Government Backed Mortgages

If one were to go back in time and review the sequence of events that caused the Federal Deposit Insurance Corporation and the Federal Savings & Loan Insurance Corporation to be formed, it might be eye-opening.

But you'd have to also consider the various bank and savings and loan association problems that caused it to evolve to what it is today.

Nevertheless, from almost the beginning, for a financial institution to be a member of the appropriate insurer, the institution had to be a member and pay dues based on its risk to the insurer.

If you owned a member bank that made lousy loans, you paid more in premium percentage than did the conservative bank of the same size.

So in essence what this meant was to be able to borrow Fed funds and insure the accounts of clients, each bank had to participate in the losses of the whole.

Perhaps the lack of membership by mortgage brokers in the federal backed loans they broker is the fly in the ointment.  Perhaps mortgage brokers should be required to be members of an insurance corporation that guaranteed mortgage lending losses.

And perhaps that premium would be calculated and assessed on the default ratio of the mortgage broker.

After all, it's not very smart to allow mortgage brokers to generate income for themselves all the while knowing that they will not be held financially responsible for the loans they made that turn out to be burdens to the rest of the nation.

BILL CHERRY, REALTORS

DALLAS

1-800-314-7110

Copyright 2008 - William S. Cherry

All Rights Reserved

NEW MORTGAGE LENDING RULES

WASHINGTON (Associated Press) - The Federal Reserve has adopted a new plan intended to curb shady lending practices that sent home foreclosure rates to record highs.

The plan will:

• prevent loans made without documentation of borrower's income;
• require lenders to escrow money to pay taxes and insurance for risky borrowers;
• limit - and, in some cases, ban - prepayment penalties;
• prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value;
• require mortgage advertising to contain information about rates, monthly payments and other features of the loan;
• require that lenders credit a mortgage payment to a homeowner's account on the day it is received; and
• forbid brokers and others from "coercing or encouraging" an appraiser to misrepresent the value of a home.

Most of the rules take effect Oct. 1. Escrow requirements will take effect April 1, 2010.

I began my business career as a real estate loan officer.  It was 1962.  This is essentially how we were required to underwrite loans back then.  We also required the borrowers to have an equity position of their own -- not 0%, not 3%, not 5%, not 10%, but at least 20%!

I can't believe these people have finally admitted we knew what we were doing --- that our way was better than theirs.  Will real equity be next?

SO YOU'VE BEEN "HAD" BY YOUR TEXAS COUNTY CENTRAL APPRAISAL DISTRICT?

WHAT NOW?

Texas real property taxpayers appear to have little understanding of the logic behind our Central Appraisal District system.  And I've concluded that at least some of the Chief Appraisers of CADs don't understand them either.

I wrote a voluminous piece on this some time back.  Here it is for review.

That piece has brought any number of telephone calls and emails from taxpayers who went before the Appraisal Review Board at their Central Appraisal District to protest the new appraisal of their home.  Each lost as a result of the smoke and mirrors presentation of the CAD's appraiser that he/she presented to the ARB.

The taxpayer didn't know how to argue against it, and the ARB members, interestingly, rabidly showed they had no understanding of how the Texas Central Appraisal system works.

In each case, the appraisal district's appraiser used as his/her evidence for raising the value of the protester's property, a handful of current sales in the neighborhood.  Current sales are only evidence if every other like property's value was likewise raised equally.  

More often than not, the district will try to use current sales to show why the protesting taxpayer's argument is invalid.  Most of the time, this "evidence" isn't applicable because the neighbors' appraisals were not also raised.  This is the smoke and mirror's presentation I mentioned.

NOTE THIS:  The appraisal district has only one function, and it has two parts.  Part one is to, through research, determine the fair value of every piece of property in the county, and then to assign them.  Part two is to make sure that the value assigned to each taxpayer's property follows the logic of the values assigned to the property of his neighbors.

EXAMPLE: So if everyone on your block lives in a similar home, and those homes are all on the tax rolls at $100,000, then one of your neighbors sells his for $135,000, the Central Appraisal District cannot raise the value of yours to $135,000 without raising the value of the homes of everyone of your neighbors'.

And further, and interestingly, it is illegal for the CAD to immediately raise the value of the home that just sold for $135,000 to $135,000.  That violation is known as "chasing the sale."  Our state doesn't allow that.

So what should you do if you protest and the appraiser brings out current sales as his evidence?  You point out that it is immaterial to the issue.  Your protest is that your house has been assigned a value that cannot be justified when compared to those assigned your neighbors.  Then you give your reasons.

If the ARB rules against you, and you have a great course of appeal.  The state Comptroller's office has trained and appointed several hundred Arbitrators.  You can find the list and their qualifications on the Comptroller's web site. 

