Carlos's Blog

Landmark Decision: Massive Relief For Homeowners And Trouble For The Banks?

Carlos Silva — Thu, 01 Oct 2009 00:16:31 -0500

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose - on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

For rest of article click HERE

REO Assignments To Decrease!

Carlos Silva — Thu, 17 Sep 2009 22:46:11 -0500

Heard from a very reliable source that REO assignments have been decreasing and will continue to decrease for a top 4 financial institution. Their inventory has been steadily decreasing for months! Due to HAMP, other programs and compliance issues there is a backlog of homes waiting to be foreclosed. Furthermore, most banks have good systems in place which have enabled them to write off a tremendous amount of assets. Add to that the holiday season when most banks have an unwritten moratorium and that pretty much ruins any hopes of increased assignments in the near future. The good news is that they're expecting assignments to increase in the first quarter of 2010.

Unethical Brokers "Pocketing" REO Listings Without Bank's Consent!!!

Carlos Silva — Tue, 01 Sep 2009 12:20:06 -0500

Over the weekend it was brought to my attention how a major REO broker seems to have an internal policy of putting REO listings in "Contingent" status as soon as they print the MLS printout to upload to RES.NET even though they don't have an executed contract. Had suspected as much but had not seen proof of it until recently. That is an unethical and probably illegal game some broker's play. Not only is it not fair to buyers agents and their clients but it may also limit the sales price the financial institution might receive for their assets. I know of one broker who will not be getting more assignments from a top 4 financial institution. The issue has been escalated to management and they support not doing business with unethical brokers. I am sure the other AMs are also being informed of this and they will start being more watchful of their brokers/agents business model. The word will spread to other AMs from other financial institutions and slowly but surely change will come. Has anyone else experienced that in their market and what have you done to curve such activity?

Now I Lay My Real Estate License To Rest!!!

Carlos Silva — Thu, 09 Jul 2009 20:03:22 -0500

After being a very successful buyer's agent, listing agent and team leader in residential/commercial/investment real estate I have been given the opportunity to try something new. In those 9.5 years of my illustrious real estate career I was able to attain my ABR, CRS, CIPS, was on my way to getting my CCIM and raised two wonderful boys. In addition to that I also received Century 21's Masters award for 6 consecutive years and Centurion for one. They say that when opportunity knocks it is best to open the door and let it in. Have been blessed with an opportunity that I have been pursuing for quite some time....Recovery Analyst for one of the main, if not the largest, financial institution in the world. Once again it is time to take the road less traveled and will do so with excitement and anticipation of what is to come. Due to the new position it will not be possible for me to blog as often as I once did. Good luck to all my friends and keep the great information coming!

Do You Have Suggestions Or Advice For REO Asset Managers?

Carlos Silva — Fri, 26 Jun 2009 15:52:45 -0500

As many of you might have noticed by now I am deeply entrenched in the fascinating world of REO. Many times I have heard many of my colleagues, loan officers, appraisers, inspectors, and title/escrow officers wonder why it's so difficult to work with some asset managers and how others don't seem to have a clue about real estate. Since it's in my nature to lend an ear and try to improve things, not to mention my inquiring mind, I took it upon myself to ask for your suggestions or advice to the asset managers. Here is your chance to let your voice be heard and contribute to the enlightenement of the asset managers.

Is Appraisal Reform Needed?

Carlos Silva — Thu, 25 Jun 2009 17:15:46 -0500

Recently I posted a blog Sales Of Existing Homes And REO Hurt By Poor Appraisals!!! to ActiveRain, LinkedIn, REOPro and Facebook. Quite frankly I was surprised by the number of real estate agents, loan officers and even appraisers who commented on the challenges they've been having with the new appraisal process. The real estage agents were not pleased with the values given to them by the appraisers, the loan officers had issues with the constraints the sellers are putting on them and the poor appraisers are taking heat from all sides for giving too low or too high values!

Here is a link someone provided from bloomberg article regarding the home valuation code of conduct (HVCC) that went into effect on May 1st. The HVCC will have a negative impact on price declines.

Last but not least here is a link to sign a petition to do away with the new appraisal system that does not work!

Do You Want Over 400 REO/BPO Companies To Register With For FREE?

