Bruce's Blog

End of the 30 day escrow

Bruce Forge (iNET Realty, Inc.) — Mon, 17 Aug 2009 20:53:35 -0700

Maybe you've heard - the government is coming to help protect you.

For example, on July 30 a new disclosure act became law. In order to protect you the borrowing, home buying, public, your selected lender must provide you with a Truth-in-Lending (TILA) statement detailing the costs you should expect to face when financing real estate. You have three business days to review this material. Add to that an estimated three day mail transit period and you will need to wait SEVEN days before your lender is allowed to collect any fees from you (except a nominal credit report fee) and that includes taking advance dated items such as post dated checks, credit card authorization, etc.

Then, if the fees increase by $100 or more, or if the Annual Percentage Rate (APR) calculation increases by 1/8th% (0.125%), the law mandates a new disclosure must be issued and another 7 days waited before your lender can draw your closing documents.

If your interest rate is floating during this period, and if that floating rate rises above the estimated rate on the initial TILA disclosure, said lender must make another disclosure with another seven day period.

And, if you are doing a refinance transaction, these periodic 7 days waits are in addition to your final 3 day rescission period that has been the law for several years.

So, you start your loan application on August 1, 2009. Assuming your lender mails the forms the next day, they are forbidden to order the appraisal (a cost) before August 8th. The initial interest rate estimate comes to you at 5.5% APR. You choose to float the rate hoping it will come down before you need to commit to the loan. For the first two weeks, it does float down to 5.25%. No problem. No new disclosure.

Then on August 15th, rates shoot up to 5.63%, just over the .125% limit. A new 7 day disclosure period starts, even though you are still floating the rate. August 25th, rates are now 5.875%. You get a new disclosure and another 7 days.

Finally, it is time to close the financing. You lock on August 31st at 5.75% by paying an additional fee to the lender of $700, called discount points. Lucky you. Good rate, but too much money spent, so another 7 day disclosure period. Finally, on September 10th your lender requests a final estimated HUD from the closing agent. Here and there some numbers are a bit off to the total of $250.00 Guess what? That's rignt, another 7 day disclosure period.

See why getting a 30 day escrow is now just a footnote in history? Bet you are glad the government stepped in to help you, right?

Yes, getting accurate fee disclosure is important. Note that lower fees and lower APR's don't cause another 7 day process. Gee, I wonder if service providers, lenders, closing agents, title companies and so on will just estimate a few bucks higher than they really need just to avoid delays? Not a lot, mind you. $100 or so here. Another $100 or so there. Pretty soon it is serious change. Such protective costs have a way of becoming firm and due as the transaction proceeds.

So, the net effect is that buyers and borrowers generally will experience higher overall costs, not lower.

Tick Toc, Tick Toc

Bruce Forge (iNET Realty, Inc.) — Sat, 11 Jul 2009 12:56:34 -0700

If you are a first time home buyer (anyone who has not owned their primary residence for the past three years) that sound you hear is the expiration date of the First TIme Buyer's Tax Credit. Could be worth up to $8,000 to you as a dollar for dollar reduction in your income tax liability.

There are lots of rules you need to meet. Speak with your tax professional about your personal situation. But, if you qualify for this incentive, there isn't much time left and you don't want to throw away that kind of money, do you?

You can find lots of buying opportunities in most of Orange County, but even in this market, well priced homes are moving quickly.

'Tis a Taxing Time

Bruce Forge (iNET Realty, Inc.) — Sun, 29 Mar 2009 16:26:29 -0700

TAX FAQ answers you need when dealing with clients to buy or finance:

Can the IRS take money from my bank account without permission?

They absolutely can, and will if they start enforced collections.

The IRS has the authority to utilize extreme tactics to collect taxes. Tactics include placing a "levy" against your bank accounts, which allows them to withdraw up to the entire tax amount owed! Does not matter if you need the money to make payroll, pay your mortgage, or whatever. The checks you've already written against the funds will just bounce. Luckily you have 21 days in which to dispute the levy before it begins.

IRS can levy against real estate and other property or assets they find in the taxpayer's name. These liens can follow the taxpayer until the tax is paid or otherwise resolved.

Usually there are multiple liens even though there may be only one tax amount due. IRS tends to file against taxpayer, spouse, and repeat in more than one county. Initial review of a credit report may look really impossible, but can often be resolved to a manageable level with skill and experience.

Tax problems such as this grow and grow, with penalties and interest, until the molehill becomes a mountain. The solution is to take action to get on top of the problem. It is not really a do it yourself project. The IRS does not work to help the taxpayer. They are not your friend - no matter what the advertisements claim.

Do you know of anyone who has received notice of a pending levy from the IRS? Email me here right now, for quick and profitable access to a top quality, professional service that will support your client and add to your income.

Can the IRS take money out of my paychecks without permission?

They can and they will. And they don't ask you first either.

