to protect the values of the remaining mortgages.
Just a simple and brief explanation of the basic differences in these two types of foreclosed properties
Paul Moye
Your Middle Tennessee Real Estate Professional
For more information on REO and HUD properties in the Nashville Market contact me at
paul@middletnrealty.com
www.middletnrealty.com
HUD Homes
Housing & Urban Development owned properties obtained primarily through the default of an FHA or VA Loan and in some rare cases government backed block grant loans for urban revitalization. These properties are primarily marketed through a Regional Sales Company such as First Preston, Pyramid Realty and or a local service providing brokerage. These properties are typically sold on a Bid Process and require the assistance of a licensed real estate agent. HUD properties do not sell to the highest bidder but the highest Net Yield for the property. In certain markets such as revitalization areas there are instances when individual bidders who work for the local Police, Fire or Schools bids are given special priority. Generally an Owner Occupant will always prevail over an investor despite Net Yield as HUD's main goal is individual home ownership.
REO Homes
These are bank / lender owned homes that have been foreclosed on and are being marketed by a local real estate brokerage on behalf of the bank / lender. These homes are sold primarily in As-IS condition with the Buyer assuming all risk for the condition. REO properties are sold with a clear title where all liens have been cured or remedied. This is also a Net Yield business where the Buyer who offers the most money with the least costs to the lender / bank will be the new owner. Lenders offer no preference as a rule to owner occupants over investors except in rare occasions where the bank / lender may have numerous properties mortgaged on their books in that specific area. A good example would be a Condo or PUD where 1 lender was the primary or prevailing lender. At that point the bank / lender may take a lower Net Yield to keep the property as an owner occupied property to protect the values of the remaining mortgages.
Just a simple and brief explanation of the basic differences in these two types of foreclosed properties
Paul Moye
Your Middle Tennessee Real Estate Professional
For more information on REO and HUD properties in the Nashville Market contact me at
paul@middletnrealty.com
www.middletnrealty.com
Monday, December 17, 2007
Freddie Mac Warns About The Foreclosure Scam
Read this info and then click on the link to watch the short video from Fraddie Mac.
With the number of people facing tough decisions on how to pay for their homes increasing daily the vultures have smelled the scent of death and begun to circle looking for their prey! The average person is truly clueless how the mortgage business works, the processes and legal issues are complex to the point that even those of us who are in this business do not know all of the nuisances, so there in lies the problem....
Several scams have been around for decades and most draw very little attention from the media because let's face it if it doesn't effect us or someone we know then we do not pat attention to it as a rule. But recently with foreclosures reaching epidemic levels even the man on the street sees the problem either through a family member, co-worker, friend or worse themselves so now the media spotlight is being shown on this problem, The Don't Foreclose Scam!
Now before you start formulating your responses I will state that there are numerous people out there hat are legitimate members of our society working to help people avoid foreclosure through Loss Mitigation, Forbearance, Short Sales, Refit's and zero equity buy outs. For those people of whom I am one this is not you I am writing about. MY foe is the Deed Purchaser.
This old trick is not new it is however more sophisticated than in the past because of the Internet and the financial pain has struck so many homeowners at once. This is one of the main versions of the scam:
A person approaches a homeowner either directly via a phone call or indirectly with a letter offering to stave off the pending foreclosure. The home owner eagerly listens to the scam artist tell them how if the owner will sign over the Deed of Trust to the Investor and begin paying the Investor directly as well as change the mortgage payment address to their office address all will be OK and the can stay in their house. The Investor states to the home owner the investment company will catch up the mortgage and pay the Lender the monthly payments from this point forward. Now this sounds good to the home owner who does not want to lose their home and uproot their family so many agree to sign over the Deed.