Carlos Silva — Wed, 24 Jun 2009 14:01:35 -0500

Quite often I am asked which companies to register for BPOs and potential REO listings. Am also asked for other REO information such as how to prepare a resume, how to address an email to an REO Marketer or Asset Manager. In my search and networking for knowledge a resource has been presented to me that not only has the list of BPO companies but also more valuable REO information as well. The resource will provide the following information:

Free Bonus #1: Over 400 REO/BPO companies to register with for FREE.
We give you over 400 great companies that you can register with immediately to start getting assignments. This is info that most agents wish they knew.

Free Bonus #2: Email Templates
Attention grabbing email templates to use when you contact Asset Managers.

Free Bonus #3: Sample Resume
A proven sample resume to send to Asset Managers if they request one.

Free Bonus #4: REO Agent 411 BPO Tutorial.
In this tutorial you will learn how to earn a substantial income doing Broker Price Opinions. This tutorial covers how to register with companies and what is required, how to pull good comps, BPO picture taking tricks, keeping your business organized, getting paid, and much more! This tutorial also includes a sample BPO and sample comp criteria from a major lender.

Free Bonus #5: REO Agent 411 Listing Procedure Manual.
On this manual you will learn step by step the process used by top REO agents to list REO properties. This manual will take the confusion out of the listing process and shows you exactly what the correct steps are in handling an REO listing.

Free Bonus #6: 14 Essential REO Agent Forms.
We provide you with 14 forms that REO agents need to run a successful REO business.

Once you provide your contact information, click on the links at the end of each Free Bonus and use the ones you like. I am in no way affiliated with this entitiy but have looked at their free resources and found them to be very useful.

Here is the link to the resource: http://www.reointelligence.com/Free_Bonuses.html

Foreclosure scams in ethnic communities.

Carlos Silva — Tue, 23 Jun 2009 20:07:29 -0500

Thought this would be a great blog to re-post.

Via Steve Mun, e-PRO, QSC® (Keller Williams Realty):

A substantial portion of my client base is Non-English speaking because I am bi-lingual. But as one navigates through the ‘ethnic” markets, one learns of the high number of abuses and fraud that is prevalent in these markets.   Especially so, during economically difficult situations like now, when opportunities arise for those who want to take advantage of the less informed and more vulnerable segment of our communities.

It is ironic, as these homeowners facing difficulty come to the “ethnic” service providers because they fear being taken advantage of and feel their “own community” will treat them more fairly. And this is probably a true statement for the most part, but there is a segment in these communities that prey on the less informed and those who need help.

So here is one thing that I feel a need to inform these communities: if you received a NOTICE OF DEFAULT from your lender, DO NOT PAY UP-FRONT FEES TO ANY ‘FORECLOSURE SPECIALISTS” OR “FORECLOSURE CONSULTANTS who claim they can stop the foreclosure.   And don’t be fooled by those who say they will provide a full refund if they cannot stop the foreclosure; it is too late, you already gave them your money, getting it back will be much harder.

Because a notice of default frightens homeowners, they are often in a panic mode and are led to believe that they have to pay someone to stop the foreclosure.   This is often just the opportunity that scammers are looking for.   Homeowners in default will miraculously receive phone calls or mails because these scammers can buy lists of people who received notices of default.   Here is a list of what “foreclosure specialists” can and cannot do. Beginning next month, all “mortgage consultants” must be registered with the State Attorney General and must also put up a $100,000 bond.

For children and grand-children of Non-English speaking homeowners, if your loved ones are having difficulty paying their mortgage payments, share this information with them, just in case they get a call from someone speaking their language, willing to help them out of their foreclosure situation because the “consultant” heard they received a notice of default.

Steve Mun, Silicon Valley Realtor

www.stevemungroup.com

SHOULD I PAY MY MORTGAGE?

Carlos Silva — Tue, 23 Jun 2009 20:04:42 -0500

This is a great post and thought it would be a good idea to re-blog.

Via Richard Zaretsky, Florida Real Estate Attorney (Richard P. Zaretsky P.A. ):

This seems to be THE NUMBER ONE question I get. Unfortunately there are several answers and which is correct for you depends on the Circumstances. I will address the common scenarios in this article.

Policy in my office is to never "tell" - as in "instruct" - our borrower client to pay or not to pay their mortgage. Paying or not paying has a lot of collateral effects and the borrower needs to know what they are before making the decision. We don't make the decision for the borrower (our client) because the effects of paying or not paying are not going to affect me - but they will affect the client, so it is the client that must make the final decision.