Often the most destructive of the tactics the IRS employs in order to collect owed taxes, wage garnishment laws allow them to take up to HALF of your total paycheck per pay period! Imagine what that would do to your ability to care for your family. Could you still make your mortgage payment? Buy gas for your car? Buy groceries to stay alive?

Tax problems do not just go away. If your client ignores the tax collection letters, the process accelerates until what may have begun as a small problem is now a major financial tsunami. Added penalties and interest mount quickly.

If you know of anyone who in danger of having their wages garnished by the IRS? Email me here right now, for quick and profitable access to a top quality, professional service that will support your client and add to your income.

Conspiracy of the Rich

Bruce Forge (iNET Realty, Inc.) — Thu, 05 Feb 2009 17:00:23 -0800

In a departure from most highly regarded authors, Robert Kiyosaki, has a new book that he is creating on-line. You are invited to participate in the development by commenting through links provided in the process. So far the initial Introduction to the book and Chapter One are available for anyone to read for free. More chapters will be added over time until the entire twelve chapters, plus the Afterword are finished and posted.

You can read and comment on this project in process at Conspiracy of the Rich.com

Already there are thousands of posts to just the first two sections of information. It is, apparently, an active interest area.

Robert has already had enormous success with his books, beginning with Rich Dad, Poor Dad and his many other projects, including seminars, CD's and the like. He and his wife are also successful real estate investors and entrepreneurs who have chosen to give back by explaining how millionaires think and how they do things differently from the rest of the citizenry.

Check it out.

A Great Tool for You

Bruce Forge (iNET Realty, Inc.) — Tue, 03 Feb 2009 17:38:39 -0800

When potential buyers call on a real estate sign, what is it they want to know? The price. A few details about the house. Oh yes, and the price.

What do they not want to share with you? Their name, contact information, phone number, and so on.

You probably have Caller ID on your business phone line, which can often provide a caller's number. But, that fails if the number is blocked or not listed. Many industry pros, like you, use 800 numbers to capture caller information. 800 service provides information regardless of blocking, unlisted status, using a cell phone, etc.

Your 800 number call report lists all incoming calls showing the time they called, how long the call lasted, and the phone number used. Great. Your service may provide these data on a daily basis, or even instantly on the web. But, who was it that called? The name. We need the name!

For that data you need a reverse number listing source. You can easily discover the information you need for nearly every caller. Information that is usually, but not always, the same as the person who called. Sometimes they call from the office. Sometimes from a friend's house. But usually from the cell phone while sitting in front of the sign, which gives you exactly the data you need.

This happens with your personal information whenever you call an 800 number too. It is possible to opt out and make your data private, and there is generally no fee to do that. It can be a little tedious as there are at least 44 databases to remove yourself from. Or, you may choose to use the service I recommend below and get the whole job done for less than a cup of fancy Starbucks.

This recommended service helps you discover information on your callers. What kind of information you ask? You can get all your questions answered on the website here. But, for example, enter your own phone number in the screen and see what is available on you, such as:

Phone owner name and current address
Line type - landline or mobile
Household members
Phone company and carrier
Possible neighbors and relatives
Issuing location
Satellite maps
Other phone numbers belonging to owner
Owner's address history
And more!

Check out this top of the line people finding tool today. You may wish to use it to opt out your own data. If you think it will help your business to be able to discover good information, then you too can increase your income with this best of type service. Check out your own number today.

You failed to report for jury duty?

Bruce Forge (iNET Realty, Inc.) — Wed, 28 Jan 2009 16:37:59 -0800

An "officer of the court", calls saying you failed to report for jury duty and that a warrant is out for your arrest. You say you never received a notice.

To clear it up, he'll need some information for "verification purposes"-your birth date, social security number, maybe even a credit card number. The scam's bold simplicity is what makes it so effective. Facing the unexpected threat of arrest, victims are caught off guard and often will reveal information to resolve the situation.

Just hang up the phone. IT IS A SCAM. Check it out with the FBI

Jury scams are years old, but are becoming common again. Real court officers never ask for confidential information by phone. Neither does the IRS, but that's another scam concerning refunds supposedly due you.

In recent months, communities in Florida, New York, Minnesota, Illinois, Colorado, Oregon, California, Virginia, Oklahoma, Arizona, and New Hampshire reported scams or posted warnings or press releases on their local websites.

The jury scam is a simple variation of the identity-theft ploys to gather personal information from good credit individuals that have become thieves' preferred prey. Scammers may tap your information to make a purchase on your credit card, but more likely will just sell your information to the highest bidder on the Internet's black market.

The fact is ID Theft is much more than just about credit or credit cards. Learn how to protect yourself here. ID Theft is booming in medical theft leaving victims with tens of thousands in bills and possible life risks, financial theft which destroys your credit and costs hundreds of hours of your time to correct, social security theft leaving victims owing thousands in taxes and penalties, along with other risks.

Moral: Never give out personal information on an unsolicited phone call.