You can file for Arbitration.  The fee cannot exceed $500.  The arbitrator will hear your case and rule.  The arbitrator's ruling is final and cannot be challenged.  If you, the taxpayer, win, the CAD must pay the entire fee.

I am one of those originally appointed arbitrators. Prior to that, I served two terms on an ARB.  That's why I have a pretty good knowledge of the ins and outs of appraisal district mechanics.  But my purpose here is not to solicit arbitrations.  My purpose is to give readers a dependable piece on how the CAD system works.

If you are going before one of the ARBs to protest your appraisal, print this out and hand it to the chairman before you begin your presentation.  If there is disagreement to methodology, stay to complete your hearing, but be prepared to file for arbitration.

Copyright 2008 - William S. Cherry

All rights reserved.

WILLIAM S. CHERRY, REALTORS

DALLAS

1 800-314-7110

I THINK IT STARTED WITH DONALD TRUMP'S "THE ART OF THE DEAL"

I blame it on Donald Trump and his personal how-to books.  Actually not him, but the public's interpretation of his how-to books. 

And I do because it seemed to have started about six months after The Art of the Deal hit the bookstores and was a run-away success.

While most Gentiles probably intuitively know it, most don't know that proper business dealings follow a Jewish mitzvah which paraphrased means, "Make certain there is something on the table for everyone."

The idea is that even if you have the upper hand in a negotiation, it is your moral obligation to make sure that the terms are fair and fair to all concerned.  When you don't, to Jews it is similar to having broken one of the Ten Commandments. 

I think I must have been about fifty when The Art of the Deal made amateur negotiators into pseudo-Donald Trumps.  I remember how appalled I was that one of my clients of many years started unfairly beating up --- making impossible demands --- on a poor fellow who was trying to sell his property to him for a fair price.

I stopped the meeting, and asked my client if I could speak with him in the hall.  When we went out of earshot of the others, I all but yelled at him, "What in God's name are you doing?"  He told me that he was doing what he had learned Donald Trump did.

Well, I told him, "That's not real, and even if it is, you're too honorable of a man to take those ideas into your bag of tricks."  Then I said, "There is a Jewish mitzvah that says 'Make certain there is something on the table for everyone.'  We're going to continue doing our business together that way, or you need a new Realtor."  He knew I meant it, and we'd had too many successful dealings together for him to let me go on my way.

Then I learned he wasn't an anomaly.  Lots of people began thinking they were Donald Trump.  Even those guys on TV who push the books that tell you how to buy million dollar mansions with a buck and no risk to your credit.

Saturday, I presented a clean and full-price contract to a listing agent.  In the old days, the seller would have signed his name and been thrilled.  Not this time.  The contract was sent back to me countered with about twelve ridiculous Donald Trump Demands.  And, in reality, they didn't mean a darned thing to the seller except he didn't want my client to have them.  He wanted everything on the table for himself.

So what is my point?  It is that real estate agents and attorneys have a professional obligation to all parties.  They must do their very best to restrain their clients from being Donald Trump The Art of the Deal interpreters.

BILL CHERRY, REALTORS

DALLAS

1-800 314-7110

OUR 43RD YEAR SELLING TEXAS

Answering the Question

All of us at one time or another are blind sided.  Someone accuses us of something; they ask us to do something; we find ourselves in a trap.  We'd rather not answer the question, but we do.  For some reason, we believe "time is of the essence" is a required obeyance.

And we've been taught, I guess, or perhaps its intuitive, that we must provide a response.  It's expected.  It's good manners.  And so we say something stupid, and we bury ourselves forever.  We may even answer the question when 1) we don't have to and/or 2) it's none of the other party's business.

I frequently read the Question and Answers that are asked and provided within the Active Rain system.  And often times the problem being laid out before us by the questioner is in essence, "How do I get out of this trap?" 

And many of those times there should be more to the sentence.  In fact it should read, "How do I get out of the this trap I've gotten myself in."

There are several answer statements everyone should learn:

"I don't know, I'll take it under advisement."

"Let me think about it and I'll get back to you with an answer."

"Before I answer, I want to get input from  == my husband, my wife, my lawyer, my boss, my business partner, my daddy, my mother."

And then there's how you should construct the actual answer.  Succinctly.  With only a "yes" or a "no" when possible.  Don't emblish your answer.  Just answer the question, or don't answer it at all if you don't want to.

Finally, don't write letters and memos if there's any chance your disagreement may end up in court.  Copies of what you write, email, fax, etc. can be asked for in the discovery process, and you must provide them.  Now the other side has empirical data that can hurt you.

Phil Noah was a famous live insurance executive.  He told everyone who would listen to never write a disagreement.  Instead, call and disagree.  It was the perfect advice.