Let me make one issue clear - when we are hired to help facilitate a short sale or loan modification it is far easier for us to negotiate with the lender if the payments are late, but it is almost never a requirement. The exceptions to which will be discussed later in this article. Additionally, internal rules change at the banks constantly. A new client came in totally frustrated. They called their bank to help with a modification and the bank said they could not address their situation until they were at least 60 days late. So the near perfect (800+) credit score couple stopped paying for 60 days and then called the bank back. Now the bank says that because they are 60 days late they cannot speak to them about a modification! The point is, if you don't have to be late then why voluntarily create a late payment credit history that will adversely affect your credit-dependent life almost immediately and for years to come?

SO LET'S GET INTO IT - Danger - this is a long article and it covers a lot of ground!

Short Sale:

A borrower that is current and contemplating a short sale wonders if they should stop paying their (first) mortgage. They are upside down and until now they have been current. However they are paying the mortgage at a cost of not paying other bills. (Other or different facts may be that they are paying all their bills but taking the money from savings or a pension fund to make those payments, or they are borrowing money from another equity loan).

Generally, it is not a good idea to get into debt to pay your mortgage, unless you have a solid plan to both (i) keep the mortgage current and (ii) repay the additional indebtedness you are creating. It is not like taking from one pocket to put into another - it is more like taking from someone else's pocket to pay your bills. This would include credit card loans as the source of funds. It all has to be paid back, so if you don't have a plan to pay it back, don't borrow it in the first place! You are only digging a bigger hole for yourself and making it harder to get out of the hole.

If you are taking from your pension or savings money, again you better have a rock solid plan to get that money back into those accounts, or there is no sense in giving up that hard earned and usually irreplaceable retirement money, especially considering these are monies that are usually protected from creditors' judgments including those your mortgage lender could obtain (deficiency judgment)..

Of course the "amount" of money you have "in reserve" comes into consideration. If you have 2 million dollars in reserve and you decide to spend 10% of it to keep the loans current until you can short sale the property, that plan has a basis that the 10% is not going to make a difference in the way you run your life over the remaining time you have left as a mere mortal.

Sometimes, but rarely, we run into a lender that says they won't approve a short sale or modification because the borrower is current with his payments. When we have encountered this it is in most cases associated with a government backed loan, (but later on we will show you why this may be motivated by plain greed on the part of a loan servicer). A properly compiled financial snapshot of the borrower should show why they are current and what will happen if the short sale or modification is not approved.

Your decision on how to proceed should be based on what goal you are trying to accomplish and how you plan to get to that goal (see how to determine your goal).

Mortgage Modification:

Apart for some voluntary government programs regarding (Fannie Mae or Freddie Mac) government involved mortgages, I know of no lender that absolutely will not deal with a borrower who is current with their mortgage payments. Lenders deal with all sorts of situations and "absolutely not" is just not in the vocabulary. A typical borrower calling a lender may hear that they must be late, but that is more of a "vetting" statement than an absolute policy.

The exceptions are some government program guides for modification. The first step to seeing if your loan comes within this exception is to see if it is a Fannie Mae or Freddie Mac loan. You can do this online at the Making Home Affordable site. Many servicers and lenders whose loans are not "government backed" are now choosing to follow this government plan (known as the Home Affordable Modification plan or more affectionately called the "Obama Plan" - see below) for the simple reason that they are being compensated by the government for each successful modification they execute within its guidelines, and either the servicer or lender receive a residual bonus for the loan staying current under the modification. In these cases we have seen non-government backed loans insist on the borrower being late to qualify for modification as well. What is confusing on this point is that when the plan was introduced it included modifications (and compensation for such) for current loans as well. However, we are told time and time again from the lenders directly that they must be late to qualify. There is no such rule in the guidelines.

While this is contrary to what has been published by the government about the plan, keep mind that following the plan and any of its various aspects is entirely voluntary and up to the Lender or servicer. They can pick and chose from this plan as they see fit for their own internal reasons. Here is a more interesting twist - a servicer that modifies a delinquent loan is paid more under this incentive plan than if the borrower were to modify while the loan is current! If the borrower is current, the servicer can receive up to $3,500 in incentive fees from the government. If the borrower is delinquent, the servicer can receive up to $4,000 in incentive fees from the government. Thus it seems that it pays ($500 to)the servicer to encourage a borrower to be delinquent!