How You Can Manage Your Risks Under "HERA"

Bruce Forge (iNET Realty, Inc.) — Mon, 05 Jan 2009 13:27:03 -0800

The Mortgage Bankers Association provides a useful "Housing and Economic Recovery Act of 2008" (HERA) Resource Center.

"As you know, on Wednesday, July 30, 2008, President George W. Bush signed major housing legislation, Public Law 110-289, the "Housing and Economic Recovery Act of 2008 (HERA)."

HERA includes reform of government sponsored enterprise (GSE) regulation that will dynamically affect FNMA and FHLMC, and modernization of the Federal Housing Administration (FHA). These are, of course, the essential sources of most of the home mortgage financing in America. Unless you only deal with all cash buyers, you need to be up to date on HERA and understand how it will affect your business - which it certainly will

This new center is the complete HERA resource for the real estate finance industry. This collection of resources houses the latest information on this major piece of legislation.

Among the little discussed areas of HERA is the requirement for national licensing and/or registration of all loan origination personnel. This will include fingerprinting, background checks, education requirements, testing, and annual continuing education hours. So, if your real estate practice is one of the 70% or so that has an internal finance division, pay special attention to these requirements.

Marketing Secrets for 2009

Bruce Forge (iNET Realty, Inc.) — Mon, 05 Jan 2009 13:10:33 -0800

One of the first things you learn to help improve your writing is the use of personas. Before you write a single word, you must decide who your audience is.

do you want to connect through your ad with Harry the handyman or Suzie the soccer mom? If you have a wide audience, consider using different ads and landing pages for each persona you want to visit your site.

You could create separate sales messages for men and women. First time buyers, investors, and empty nesters. Separate messages for starter homes, move-up homes, condos, and so on.

While it is extra work, if you talk directly to the needs of small targeted groups, you'll increase your sales and conversions.

Planning for your taxes after the short sale

Bruce Forge (iNET Realty, Inc.) — Thu, 04 Dec 2008 17:59:36 -0800

What taxes you ask? Wasn't there a law passed to eliminate tax on the debt reduction from a short sale?

Well, yes, but ... (a pretty standard answer from government "benefits" as you know)

If the home is a primary residence, and if you have no more than $2,000,000 in this type of "income", and if the loan qualifies, and if you did not retain the property through a loan modification, then maybe you can get this benefit eliminated.

This is not a do it yourself project either. You need to review your situation with a qualified tax professional.

There are rules of ownership; rules as to loan type and how the money was used; date rules; and much more that can affect the tax results for you or for your clients if you work as a real estate professional or lending professional.

The point? Don't just believe the headlines. Get the facts as they apply to your specific situation. Get them from the tax professional of your choice. But get them before you file your return for the affected year.

The Banking Situation Explained

Bruce Forge (iNET Realty, Inc.) — Mon, 06 Oct 2008 12:29:40 -0700

Based on an email received from a friend today, here is a horse racing analogy for you. Just add the appropriate number of zeros to these figures and it will be a closer, though still not a perfect match to the banking situation. Still, I think it is closer than what Congress is using to explain the problem to the public.

George is at the race track and bets $2 on a horse to win.

Two guys observe this bet and Fred says to Samuel, "I'll bet you $5 that George wins his bet."

Nearby are William and Bob. William says: "I'll bet you $10 that Fred welshes on his bet if he loses."

Next to them is Sally. Sally says: "For $3 I'll guarantee William that if Bob fails to pay off, I'll make good on the bet."

Sally goes to Mary and borrows the $7 she'll need in case she has to ever pay off, promising to pay back $8 to Mary. Sally doesn't expect to pay as she believes Bob will make good. She expects to net $2 no matter what happens to George's original $2 bet.

A quick calculation indicates that there is now 2+5+10+3+7 = $27 riding on the outcome of the horse race.

Question: how much has been "invested" in the horse race?

Answer: $50,000 by the horse owner who expects to profit on his investment as the horse wins and future deals.

Everyone else is gambling (speculating), not investing.

In the housing market, the only "investor" was the person who bought the property. Buyers of the meaningless derivatives spun off from this are gambling. The face value of all these side bets quickly exceeds the underlying investment. Who holds these side bets? Not the homeowner. Customers of the failing investment banks, hedge funds and similar enterprises hold these bets. Notice that the bailout is being directed at them not the homeowners.

The real world is more complicated. For the past 30 years, people placed bets almost anything, starting with the value of stock averages. While there is nothing wrong with this activity, they might as well bet on the temperature in Newark at 8:00 AM. It only becomes "wrong" when congress gets involved and decides to steal more money from the suffering homeowners to "bail out" these financial market speculators.

So when you hear everybody saying this is a crisis caused by the housing collapse, be skeptical. We are in the midst of a classic pyramid or Ponzi scheme and people will lose a lot of money. If the losses remain where the hoped for gains would have gone, that is a market transaction. But, what is really happening with the bailout is that it is the taxpayers who are being milked for the cash - AGAIN!