GOVERNMENT FANS FORECLOSED HOME LOAN MISMANAGEMENT

Lenders are foreclosing homes right and left, and the ownership of many of those pass to FHA or one of the other governmental secondary market lenders for them to dispose of. 

That's because the loans were sold to them by the originating lender or mortgage broker. 

As a result, an opportunist industry has developed.  You see, rather than dole out the listings of these properties to licensed real estate brokers and agents on a lottery system, through some magic, only certain agents have gotten the majority of the listings.

This is yet another case where the National Association of Realtors didn't bother to step in and assist the governmental lenders and underwriters in developing an honorable, fair system.

There are any numbers of those specially treated agents in Dallas; the ones whose primary business is listing foreclosed homes.

I am familiar with three companies that have "teams" (a euphemism for a business within a business) composed of about six people, each whose major part of the real estate business is listing and managing foreclosed properties for the government. 

One has so many of these listings that they don't bother to answer or return the phone calls of buyers.  The signs in the front yards with the agent's rider and number at the bottom are of no value to obtaining and handling buyer inquiries. 

The listing agent does not answer or return calls.

The agent expects the buyer to make inquiries and issue contracts on his listings through one of the other agents in the city.  The problem is that the client has no way to know that's the rules he's expected to play by.

Just think, when some 14,000 agents in the Dallas and Ft. Worth area and where many are scratching to make a living, our government is consciously making a select few rich. 

And there's no way to lose one of those listings because it will eventually sell at some price.

And if that isn't bad enough, it is obvious that the government has no audit procedure in place to see that these listings and sales are handled on the up and up.  Many aren't.   

I was involved as a co-op broker in one such listing.  My client's contract was not accepted even though my client offered full price and immediate closing.

Why?  It was obvious to me that before the listing hit the MLS, the listing agent had already cut a side deal as to whose contract would be accepted.

Real estate brokerage has had a propensity for dishonest dealings since the beginning of time.  It's most certainly been going on since I entered the business forty-three years ago.

(Remind me to tell you about the time, representing a buyer, as trustee I bought a $3 million building for $711,000. It was because of the total incompetence of the government's selection of a real estate broker to represernt them in that sale.)

And as it has so many times in the past, the government is once again fanning the flames of deceit.  

BILL CHERRY, REALTORS DALLAS

1 800 314-7110

www.billcherryrealtors.com

A CRAZY WAY TO APPROACH HOME SALES

One part of Dallas where the more expensive homes are located, has developed the most arrogant approach to sales.  I wonder where these people's heads are.

The MLS listing instructions more frequently than not read like this:  Listing agent must accompany all showings.  Appointments must be made 24 hours in advance.  Owner's baby naps between 2 and 4 so no showings can be scheduled then.  Please do not request showings on weekends or before 11 AM or after 4 PM.

I see these listings expire and renew over and over for months.  No one seems willing to grasp that it could easily be because they are not accommodating the prospective buyer, and quite frankly, in sales, the one with the money to buy is the one who is supposed to trump.

So what useful purpose accrues by expecting the guy with the prospect to deal with the schedule of the listing agent as well as the unreasonable demands of the seller?

Exactly what does the listing agent accomplish by being at the showing other than 1) getting in the way 2) offering a subtle but obvious insult to the showing agent and the client that the listing agent is there to keep them from stealing or breaking something and 3) interfering with the rhythm of the showing agent's sales presentation?

So to reevaluate this scheme, let's do this.  When Mr. Sewell initiates a similar plan in the sales departments at Sewell Lexus, Sewell Infinity, Sewell Cadillac and Sewell Hummer, go for it. 

Until then, the way the million buck home should be presented and sold is no different than the way the Century 21 agent presents and sells the hundred thousand buck home.

BILL CHERRY, REALTORS

DALLAS

Our 43rd Year Selling Texas

214 503-8563

On the Web

GALEN JETER ORCHESTRA PLAYS STAN KENTON -- SUNDAY, JUNE 29TH IN DALLAS

THE GALEN JETER JAZZ ORCHESTRA

As the sun was going down Sunday, Patty and I met our friends (our minister and his wife) Clif and Gig Gardner and (famed radio man) Bud Buschardt at the Village Country Club on Southwestern near Skillman, for the barbeque buffet and three hours of music by the famous twenty piece Galen Jeter Orchestra.

Galen is a retired biology teacher from the Garland ISD, but he's had one big jazz orchestra or another for thirty-five years.  And while he won't tell you this I will: He was with the famed Woody Herman Band along the way.

And he and his guys have played at the Village Country Club most Sunday nights for more than ten years.

Galen Jeter, 2nd from left

This is the real McCoy.  It's a Kenton-style orchestra -- 5 saxes, 5 trumpets, 5 trombones and 5 rhythm pieces.  And all of the members are highly trained and talented musicians, not the kid down the street who's just learning, or his dad who played in the high school marching band.

