What's the difference between a catfish and a Realtor?
One is a scum sucking bottom dweller and the other one is a fish. A little harsh perhaps but sometimes that's how I feel.
Friday, January 28, 2011
Thursday, January 27, 2011
Short Sale nightmare in real world terms.
Short Sales. Everyone who is not living in a cave has heard this phrase. A Short Sale occurs when a homeowner is in pre-foreclosure (Lis Pendens). Pre-foreclosure is when the bank starts legal action informing the owner of default, generally meaning they haven't paid their mortgage in 90 days or more. A short sale is when the owners are willing to sell their house for less than they owe on the mortgage. This is only possible if the bank agrees to take less than is owed on the mortgage. The current owner will usually be forgiven of some or all of the unpaid difference.
Here is the entire nightmare in short with a a little sarcasm thrown in for good measure.
If you have an unlimited amount of time, and nerves of steel, go ahead and give it a shot. If you have any time frame at all for wanting your next house, run away from a short sale as fast as you can. In fact, instruct your Realtor NOT to bother showing you short sales. Here's why.
Let's say your looking at homes in the 200K range. First you must make an offer to the current owner that I not-so-affectionately call the 'pretend owner' or PO for short. After all, he or she really doesn't own shit at this point. They have been doing little more than renting the house from the bank. Only now, they aren't paying rent anymore. That's another problem all together. If you are living there for free, why bother selling? Starting to see the problem yet? UGHHH!!!!
Where were we, oh yeah, you must make your offer to the PO, NOT the bank. The PO will get nothing out of this deal so why an owner would refuse any offer is beyond me. Back-up, they are living there for free so why would they accept any offer...catch-22 #1. And that my friends is also frustration #1 and a MAJOR problem. Currently, it is taking banks up to 3 years...Yep 3 YEARS!!! to evict someone for not paying their mortgage. Stop and think about that...how much could you save by not paying your mortgage for 3 years. 50K? 75K? more??? pretty nice little chunk of change I would say. The system provides for built in equity by screwing the bank. No one is being prosecuted for basically stealing from the bank. And, no one at the bank is being prosecuted for their negligence. Just a lot of hand slapping. Those of us who have paid our bills on time, bought a house we knew we could afford and continue to live within our means, end up footing the bill. That's fair huh? What's the solution, evict them sooner and you end up with a bunch of homeless people and houses that are rotting in neighborhoods which in turn devalues the homes of those who are paying their mortgages. Not good. More on this later.
Ok the second step, which is really just step 1-b, you and the PO of the house finally agree on a price. Now we're getting somewhere. Or are we? NOPE. This meaningless step just takes you to the real next step,
The bank must now approve your offer. And, your paper work had better be filled out properly or the super nightmare starts. In a normal world, you would place an offer, give them 24 hours to respond and wait for a counter offer or acceptance. Not in the banking world. Nope, the bank will take anywhere from 30 days (if you are EXTREMELY lucky) to 10 months to give you a counter offer or an acceptance. Yep, up to 10 months. Sometimes, even more. Average response time is roughly 3-4 months. Once the bank gets back to you the answer from them may be NO...then we start the process all over again. Oh, did I mention that bank will not accept your offer if it is contingent on you selling your current home? I don't know about you but I don't know many people that can swing owning two homes or even have the money for a down payment without first selling their home. A rather large catch-22.
Here's my solution:
Once an PO has missed 3 consecutive payments, the bank should notify the PO that they are 90 days behind in payments and that the bank will be auctioning the house in 30 days. Upon notifying the owner, the debt of the owner is then frozen at that time, no more interest or penalties are accrued. The PO has 30 days from the end of the auction to move out unless the house doesn't receive any acceptable bids.
The owners can either:
A) pay all monies due to become current or
B) continue to live there for FREE until the bank finds a suitable buyer. At which point, the owners must vacate. **Oh and the current PO CANNOT purchase the house from the bank at the new asking price. Because after all, not paying their current mortgage is what started all this crap in the first place.
The banks must respond to any written offers within 5 business days.
The bank must also calculate how much interest the owner has paid to date and subtract that from the current Payoff amount. On a 200K mortgage @ 5% interest that's about 10K a year that has been paid in interest.
Here's an example:
A house was purchased for $200K 5 years ago with 5% down. That's 10K in equity.
They have paid roughly $50K in interest over that period.
They also have paid about $15K in principal.
$200K purchase price
- $10K initial down payment
- $50K already paid in interest
- $15K paid on the principal
=========
$125K is still owed to the bank.
Which strangely enough is probably more than the house is worth today. The bank lists the house as a 30 day 'first offer is your best offer' auction for people buying a the home for a primary residence. Opening bid is for the $125K.