What Next, One Wonders

Bruce Forge (iNET Realty, Inc.) — Sat, 04 Oct 2008 13:57:19 -0700

It has been a busy time since my last post. WAMU collapsed into the arms of JP Morgan, the exiting President, Mr. Fishman, receiving about $1,000,000 per day for his 19 days of service.

Wachovia, suffering from indigestion from their earlier purchase of World Savings apparently, faded into Citibank - er Wells Fargo, now creating conflict between these two giants. Lehman Brothers fades to memory.

But AIG gets an $80Billion support package from congress. I wonder of these folks would be quite as generous with their own money as they are with ours.

The list goes on, and will continue to grow over the next year or two. Now another $700 Billion or so of your money will go into buying worthless "securities" to "shore up the capital markets" after some brief posturing in congress.

Everyone wailing that the government needs to fix all this. In reality, the government is what broke it in the first place by interfering with the markets. Best solution would have been to stay out and tend to the Constitutional functions of government. But that would require better planning and restraint.

Freedom does not disappear in one event, but is rather legislated away over time. We now have a nationalized mortgage market, which means essentially a nationalized real estate market. Examples are endless. Property taxes are forcing people from their paid for homes. Where will they go?

Social Security is social all right, but there is no security there. For most retiring Americans, the social security payments now barely cover their fuel bills for home and auto.

The rest of 2008, and the coming 2009 will be interesting for sure. People adjust. Family compress. Needs change.

The collapse of the credit card industry is next. All that "free" money with "0%" rates does run out. Folks have been using their consumer credit to keep their lives afloat, but that too hits an end. Then banks change rates on you to double digits - as much as 35% on some cards, and if you read the omnibus clauses added to the card agreements over the past few years, default on one can trigger major jumps in interest charges on all the other cards you have. Just what a struggling card payer needs. Triple the payments that they couldn't pay already. Clearly this change was aimed at better customer service and helping folks deal with their debts, right?

Is there a solution? Of course. It is called bankruptcy and will become even more popular than it has been so far. People, good, honest, functional people, who have suffered loss of employment can not pay their bills, even before the "friendly" banks jack up interest rates to 25%, 28%, 35%. The law profession will do well. The economy will sink to new lows. More banks will fail. There is not enough bailout available to fix it all.

The market will, in the end, prevail.

Then we can all get back to business and building our lives.

We're From the Government and We're Here to Help!

Bruce Forge (iNET Realty, Inc.) — Wed, 10 Sep 2008 18:28:10 -0700

Heard that line before. Never seems to work out quite the way it was promised up front. One wise mentor maintains that there is an inverse law at work in government. Whatever the government tries to do, the reverse happens. There are myriad examples, but the bottom line seems always to be that the incentives are inverted.

Business people have a constant measure of success or failure. If they spend more than they make, the business dies. You don't have to wait for a committee to tell you that. But in government, the more you spend, the better your promotion will be. There is no profit score to tell you how well you play. The incentives are all in the wrong place.

Consider FNMA and FHLMC. These two favorite child agencies paid no taxes on their income or on their real estate. They enjoyed access to capital that competing business could only dream about. They were for all practical purposes born as agencies of the government, then clothed to sort of resemble private corporations with stockholders and all that. But it was just an illusion. Now the truth is plainly apparent.

We, the long suffering tax payers, get shafted again.

When the dust settles over the next several months, there will still be a secondary mortgage market. People will still buy homes. Most of them will actually make the payments they promise to make. But, a careful reading of the pronouncements from Treasury and the other alphabet soup committees display nothing but excuse making and butt covering. No matter how many times you wrap a piece of crap, inside, it is still crap.

The only way stability will return to the mortgage market is when rational underwriting returns to the loan approval process. It will take time to recover. And billions of dollars will be sucked from the tax payers through the inflation tax mostly.

Owning a home is not a social right. Owning a home is a result of thrift, care, and prudence. Sometimes, no matter how hard, how honestly, how diligently a home buyer works, stuff happens. But, for those who knew they could not make the payments they were promising to make, it is wrong to shield them from the lessons of life.

FNMA & FHLMC - still in the news

Bruce Forge (iNET Realty, Inc.) — Tue, 09 Sep 2008 16:52:52 -0700

Much more about the developing situation around these two former GSE entities in the news today. When these two agencies were first birthed by Congress about 40 years ago, the goal was to bring order and stability to the mortgage lending activity in America. Prior to their creation, mortgage lending was mostly a function of local banks and savings banks, with some insuring activity available from VA and FHA. These were the days of 20% cash down payments and your choice of 30 year or 15 year fixed rate amortization loans. Life was pretty simple then. Home ownership rates were climbing as income and savings increased for Americans following WWII.

Of course it helped to live near the money centers as those banks had money to lend whereas in much of small town America, that was not true. But, you did know the lender - and more importantly, he knew you, your family, your parents, and probably your teachers and your minister too. Most mortgage lenders held their own paper - called "portfolio" lending, collected the payments, and eventually handed back the original of the note you signed when you borrowed the money.