This coming Sunday night -- June 29th between 7 and 10 -- the Galen Jeter Orchestra will play original arrangements from the Stan Kenton book.  If you like big bands, love Kenton, and long to hear a full orchestra play, here's your chance.

The tickets are 7 bucks a person.  The buffet is 5 bucks.  Drinks cost whatever drinks costs.  (I spent $100 for the five of us, and that included admission, food, drinks and the tip.)

Get there no later than 6:30 so you'll have a good seat because the place fills up to SRO the closer it gets to 7 PM.  We'll see you there.

BILL CHERRY, REALTORS

DALLAS

Our 43rd Year Selling Texas

214 503-8563

YOU CAN GO HOME TO THE NEXT HOT AREA OF DALLAS!

2122 LEANDER DRIVE

$285,000

If you know me, you know my great passion for pianos.  Maybe it's to me what hunting ducks is to my friend, Butch Kelso.

Nevertheless,  I have performed for more than forty years, and I have tuned pianos in spare moments for what, maybe twenty of those years?  Of course all the while devoting my full business time to real estate brokerage.

Well, since we've lived in Dallas until recently I hadn't had much reason to drive to Oak Cliff and explore. But about a month ago, an attorney friend called and asked me to tune his big Yamaha grand. 

He lives in Oak Cliff, and in a most interesting million-dollar home that the contractor has just completed.

"What's the deal?" I asked him. "Successful attorneys are required to live in the Park Cities," I teased.

"Well, do you realize how easy it is to get from Oak Cliff to downtown Dallas?  It's a handful of minutes even at the busiest time of the day," he said as of he were the discoverer of a heretofore secret biblical revelation.

"And look at the parks and golf courses and the big trees and the somewhat rolling terrain that are here in Oak Cliff," he went on. 

"And how about the beautiful architecture that abounds," he said while waving his arms in broad strokes.

It was then that it hit me!  Oak Cliff will be to Dallas what the Museum District and Montrose are to Houston and for the same reasons!  And this gas problem isn't going to go away, and that can't help but bring more and more homebuyer interest to Oak Cliff.  The attorney had found a secret revelation!

Well, my friend the well-known Park Cities builder, Mickey Smith, bought a tudor stone bungalow, and he and his men went in and made it wonderful, and stager Barie Pinnell brought in furniture and accessories to show it off. 

Astounding results.  He's ready to sell it.

2122 Leander Drive.  1941 square feet.  3 bedrooms, two big baths plus a fabulous Great Room. $285,000.

JUST LOOK AT THESE PHOTOS I TOOK

MLS Number 11006202. $285,000.  Call us or your own real estate agent.  Join what's sure to be a trend, and join it before HOT drives the prices up.

BILL CHERRY, REALTORS

DALLAS

Our 43rd Year Selling Texas

214 503-8563

On the Web

The Window Man and His Cold Calling Smile and Wizardry

Lake Highlands in Dallas is really a wonderful place to live. 

Because I have spent the majority of my life living in large Victorian homes, moving into a neighborhood that has houses that are primarily 25 to 30 years old is a new experience for me.  But I'm growing to like it very much.  Pretty much the late beginning of an Ozzie and Harriet life-style.

The other day the doorbell rang.  I was here and getting ready to leave to meet a client at the title company.  I went to the door, and there stood a small fellow -- a grown-up --- but an urchin of a man in a khaki uniform that was a bit on the too large side.  He had a huge smile on his face.  I mean huge and sincere.  It makes me smile just thinking about it.

I answered the door, and he told me that he was Charles Dangprasert.  He was cold calling our neighborhood for ACRI Factory to You Windows.  He went on to tell me that almost all of the homes in our neighborhood could stand to have their windows replaced.  I knew he was right...single pane windows in weather-pitted aluminum frames.

He gave me a flyer, and pointed me to the back page.  It was a page full of references.  "Call any of them," he said, "But don't call them until after you've called the Dallas Better Business Bureau.  You'll find that not only are we members, but they don't have one black mark against us, and we've been in business here for years."

I told Charles that we weren't ready for new windows here at our house, but that we would be in a few months.  And I told him we'd call him for a bid.

Real estate people know what it's like to cold call a neighborhood.  Charles did it with such aplumb that I couldn't resist telling you about him and his company.  If you're in Dallas and you need new windows, call Charles Dangprasert at ACR Factory to You Windows.  You can reach him direct at 214 916-7870 or at his office at 214 550-0419. 

Buy from the guy who's doing what you and I hate to do...cold calling a neighborhood.

BILL CHERRY, REALTORS

DALLAS

214 503-8563