If any bids come in above 125K the owner is forgiven of all other debts. If no bids come in during the 30 day period, the house is auction to the highest bidder over the next 30 days for all interested parties.
In an effort to give the auctioning bank a chance to make back some of the money lost...The auctioning bank has right of first refusal on providing financing to the new owner at the same rate the financing owner can find elsewhere.
If the home sells for less than the 125K the owner is responsible for 50% the difference. So if the home sells for 115K the bank must eat 5K and the owners still owes the bank 5K. The 5K the owner owes the bank is not a normal loan. The owner is legally bound to adhere to a reasonable payment schedule or face criminal charges much like deadbeat dads.
What does this do? It keeps owners in there home with an incentive to keep it in good condition. It still holds the owners somewhat accountable. It all but stops the practice of having empty homes rotting in neighborhoods while deteriorating the value of nearby homes. And, it gives the bank an incentive to quickly sell the house since they are no longer receiving any income from the owners. It also starts the long process of recovery in the real estate world which in turn helps the entire economy recover. Keep in mind, when housing doesn't sell, houses don't get built. When there are no houses being built, there are less jobs for builders, plumbers, electricians, wholesalers, contractors, on and on and on. If there are less jobs for the skilled labor there is less money to spend. Less money to spend = fewer trips to restaurants, sporting events, vacations etc. It's a very big picture that revolves around the housing market. Fix the housing market and you all but fix the economy.
Here is the entire nightmare in short with a a little sarcasm thrown in for good measure.
If you have an unlimited amount of time, and nerves of steel, go ahead and give it a shot. If you have any time frame at all for wanting your next house, run away from a short sale as fast as you can. In fact, instruct your Realtor NOT to bother showing you short sales. Here's why.
Let's say your looking at homes in the 200K range. First you must make an offer to the current owner that I not-so-affectionately call the 'pretend owner' or PO for short. After all, he or she really doesn't own shit at this point. They have been doing little more than renting the house from the bank. Only now, they aren't paying rent anymore. That's another problem all together. If you are living there for free, why bother selling? Starting to see the problem yet? UGHHH!!!!
Where were we, oh yeah, you must make your offer to the PO, NOT the bank. The PO will get nothing out of this deal so why an owner would refuse any offer is beyond me. Back-up, they are living there for free so why would they accept any offer...catch-22 #1. And that my friends is also frustration #1 and a MAJOR problem. Currently, it is taking banks up to 3 years...Yep 3 YEARS!!! to evict someone for not paying their mortgage. Stop and think about that...how much could you save by not paying your mortgage for 3 years. 50K? 75K? more??? pretty nice little chunk of change I would say. The system provides for built in equity by screwing the bank. No one is being prosecuted for basically stealing from the bank. And, no one at the bank is being prosecuted for their negligence. Just a lot of hand slapping. Those of us who have paid our bills on time, bought a house we knew we could afford and continue to live within our means, end up footing the bill. That's fair huh? What's the solution, evict them sooner and you end up with a bunch of homeless people and houses that are rotting in neighborhoods which in turn devalues the homes of those who are paying their mortgages. Not good. More on this later.
Ok the second step, which is really just step 1-b, you and the PO of the house finally agree on a price. Now we're getting somewhere. Or are we? NOPE. This meaningless step just takes you to the real next step,
The bank must now approve your offer. And, your paper work had better be filled out properly or the super nightmare starts. In a normal world, you would place an offer, give them 24 hours to respond and wait for a counter offer or acceptance. Not in the banking world. Nope, the bank will take anywhere from 30 days (if you are EXTREMELY lucky) to 10 months to give you a counter offer or an acceptance. Yep, up to 10 months. Sometimes, even more. Average response time is roughly 3-4 months. Once the bank gets back to you the answer from them may be NO...then we start the process all over again. Oh, did I mention that bank will not accept your offer if it is contingent on you selling your current home? I don't know about you but I don't know many people that can swing owning two homes or even have the money for a down payment without first selling their home. A rather large catch-22.
Here's my solution:
Once an PO has missed 3 consecutive payments, the bank should notify the PO that they are 90 days behind in payments and that the bank will be auctioning the house in 30 days. Upon notifying the owner, the debt of the owner is then frozen at that time, no more interest or penalties are accrued. The PO has 30 days from the end of the auction to move out unless the house doesn't receive any acceptable bids.
The owners can either:
A) pay all monies due to become current or
B) continue to live there for FREE until the bank finds a suitable buyer. At which point, the owners must vacate. **Oh and the current PO CANNOT purchase the house from the bank at the new asking price. Because after all, not paying their current mortgage is what started all this crap in the first place.
The banks must respond to any written offers within 5 business days.
The bank must also calculate how much interest the owner has paid to date and subtract that from the current Payoff amount. On a 200K mortgage @ 5% interest that's about 10K a year that has been paid in interest.