With the goal of making money available to more Americans to buy homes, Congress created FNMA and FHLMC - two agencies to allow for some competition. They were not really agencies of the government. They were private stock corporations with a special deal with the government to protect their business interests.

The idea was to provide a market for mortgage lenders to sell their mortgages for cash, thus enabling the lenders to make more loans to service more customers. The F's bought these mortgages, gathered them together into "pools" and sold rights to receive the principal and interested cash flow streams to large investors.

It worked pretty well for about 40 years. Qualified borrowers able to demonstrate income, credit, assets, and credibility routinely borrowed mortgage money of 80% of the purchase price of a home and as debt ratios ran to a maximum of 1/3 of income for the full mortgage debt and only another 5% of income for all other debts combined, could actually be expected to make the payments on time for the entire term of the loan. It worked so well that about 35% of all homes in America are owned free and clear of any mortgage.

What will the new plan will accomplish? Markets are somewhat confused right now. Things looked pretty good on Monday. Not so good on Tuesday. Bottom line, you and the rest of we taxpayers, have a 5 Trillion Dollar liability to share.

More tomorrow.

FNMA & FHLMC Bite the Dust

Bruce Forge (iNET Realty, Inc.) — Mon, 08 Sep 2008 16:38:53 -0700

Dateline - Washington DC

Two interesting bits of news in from the Potomac. This first item from the Washington Post...

U.S. Seizes Control of Mortgage Giants
Washington Post (09/08/08) P. A1; Irwin, Neil; Goldfarb, Zachary A.

"The federal bailout of Fannie Mae and Freddie Mac involves putting the companies under conservatorship and placing the Federal Housing Finance Agency in charge of their operations and appointment of senior managers. The government has dismissed Fannie Mae and Freddie Mac's CEOs--who will, however, assist in the transition--and will provide capital, if necessary. The plan also calls for a cut in the stake of current shareholders to 20 percent from 100 percent. It additionally will require an increase in mortgage funding by Fannie Mae and Freddie Mac through the end of next year to stabilize the housing market; however, mortgage volume will be reduced 10 percent annually for a decade beginning in 2010 to reduce risks to the overall financial system. The companies--which will no longer be allowed to lobby or engage in other political activities--will be restructured by Congress before 2010."

And this second item ...

"Also with reluctance, Senators (last week) voted to privatize their restaurant and food services.
Year after year, decade upon decade, the U.S. Senate's network of restaurants has lost staggering amounts of money -- more than $18 million since 1993, according to one report, and an estimated $2 million this year alone, according to another.

"The financial condition of the world's most exclusive dining hall and its affiliated Capitol Hill restaurants, cafeterias and coffee shops has become so dire that, without a $250,000 subsidy from taxpayers, the Senate won't make payroll next month.

"The embarrassment of the Senate food service struggling like some neighborhood pizza joint has quietly sparked change previously unthinkable for Democrats. Last month, in a late-night voice vote, the Senate agreed to privatize the operation of its food service, a decision that would, for the first time, put it under the control of a contractor and all but guarantee lower wages and benefits for the outfit's new hires."

Now, then, don't you feel better about the first item after reading the second one?

Can't sell your house? - Why not trade it instead?

Bruce Forge (iNET Realty, Inc.) — Mon, 25 Aug 2008 16:29:32 -0700

In today's real estate market, selling a home requires more imagination and more effort than in more typical markets. Even if you have a pretty house with equity in the property, most of the available buyer pool will need to sell their property before buying another. While the idea of exchanging one piece of real estate for another is not new, it is generally something done for income property transactions.

Now it is possible to exchange your home for another property or even for other sorts of property including boats, motor homes, mobile homes and other forms of residential properties. Not all sites allow for this much flexibility. Some limit your options to like kind property, so take a look before you jump in. However, most such sites have national exposure, allowing trades among home owners from one state to another.

To get you started, you may wish to review the following sites, then expand your search from there.

On-line House Trading

DomuSwap House Swapping

But the basics remain the same.

Bruce Forge (iNET Realty, Inc.) — Wed, 13 Aug 2008 13:52:06 -0700

Yes, the real estate market has changed in most of the country. See details here Real Estate Decline Charts

But the basics remain the same.

Prices have fallen, more in some areas than in others, and continue to fall.

But the basics remain the same.

Record numbers of foreclosures plague most areas of the country; certainly here in California.

But the basics remain the same.

Folks still need a bigger house due to growing families. Sometimes this growth is from adult children returning home due to loss of their own homes. Sometimes the growth is from new births. Sometimes from caring for aging parents.

Folks still need to sell property due to transfers, retirement, estate planning, illness, divorce, death, and the rest of the normal reasons that apply in every market.

The 10 basics for selling in today's real estate market.