Here comes the scam, the Investor takes out a new 2nd or possibly a 3rd mortgage and never makes any payments, continues to pocket the money paid to him by the owner for rent until the bank is ready to foreclose. The Investor signs the deed back over to the bank if they even actually registered the change with the local registrar. The mortgage is still foreclosed on and the "home-owner" is out thousands of dollars in payments never made on their mortgage and also still lose their house. The Investor moves on to the next victim and recreates the same situation...Most crimes are very simple when you have the chance to look at the motives of the criminal form an objective point of view. The problem is the emotional state of the victim clouds their judgment and they believe this is a solution
Follow this link to view the Freddie Mac Video http://www.youtube.com/AvoidFraud.
With the number of people facing tough decisions on how to pay for their homes increasing daily the vultures have smelled the scent of death and begun to circle looking for their prey! The average person is truly clueless how the mortgage business works, the processes and legal issues are complex to the point that even those of us who are in this business do not know all of the nuisances, so there in lies the problem....
Several scams have been around for decades and most draw very little attention from the media because let's face it if it doesn't effect us or someone we know then we do not pat attention to it as a rule. But recently with foreclosures reaching epidemic levels even the man on the street sees the problem either through a family member, co-worker, friend or worse themselves so now the media spotlight is being shown on this problem, The Don't Foreclose Scam!
Now before you start formulating your responses I will state that there are numerous people out there hat are legitimate members of our society working to help people avoid foreclosure through Loss Mitigation, Forbearance, Short Sales, Refit's and zero equity buy outs. For those people of whom I am one this is not you I am writing about. MY foe is the Deed Purchaser.
This old trick is not new it is however more sophisticated than in the past because of the Internet and the financial pain has struck so many homeowners at once. This is one of the main versions of the scam:
A person approaches a homeowner either directly via a phone call or indirectly with a letter offering to stave off the pending foreclosure. The home owner eagerly listens to the scam artist tell them how if the owner will sign over the Deed of Trust to the Investor and begin paying the Investor directly as well as change the mortgage payment address to their office address all will be OK and the can stay in their house. The Investor states to the home owner the investment company will catch up the mortgage and pay the Lender the monthly payments from this point forward. Now this sounds good to the home owner who does not want to lose their home and uproot their family so many agree to sign over the Deed.
Here comes the scam, the Investor takes out a new 2nd or possibly a 3rd mortgage and never makes any payments, continues to pocket the money paid to him by the owner for rent until the bank is ready to foreclose. The Investor signs the deed back over to the bank if they even actually registered the change with the local registrar. The mortgage is still foreclosed on and the "home-owner" is out thousands of dollars in payments never made on their mortgage and also still lose their house. The Investor moves on to the next victim and recreates the same situation...Most crimes are very simple when you have the chance to look at the motives of the criminal form an objective point of view. The problem is the emotional state of the victim clouds their judgment and they believe this is a solution
Follow this link to view the Freddie Mac Video http://www.youtube.com/AvoidFraud.
Sunday, December 16, 2007
So You Are A Real Estate Investor Who Want To Make An Offer On A Foreclosed House
I receive phone calls from real estate investors from time to time on properties I have listed on the Internet and one thing rings true about all of these Investors.... They have been sold on the disinformation being poured out by the so called real estate investment guru's who last year were selling some other form disservice to anyone who would come to their seminars and buy their materials.... So if you are an investor seasoned or novice then look at the issue from the lender's prospective....
A couple of points you need to know when truly making an offer on a foreclosed property...
•1. Cash is not king! A mortgage company does not frown on a mortgage. When you think about it that makes sense, once you look at from a mortgage company's point of view. They only care about the NET
•2. A quick decision in most cases is not possible, so do not threaten to walk if you do not get an instant response. The typical answer in anything under 10 days is good when dealing with a lender.
•3 It's all about the NET so inspections & warranties paid by the buyer increase the net and help the sales price
•4. The cost of the Buyer's agent is considered in the sales price and yes banks like you to have professional representation to protect your interest in the contract. Banks like to be covered and a Buyer's agent is a good thing!