Here's an example:
A house was purchased for $200K 5 years ago with 5% down. That's 10K in equity.
They have paid roughly $50K in interest over that period.
They also have paid about $15K in principal.
$200K purchase price
- $10K initial down payment
- $50K already paid in interest
- $15K paid on the principal
=========
$125K is still owed to the bank.
Which strangely enough is probably more than the house is worth today. The bank lists the house as a 30 day 'first offer is your best offer' auction for people buying a the home for a primary residence. Opening bid is for the $125K.
If any bids come in above 125K the owner is forgiven of all other debts. If no bids come in during the 30 day period, the house is auction to the highest bidder over the next 30 days for all interested parties.
In an effort to give the auctioning bank a chance to make back some of the money lost...The auctioning bank has right of first refusal on providing financing to the new owner at the same rate the financing owner can find elsewhere.
If the home sells for less than the 125K the owner is responsible for 50% the difference. So if the home sells for 115K the bank must eat 5K and the owners still owes the bank 5K. The 5K the owner owes the bank is not a normal loan. The owner is legally bound to adhere to a reasonable payment schedule or face criminal charges much like deadbeat dads.
What does this do? It keeps owners in there home with an incentive to keep it in good condition. It still holds the owners somewhat accountable. It all but stops the practice of having empty homes rotting in neighborhoods while deteriorating the value of nearby homes. And, it gives the bank an incentive to quickly sell the house since they are no longer receiving any income from the owners. It also starts the long process of recovery in the real estate world which in turn helps the entire economy recover. Keep in mind, when housing doesn't sell, houses don't get built. When there are no houses being built, there are less jobs for builders, plumbers, electricians, wholesalers, contractors, on and on and on. If there are less jobs for the skilled labor there is less money to spend. Less money to spend = fewer trips to restaurants, sporting events, vacations etc. It's a very big picture that revolves around the housing market. Fix the housing market and you all but fix the economy.
Monday, January 10, 2011
No good deed goes unpunished
1-7-2011 It's a beautiful day, sun is out, the slightest of chills in the air but nothing long sleeves won't cure. I walk out the front door of our 'lil' house to find this lil (lil sounds better than little but I digress) old lady wandering the streets of our neighborhood obviously looking lost. She looks, ummm, welll, trailer-y. Kinda scruffy, holding a ciggy, burned down to the nub, in her nicotine stained fingers.
Quit bit of background, it is not all that rare that people get turned around in our neighborhood. A lot of streets, including ours start and stop in a few places. So if you go up 2 blocks, turn right and go 2 blocks, turn right and go 2 blocks more to make a square...well you may not end up where you think.
So anyways for the third time in the past year, me being the super nice guy I am, approach this latest weary traveler and say "Hi Ma'am, can I help you?" To which she says..."No, I'm fine I'm just looking for Wisconsin Ave".
"ummmmmmm," I'm say with more sarcasm than confusion, cuz that's how I roll, "you're on Wisconsin."
She perks up and says "Oh ok then, I'm not lost. I live just a few blocks away."
Now that could have and probably should have been the end of it. But no, I need to have a clear head when I send her on her way. So I ask one more question. "what is your address?" I'm not sure why I asked...ok yes I am, she was obviously confused and Wisconsin starts and stops more than any other street in this wacky neighborhood.
annnnnyways, she says "917"
DOH! "917? Ma'am that is a good mile an a half from here and on the other side of the Alt 19!" (Alt 19 is, strangely enough, and alternate route for hwy 19. It's not a major hwy but definitely busy enough where a confused old lady could get run over.
She says, belligerently I might add "I DID NOT CROSS alt 19!!!!!"
I know I'm right (as per usual) so we continue "Ma'am, you had to cross alt 19 to get this far."
Her appreciation for me continues to ooze out like Molten lava. "Sir, I AM NOT LOST, I live just a few blocks from here, Thank you anyway."
OK so, I'm not great with people who are rude to me, not even lil old ladies with nicotine stained fingers smoking a ciggy nub. So I say, "OK, take care" and after walking over to the neighbor who was once a cop to discuss this development, he says, "oh yeah 917 is just a few blocks up."
"HUH? Bill, we live on what should be the 1700 block, how can the 900 block be just a few streets up?"
Well, he says, That can't be right, that house, pointing to the house on the corner where 'trouble' lives. "Is 1077."
"Well you're the retired cop...you must be right"
So we walk over there to find the house is actually 1707!!!! Just like I, ME, MYSELF said it was.
By now, the ciggy nub smoker is a block or two away and I go back inside, glad that my neighbor is a RETIRED cop.
This is where the real fun begins. I tell my wife what happened and she wants to know what I'm doing in the house and why I'm not helping nicotine fingers.
Soooooooooo I google the address to find the phone and...ADDRESS NOT FOUND!!! DAMN IT!!!!!!