If you are going to sell in the public market, make sure you use a price that makes your home the bargain in the neighborhood.
Use a professional staging company, and listen to their recommendations. Then do what they say.
Clutter does not sell.
Deferred maintenance does not sell.
Weird colors do not sell.
Full disclosure is mandatory.
Get all the inspections done before you offer the property for sale. Termite, home inspection, geological, and so on. Make copies available to interested buyers, but not to tourists.
Choose your Realtor carefully. Find one who actually sells property, not just collects listings.
Consider other available options as well, especially if selling quickly is important to you.
Know the market you are selling against and be the best opportunity in that market.

Got Short Sales?

Bruce Forge (iNET Realty, Inc.) — Tue, 29 Jul 2008 16:11:58 -0700

Short sales are plentiful today and many real estate agents either struggle with working through them or shy away from what can be profitable business for the agent. Foreclosure is a fact of life in today's market as we recover from the lending excesses of the past few years and as real estate values return to there more normal growth rate.

Lenders are pretty much swamped with short sales and REO activity. Stories abound in the media about this bank and that bank teetering on the edge of failure. The FDIC is adding personnel and getting ready to deal with expected bank failures. You can get an informal look at the strength of any bank, such as where you bank, on the Internet at How Safe is Your Bank

Doing a short sale is not difficult in concept. There are many industry seminars that teach the basic steps and process. However, in practice, it takes hours of time waiting on hold, collecting data, negotiating with the lender (once you find the correct person) and for most real estate agents, this process is best outsourced to professionals. You already outsource many skilled jobs such as escrow, title, appraisal, credit, and home inspection.

No one person can be expert in all areas, and even if one could learn all this, there is simply not enough time in the work day to handle all the tasks needed to effectively close real estate transactions doing everything alone. Not if you plan to continue marketing, conduct showings, qualify buyers, qualify listers, and perform the essential tasks facing successful real estate agents every day.

There are a few good outsource companies that can do the short sale work for you and deliver a final approval from the property lenders. Our company is one of them. When you get a potential short sale listing, we will inspect the property, arrange for repair estimates, make an offer to purchase the property and handle the short sale process for you. When the approval is in hand for the short sale, we close the transaction and you get paid.

Something to consider as you grow your business in this interesting market.

Contact me directly for more information ir answers to your questions. Promise - you will not get a sales pitch. We only work together when it benefits you, your clients, and us. Otherwise life is too short.

Smart Upgrades To Your Home

Bruce Forge (iNET Realty, Inc.) — Tue, 29 Jul 2008 15:49:41 -0700

There are many remodeling options available to make your home more comfortable now and more appealing to buyers down the road. But which options will offer the highest return on your investment?

Each year the nations Realtors rate remodels and upgrades that offer the highest return for your dollar. This information is available in Remodeling magazine on the Cost vs. Value Report.

It is a great reference source for the questions:

How much will the project cost?, and
Will I get most of my money back if I have to sell?

The results are broken down by region, so you can compare a similar upgrade from Los Angeles to Chicago. You can even check out your regions highlights on the web at www.costvsvalue.com before you call the contractor.

For 2007, exterior and replacement projects had the highest recovery rate of over 80% nationwide with upscale siding replacement topping the list at 88%. Minor kitchen remodels also scored high with an 83% return.

For the empty nester, building the master bedroom suite of your dreams gives a 69% return, and for those with a growing family, two-story additions show an average return of 73.9%. Remodeling is still a pretty good investment. Two-thirds of this year's projects return between 65% and 80% at resale.

That means homeowners are still paying just 20 cents to 35 cents on the dollar for more space, a better space, or a different space. So ponder a remodeling project or two if you plan on staying in your home for a while. Your upgrades can provide for a better life now and give you an edge and a bigger return when the time is right to sell.

Of course, basic rules still apply when selecting the contractor for your project. Check the applicant's license, bond, and worker compensation insurance. Check for proper licensing and that all insurance is still active and in force.

Workers Compensation rules are very strict and can make you liable for any injury that occurs on your project. This is a good time to find quality craftsmen to improve your home as construction work is generally down in most areas and bidding for jobs is more likely to be intense. Watch out for the bid that seems too good to be true though. It can end up costing far more than a higher bid from a well financed company.

How things work

Bruce Forge (iNET Realty, Inc.) — Wed, 23 Jul 2008 10:37:00 -0700

This just in by Cecilia Kang, Washington Post Staff Writer, on Saturday, July 19, 2008; Page D01 ---

"A long-delayed merger between the nation's two satellite radio providers may be facing another hurdle after a key regulator yesterday told the companies they would need to make stronger concessions on pricing and minority programming to gain his support.

"Federal Communications Commission member Jonathan Adelstein, a Democrat, who said he discussed his plan with XM and Sirius satellite radio this week, could hold the swing vote in the five-member commission, with two votes already cast in favor of the deal.