•5. It takes time to remove all of the encumbrances and liens off of a deed so expect 21 to 30 days to close, not tomorrow!
•6.Yes in multiple offer situations a lender may consider an owner occupant over an investor. Remember that lenders usually have numerous properties in any given area or neighborhood & protecting the property value is a consideration.
•7. Repairs....not happening in 90% of any REO sale, unless the repair would prevent more or continued damage to the property. What your inspector or contractor says really does not influence the bank's decision. That information is for your decision.
•8. The first offer is rarely accepted unless it is of course for full price so be ready to counter and re-counter offers
When you take these items into consideration you will see that it is possible to buy an REO property and obtain a good deal if you work with the guidelines banks like to follow.
One other consideration; With the number of foreclosed houses on the market there is pressure to sell them but Lenders have hundreds of deals to consider ever day so keep your prospective and realize if you "Walk" if you do not have an answer by 5:00 today...they don't care.
•1. Be agreeable and willing to work with the Lender or Asset Company
•2. Be patient with the response time and how you respond in king to the Lender
•3. Be prompt with your information even if they are not prompt
•4. Be realistic with your pricing and what your costs will be, exaggeration kills many good deals
•5. Be flexible closing dates next week is not realistic and the day after tomorrow is not being flexible
•6. Be willing to walk away and willing to re-visit their offer if is remains available
•7. Remember banks are in the business to make money not lose money so they work with people who work with them
The really good investor has patience to seek out opportunity and the ability to pounce when it arises....
A couple of points you need to know when truly making an offer on a foreclosed property...
•1. Cash is not king! A mortgage company does not frown on a mortgage. When you think about it that makes sense, once you look at from a mortgage company's point of view. They only care about the NET
•2. A quick decision in most cases is not possible, so do not threaten to walk if you do not get an instant response. The typical answer in anything under 10 days is good when dealing with a lender.
•3 It's all about the NET so inspections & warranties paid by the buyer increase the net and help the sales price
•4. The cost of the Buyer's agent is considered in the sales price and yes banks like you to have professional representation to protect your interest in the contract. Banks like to be covered and a Buyer's agent is a good thing!
•5. It takes time to remove all of the encumbrances and liens off of a deed so expect 21 to 30 days to close, not tomorrow!
•6.Yes in multiple offer situations a lender may consider an owner occupant over an investor. Remember that lenders usually have numerous properties in any given area or neighborhood & protecting the property value is a consideration.
•7. Repairs....not happening in 90% of any REO sale, unless the repair would prevent more or continued damage to the property. What your inspector or contractor says really does not influence the bank's decision. That information is for your decision.
•8. The first offer is rarely accepted unless it is of course for full price so be ready to counter and re-counter offers
When you take these items into consideration you will see that it is possible to buy an REO property and obtain a good deal if you work with the guidelines banks like to follow.
One other consideration; With the number of foreclosed houses on the market there is pressure to sell them but Lenders have hundreds of deals to consider ever day so keep your prospective and realize if you "Walk" if you do not have an answer by 5:00 today...they don't care.
•1. Be agreeable and willing to work with the Lender or Asset Company
•2. Be patient with the response time and how you respond in king to the Lender
•3. Be prompt with your information even if they are not prompt
•4. Be realistic with your pricing and what your costs will be, exaggeration kills many good deals
•5. Be flexible closing dates next week is not realistic and the day after tomorrow is not being flexible
•6. Be willing to walk away and willing to re-visit their offer if is remains available
•7. Remember banks are in the business to make money not lose money so they work with people who work with them
The really good investor has patience to seek out opportunity and the ability to pounce when it arises....