As my wife and I get into the car, yep, you guessed it, I tell her she's probably just right up the road. We catch up to this sweet confused lil old lady as she wanders across an intersection without so much as batting an eye in either direction.
I get out of the car and say, as nice as I possibly can be expected, "Ma'am, why don't you let us take you home to 917 Wisconsin?" She says "because I live at 915 Wisconsin"
I gotta get my hearing checked...I hate this!!!
"OK. we'll take you to 915 then, you're still a mile away and it's across a busy hwy."
So she gets in the car and using GPS we take her to her neighborhood. Once there she realizes that yes, in fact we were right and her house was across a busy intersection. Of course, happy ending right? WRONG. She starts to get crazy again and insist we let her out blocks away from her house. We politely say, it's really no problem. So what does she do? She opens the door WHILE WE ARE MOVING...and says I'M GETTING OUT WHETHER YOU STOP OR NOT!!!.
So, we stop on a dime and let her out. She then flips back over to sweet lil ol' lady and says "thanks so much, that was really kind of you. At which point I instruct my wife to run her over. Just kidding.
Just more proof, no good deed goes unpunished.
Quit bit of background, it is not all that rare that people get turned around in our neighborhood. A lot of streets, including ours start and stop in a few places. So if you go up 2 blocks, turn right and go 2 blocks, turn right and go 2 blocks more to make a square...well you may not end up where you think.
So anyways for the third time in the past year, me being the super nice guy I am, approach this latest weary traveler and say "Hi Ma'am, can I help you?" To which she says..."No, I'm fine I'm just looking for Wisconsin Ave".
"ummmmmmm," I'm say with more sarcasm than confusion, cuz that's how I roll, "you're on Wisconsin."
She perks up and says "Oh ok then, I'm not lost. I live just a few blocks away."
Now that could have and probably should have been the end of it. But no, I need to have a clear head when I send her on her way. So I ask one more question. "what is your address?" I'm not sure why I asked...ok yes I am, she was obviously confused and Wisconsin starts and stops more than any other street in this wacky neighborhood.
annnnnyways, she says "917"
DOH! "917? Ma'am that is a good mile an a half from here and on the other side of the Alt 19!" (Alt 19 is, strangely enough, and alternate route for hwy 19. It's not a major hwy but definitely busy enough where a confused old lady could get run over.
She says, belligerently I might add "I DID NOT CROSS alt 19!!!!!"
I know I'm right (as per usual) so we continue "Ma'am, you had to cross alt 19 to get this far."
Her appreciation for me continues to ooze out like Molten lava. "Sir, I AM NOT LOST, I live just a few blocks from here, Thank you anyway."
OK so, I'm not great with people who are rude to me, not even lil old ladies with nicotine stained fingers smoking a ciggy nub. So I say, "OK, take care" and after walking over to the neighbor who was once a cop to discuss this development, he says, "oh yeah 917 is just a few blocks up."
"HUH? Bill, we live on what should be the 1700 block, how can the 900 block be just a few streets up?"
Well, he says, That can't be right, that house, pointing to the house on the corner where 'trouble' lives. "Is 1077."
"Well you're the retired cop...you must be right"
So we walk over there to find the house is actually 1707!!!! Just like I, ME, MYSELF said it was.
By now, the ciggy nub smoker is a block or two away and I go back inside, glad that my neighbor is a RETIRED cop.
This is where the real fun begins. I tell my wife what happened and she wants to know what I'm doing in the house and why I'm not helping nicotine fingers.
Soooooooooo I google the address to find the phone and...ADDRESS NOT FOUND!!! DAMN IT!!!!!!
As my wife and I get into the car, yep, you guessed it, I tell her she's probably just right up the road. We catch up to this sweet confused lil old lady as she wanders across an intersection without so much as batting an eye in either direction.
I get out of the car and say, as nice as I possibly can be expected, "Ma'am, why don't you let us take you home to 917 Wisconsin?" She says "because I live at 915 Wisconsin"
I gotta get my hearing checked...I hate this!!!
"OK. we'll take you to 915 then, you're still a mile away and it's across a busy hwy."
So she gets in the car and using GPS we take her to her neighborhood. Once there she realizes that yes, in fact we were right and her house was across a busy intersection. Of course, happy ending right? WRONG. She starts to get crazy again and insist we let her out blocks away from her house. We politely say, it's really no problem. So what does she do? She opens the door WHILE WE ARE MOVING...and says I'M GETTING OUT WHETHER YOU STOP OR NOT!!!.
So, we stop on a dime and let her out. She then flips back over to sweet lil ol' lady and says "thanks so much, that was really kind of you. At which point I instruct my wife to run her over. Just kidding.
Just more proof, no good deed goes unpunished.
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