"He told the companies that they would have to agree to cap prices for their service for six years after the merger, set aside one-quarter of their radio spectrum for noncommercial and minority programming and equip satellite receivers with high-definition over-the-air radio signals to ensure that traditional radio will be able to compete with the monopoly.

"Adelstein has also told XM of the District and Sirius of New York that they would have to agree to an independent monitor to ensure they live up to the agreement.

"Sirius and XM declined to comment on Adelstein's proposal"

Translation = Jonathan Adelstein of the FCC and a career politician, purports to tell two entrepreneurial companies that in order to merge, they must give up 25% of the potential revenue stream to Adelstein's idea of what good programming would be, specifically "noncommercial and minority programming," however that would be defined. They must also cap their prices for six years. No doubt he intends to cap the FCC license fees, salaries for the company's employees, medical insurance costs, taxes, utility fees, maintenance costs and so on for the same period to benefit the merger. No? Hmmm, perhaps the company should just close down now and return whatever is left to the "greedy" stockholders.

Yesterday we learned that the FDIC made bad sub-prime loans. Today we learn the FCC apparently wants to strangle satellite radio. This with the goal of protecting the public from a monopoly.

Now I ask you to consider, just how essential to your life is satellite radio? Don't we all have alternatives for music and information, such as iPods, conventional radio, Internet radio, television, even such old fashioned options as newspapers, books, and magazines. I was an Internet radio subscriber for a few years and chose not to renew my subscription because it no longer makes sense for me to spend money for something that has become insipid and, if Adelstein gets his way, would become even more so if 25% of the programming can no longer produce revenue.

Who cares about this tempest in a teapot anyway? Perhaps you should as this example again reinforces what every native American already knows...to rely upon government taking care of you is a disaster by every measure. Just watch what they are about to do to the housing industry.

What do you think?

And the dance continues...

Bruce Forge (iNET Realty, Inc.) — Tue, 22 Jul 2008 12:39:12 -0700

How about that! A new subprime lender discovered by Beal Bank, and they appear to be a bit put out by the discovery too.

According to the Washington Post (07/22/08) P. D2,

"FDIC Sued Over Subprime Loans: The Federal Deposit Insurance Corp., which insures U.S. bank deposits, made subprime mortgage loans to borrowers in 2001 and 2002 that violated guidelines, according to a lawsuit by Beal Bank. The FDIC made the loans after it took over Superior Bank as conservator in 2001 and operated its subprime mortgage business, according to court documents. Beal Bank sued in 2002, saying about a quarter of the 5,315 loans it bought from the regulator were defective.

The loans sold to Beal, including the loans originated by the FDIC itself, violated Old Superior and New Superior's underwriting guidelines and almost every consumer protection and fair lending law, regulation and standard," Beal said in a court filing"

FDIC Sued Over Subprime Loans is not a headline one would have anticipated in anything like a normal market. However, we are somewhat distant from normal. Still, this should be an interesting case to watch as the results could have repercussions for many of the surviving lenders - and there will be some survivors of course.

The responsibility of the originating lender to the subsequent holder of the "asset" is normally defined by contract between the parties. Most such contracts hold that the originating lender is responsible for the quality of the loan and the performance of the loan for some period, six months to a year is common.

Beal bank has an advantage in that the seller of these loans is still in business. Not true in many many cases.

So what do you think?

Ramp up your marketing power

Bruce Forge (iNET Realty, Inc.) — Thu, 17 Jul 2008 13:13:50 -0700

Just recently discovered this option from a friend of mine. A very creative idea called RipCard, which is a double sided, full color business card designed to be ripped in half (it is perforated down the middle) to enhance your referral business. Each card carries an unique identification number. You give out a few to each of your current clients, who then share them with their friends and associates. When a referral contacts you, the card ID number tells you who made the referral and you can complete the thank you option of your choice at that time.

Of course, you need to keep such offers within stated limits for your regulatory guidelines, but it makes the process of referring much easier for your customers and the unique aspects of the card seem to encourage more referrals.

I've got my first order ready to go as soon as the logo quality graphic is ready. Seems a natural for those in need of more business and with a network to begin from such as friends, relatives, club members, past clients, and so on. Let your imagination soar. Good selling to you.

Learn all about it here

Lender of Last Resort

Bruce Forge (iNET Realty, Inc.) — Mon, 14 Jul 2008 12:53:54 -0700

The news is everywhere that the government will not allow FNMA and FHLMC to fail. Instead the Federal Reserve will offer funds at the same rate that the big banks pay and the loans will all be guaranteed by congress. Maybe.

Obvious problem with this solution is that, contrary to popular opinion, the government does not have any money, earns no income to speak of, and seems unable to manage critical issues such as concealing concubines, balancing the budget, and uniting in the defense of the country. Odd group of failures, one thinks.

Politicians strive prmarily to remain in office. Events such as the collapse of FNMA and/or FHLMC could interfere with getting re-elected. We know approximately 3% of the population controls over 90% of the wealth in the country. Seems as if the politicians would play to the 97%, not the 3%, but that would not be a very successful bet.