Housing Slow Down Will Have Far reaching Impact In The Coming Months
The Nashville metropolitan economy will lose about $1 billion next year because of the mortgage crisis, according to a national report just released this past weekThe report, prepared for the U.S. Conference of Mayors, found that the economic slow down caused by mortgage defaults and real estate foreclosures will cut the expected growth of the area's Gross Metropolitan Product by 0.7 percentage point, to 2.5 percent. The Gross Metropolitan Product is the measure of the total value of the goods and services produced in a community.The Nashville-Davidson County-Murfreesboro Metropolitan Statistical Area had a gross metropolitan product of $60.3 billion in 2005, ranking it 40th in the country, according to another report released by the mayors group in January.Rising home prices had fueled consumer spending, which drove economic growth, the mortgage crisis report states.Now, the reverse is happening.The report predicts economic growth of less than 2 percent next year in 128 of the 361 areas that were studied.
Other considerations are the slow down in sales tax revenues generated from the strong housing market that supported local the local economies. Unemployment triggered by the slow down reaches further than just the real estate and mortgage industries. Contractors, building product suppliers and retailers will all feel the effect.Other Tennessee metropolitan areas and their projected declines include:
Jackson, 0.7 percentage point, $77.2 million.
Clarksville, 0.8 percentage point, $13.7 million
Knoxville, 0.6 percentage point, $311.9 million.
Chattanooga, 0.5 percentage point, $166.3 million.
Memphis, 0.6 percentage point, $482 million.
Other considerations are the slow down in sales tax revenues generated from the strong housing market that supported local the local economies. Unemployment triggered by the slow down reaches further than just the real estate and mortgage industries. Contractors, building product suppliers and retailers will all feel the effect.Other Tennessee metropolitan areas and their projected declines include:
Jackson, 0.7 percentage point, $77.2 million.
Clarksville, 0.8 percentage point, $13.7 million
Knoxville, 0.6 percentage point, $311.9 million.
Chattanooga, 0.5 percentage point, $166.3 million.
Memphis, 0.6 percentage point, $482 million.
Short Sales and Loan Work Outs Nothing New Just More Popular In A Default Driven Market
The aspect of loss mitigation, short sales and loan work out is booming in popularity across the nation. As mortgage lenders look at the prospect of foreclosures doubling over the next 3 ears and remaining high for at least five years is the industry learning to be more helpful? The process of loss mitigation begins as a home owner becomes delinquent on their mortgage either by missing consecutive payments or paying habitually late or skipping months. First let me tell you that real estate agents and homeowners need to check with their home state's regulatory or consumer agencies to see if this process is an option before beginning the process. Mortgage banks and investors all want the home owner to make the payments, that's where they make their money on the investment, banks rarely if ever show any profit in a foreclosure. Recently mortgage banks have been trying to work with homeowners to keep them in the house and keep them making payments, on a timely manner. The most popular solutions are forbearance and loan modification. They both require the home owner to show why they have fallen behind and the ability to start making payment in the future so as to prevent the late payments from re-occurring. If you are a homeowner in trouble, contact your mortgage company at once, do not wait for the collection calls, get out in front, ask for help, demand help if necessary ask of the lender's loss mitigation department, but never tell yourself the problem will just work out somehow or someday; it will....that solution is called foreclosure and it is financially and mentally devastating.
In my experience working with home owners over the past 3 years I have found that there are several banks that will go above and beyond, while some of the major lenders are still working as usual & ignoring a simple solution to what is sometimes a short term problem. Home owners need to be prepared to provide lots of documentation in a clear and concise manner to show the cause & effect and the plan of action to resolve the matter. Paycheck stubs, checking account statements, proof of unemployment, disability or illness along with a budget and a written action plan are all required to begin the process. The end result however can be well worth the efforts put forward now.
In my experience working with home owners over the past 3 years I have found that there are several banks that will go above and beyond, while some of the major lenders are still working as usual & ignoring a simple solution to what is sometimes a short term problem. Home owners need to be prepared to provide lots of documentation in a clear and concise manner to show the cause & effect and the plan of action to resolve the matter. Paycheck stubs, checking account statements, proof of unemployment, disability or illness along with a budget and a written action plan are all required to begin the process. The end result however can be well worth the efforts put forward now.
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