We often see a client that fits the profile for modification under this government plan. Some of these plans are said to require that to be qualified the borrower must be late 60 days (see Guidelines page 5 at bottom). But in fact, being late is not a requirement, but only one factor of many (see Guidelines page 16 at the top - "However, a NPV (net present value) positive result is not necessary to qualify a loan for a Home Affordable Modification"). If the goal is to qualify under such a plan as put in place by the lender at that time, then to accomplish that qualification the borrower may need to make themselves late, but that cannot be determined in a 2 minute telephone call with a lender representative. I cringe when we go this route because just like these "plans" came into existence, I can see them change the plan thus leaving the now 60 day late borrower with ruined credit scores that occurred needlessly.

Generally about a quarter of our modification clients never go late and still get a modification offer from the lender. However, keep in mind that nearly all lenders put up as their first line of defense the policy that going late is a necessity to qualify. We can only speculate this is done to deter the enormous inflow of loan modification requests from borrowers that would come in if this was NOT said to be a requirement. It also helps address those in the most dire amount of need first.

The Pro's and the Con's:

The general rule of thumb we use is if you can pay your mortgage and maintain your life's necessities, you may consider keeping the loan current, taking the points in this article into account. However, if you need to choose between buying food or medications and paying the mortgage, the decision that should be made is clear: your life necessities take precedent.

Here are the pro's to consider when in the short sale or modification process. Keeping the loan CURRENT has the following benefits:

a) Your credit score is not dinged until the short sale transaction occurs (and not at all in most loan modifications) and your overall credit score reduction will be minimized, and b) You will remain in good standing with your lender without worry of penalties, fines, or a foreclosure.

The "con's" of keeping the loan current are that:

(a) You will be out of pocket for the monthly mortgage payment (monies which you may or may not need to survive), and

(b) Your lender may question the sincerity of your claimed hardship, and you may be spending funds that would otherwise be potentially (but rarely) forgiven by the lender. In addition, occasionally the lenders in a short sale may require a lump sum payment above the sale amount from the borrower to forgive the debt. Coming up with that money is sometimes the difference between a deal or no-deal. If you can put your mortgage payments aside and stockpile them, it will help you cover that potential lump sum.

A similar pro/con approach applies to GOING DELINQUENT with your mortgage. In favor of going late is being able to keep the unspent mortgage payments in your pocket (or applied towards other necessities as the case may be) in which event your hardship may appear more sincere to the lender. On the other hand, there are very real consequences to going late with your mortgage payment:

a) You WILL incur late fees and other penalties on the late interest. Usually this is not a large issue as it is part of the forgiven debt in a short sale and usually forgiven in a modification, but it is something to consider,

b) Your credit score downgrade will be harder as you will compound the short sale hit with a 30 day late, 60 day late, etc, (and if this is a modification you will make a non-negative credit score event turn into a negative credit score event), and

c) You will eventually cross a threshold (typical industry standard of 90 days late) where the lender will initiate a foreclosure action in State court.

Going Late on Your Second Mortgage:

Often a borrower comes to us and says that they are late on the first mortgage but current on the second mortgage. The second mortgage is almost always totally upside down with no equity left in the property to secure that financial obligation. The borrower says they paid the second mortgage because they had the money for the smaller payment (second) mortgage but not the larger amount first mortgage. Our answer - if you don't pay the first mortgage they are going to foreclose it and then paying the second mortgage is not going to save your house.

Lately we have seensecond mortgage lenders with 90 day late mortgages skipping the foreclosure process (since if they cause a sale of the house it is sold subject to the first mortgage, and thus any buyer still has to pay the first mortgage, which usually makes no economic sense). Instead the second mortgage lender sues the borrower on the promissory note only and gets a money judgment that they can keep for a long time (20 years in Florida).

So if a client says they are paying the second mortgage but not the first mortgage, we usually suggest they look at the common sense approach and what are they likely to gain or lose by doing so.

Effect of Non-Payment / Late Payment on Credit Score:

This is a big question and nowhere is the answer clear cut. Definitely if you get a report on your credit that you were "late" (in mortgages that means 30 days or more late) then your credit has been "dinged" and your credit score is adversely affected.

Credit scores are used for many purposes, including the amount of credit you can get on a credit card, the interest rate you get on credit cards, car loans and mortgages, your ability and price of life and disability insurance and even car or house liability insurance, your ability to get a certain type of job, or to establish business relationships, and your ability to rent a place to live, to name a few. So credit scores are important. If you want to better understand credit scoring you can see the Federal Reserve Board's Report to Congress from April 2008.

How much your credit score is affected by a 30, 60 or 90 day late report depends on a lot of other factors about your financial well being, your past credit history and myriad other issues. Generally though we have our clients reporting drops of as little as 50 points for a no late payment short sale or up to 150 points for a short sale with multiple late payment reports. We have seen an 800 go to 720 and we have seen a 740 go to 500. It all depends on too many uncontrollable credit issues to be able to give a formula that works for everyone. For a discussion on credit scores this our past article.