Together these two agencies contain a bit over 5 trillion dollars in debt. How big is a trillion? It is 1000 billion. How big is a billion?

A billion seconds ago it was 1959.

A billion minutes ago Jesus was alive.

A billion hours ago our ancestors were Living in the Stone Age.

A billion days ago no one walked on the earth on two feet.

A billion dollars ago was only 8 hours and 20 minutes ago aaAt the rate our government is spending it.

That's roughly 3 billion per day, or a touch over a trillion dollars per year.

Just who is the lender of last resort in the USA? Take a look in the mirror friend. It is you and the rest of the taxpaying public.

What do you think? Should these agencies be allowed to fail? Are they still needed in our economy? Or do they just add another layer of cost to each mortgage transaction that could be dealt with another way for a lower cost?

FNMA & FHLMC???

Bruce Forge (iNET Realty, Inc.) — Sat, 12 Jul 2008 20:16:37 -0700

It is all over the news this weekend, and last week's stock market seems to be pointing the way. Fnma, affectionately known as Fannie-Mae, and brother FHLMC, AKA Freddie-Mac are in deep financial trouble. Some say these two industry giants are already insolvent by a wide margin. Their need for new capital is currently at 75 million and in the latest debt offering, FNMA had to pay nearly 3/4 percent above the Federal Funds rate that supported their usual borrowings.

What would happen to the real estate business as we know it is these two market makers (roughly half of all mortgage loans in the US) were to cease to exist?

These two entities set the annual Conforming loan limit for the entire country.

Banks and other mortgage lenders sell their loans to FNMA/FHLMC to get the capital to make more loans. If that window closes, expect a pretty big hiccup in mortgage closings.

The Bush administration is said to be considering taking over both of these companies. High ranking Senate leaders say they are just too big to be allowed to fail. What does that mean, do you suppose, on your next year's 1040?

There is an expression that comes to mind - "May you live in interesting times." It appears we will have very interesting times for the next few years. The mortgage challenges continue with the Friday closure of IndyMac bank as an independent entity. Maybe the president will need to take a bit bigger pay cut than the one he offered.

But FNMA and FHLMC?

What do you think?

IndyMac CEO Requests Pay Cut

Bruce Forge (iNET Realty, Inc.) — Thu, 10 Jul 2008 17:34:10 -0700

IndyMac CEO Michael W Perry requested a 50% pay cut as a result of the market changes at the bank he has run for the past 15 years. What does that really mean?

Recently he was listed as number 84 among the Forbe's list of top CEO's compensation across America. That put him on page 4 of the list; entry reproduced here for your convenience.

Michael W Perry

IndyMac Bancorp

15.92

42.23

8.7

So his pay cut request essentially means he will need to struggle along on a bit under $8 Million per year. The 3,400 soon to be former employees will get somewhat less, even though IndyMac was noted for very generous separation package, those terms have also suffered some negative changes in the current challenges for the bank.

These are just observations, and personal ones at that. I suppose adjusting to an $8 million dollar pay cut will take some getting used to. And, when a CEO delivers growth, income, security, and assets, it seems the pay received should reflect that value. But, when the company crashes, are they still entitled to $8 million dollars of the shareholders' value?

IndyMac was once a leading edge lender with excellent programs, great technology, a can do attitude and more. I sold many of their loan products over the years and was happy to do so. I was even a long time stock holder in the company, a small one, but nonetheless, and investor with them.

What do you think?

Another Bank Bites the Dust

Bruce Forge (iNET Realty, Inc.) — Wed, 09 Jul 2008 16:17:52 -0700

In the news today, IndyMac Bank depositors want their money back. So they've started a run on the bank to close their accounts and get what cash they may have, even those under the FDIC insurance limit. This follows Monday's announcement that IndyMac would shut down the mortgage lending operations. These were the heart of the bank's income and profits just as recently as a year ago. Most of its retail mortgage branches were sold to Illinois-based Prospect Mortgage for an undisclosed price.

Hard to remember that a year ago IndyMac Bank stock was $30.00/share. Two years ago it was at $45.00/share and paying dividends of $0.50 per quarter.

Today it is just 44 cents/share! And falling as this is written. Heck, two years ago, the quarterly dividend was greater than today's stock price.

IndyMac announced layoffs of about half there 7,200 employees. Any bets that will go higher?

IndyMac grew out of Countrywide as it was started by Angelo Mozillo's son, and even took over the old Countrywide headquarters in Pasadena.

In a filing with the Securities and Exchange Commission, IndyMac blamed Senator Charles Schumer (D-NY) for contributing to depositor and investor concerns. Senator Schumer sent letters to several regulatory agencies alleging that the company might fail. His comments prompted some agencies to restrict IndyMac's borrowing ability. Senator Schumer says that the company's business practices and poor supervision caused its problems, not him.

What do you think?