Confused?

Rightfully so. The fact of the matter is that we are in uncharted waters and there is no industry standard for Short Sales or Loan Modifications, which makes pinning down exactly what the Lenders may do near impossible. Pile on the fact that there are a large number of lenders out there and each have their own internal policies which change as readily as the tides. The best anyone can hope to do is make an educated decision, set a plan, and be ready for anything.

Copyright 2009 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at SHORT SALE AND LOAN MODIFICATION TABLE OF CONTENTS

Sales Of Existing Homes And REO Hurt By Poor Appraisals!!

Carlos Silva — Tue, 23 Jun 2009 12:33:13 -0500

Many of us have seen deals go down the drain because of appraisals that were done by appraisers who are not in the market where the appraisal is being done or the appraiser low balling the appraisal to protect themselves. NAR President Charles McMillan also said shoddy appraisals were hurting the market. “To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. ~ Mortgage News Daily"

In the past we've pulled comps to show the appraiser their appraisal was off and justify the listing price. In some cases we even resorted to a second opinion. What are your experiences and what are you doing to overcome this challenge?

How To Build An REO Team!

Carlos Silva — Fri, 19 Jun 2009 18:13:07 -0500

I am often asked how to set up an REO team. Of course there are many ways to do so and some are better than others. Ultimately you have to do what works best for you and your clients. Here is how we've structured it:

1. Person or team to access damage, handle lock outs, visual inspection, opens property for utilities, take pictures, check occupancy status, handles cash for keys and installs lockbox; usually has a CWP.
2. BPO agent or team depending on how many listings you are getting.
3. REO agent or team coordinator who inputs listings, takes in all the offers, follows up and closes transaction.
4. Billing person or team to pay all vendors and make sure expenses are submitted to asset manager.
5. Dedicated asset manager liaison to negotiate and handle all matters directly with the asset manager.
6. Dedicated receptionist to field all incoming calls and give out to agents per broker/team leader instructions
7. Agent or agents to sit open houses and field incoming buyers calls; they pay a referral on the calls only.
8. Commission disbursing person or team.

Besides that there are the usual dedicated repair contractors, loan officers, home inspectors, escrow officers and home warranty representative. Be careful when your starting your team that you hire ethical agents that are not going to steal buyers or your REO accounts. Make sure you have a detailed written contract that stipulates every member's duties.

Vandals, Vagrants And Staying Safe In Vacant Homes!!!

Carlos Silva — Fri, 05 Jun 2009 17:46:04 -0500

We have seen many of our vacant homes destroyed or seriously damaged by vandals or vagrants and we have been trying to find a solution to that problem. As many of you know that is one of the biggest and most expensive challenges listing agents face. It is dangerous to go to vacant homes alone because you never know if there are vandals or homeless people in the property. One of our agents was attacked and raped in a vacant home last year. Only by sheer luck was she able to stay alive. Everyone, this includes men, be extra careful out there!

Please let me know what you are doing to stay safe and prevent the homes from being vandalized.

Development/Acquisition Opportunity

Carlos Silva — Mon, 01 Jun 2009 18:52:58 -0500

Our client company has assembled numerous parcels of land in downtown Phoenix, Arizona. They have completed the entitlement process for all of the parcels. The entitlements include multi-family, retail, and independent living facility. The master plan concept is that of a “gas Light” district. A well defined mixture of residences, retail, restaurants, and commercial facilities.

Downtown Phoenix is transforming into a hub for business, sports and the arts. Chase Field opened in 1998 with a 48,500 seat baseball stadium to house the 2001 World Series Champion Arizona Diamondbacks. US Airways Center is the home of the Phoenix Suns and the Coyotes hockey team and hosts numerous concert and sports events each year. Phoenix Civic Plaza is home to large-scale conventions and trade shows that bring over 5 billion dollars annually into the area economy.

Arizona State University's Downtown Phoenix campus will be located in the heart of the Valley's business, political, media and health care community. The Phoenix Development Office estimates that ASU and the new light-rail line will attract about $600 million in private and public investment in the next few years.

At this time they are interested in developing a partnership relationship with a firm for the final development of the project. The master plan currently reflects the following;

* Parcel One is an 8.3 acre site will include 800 residential units constructed in 5 phases.

* Parcel Two is a 34 story high rise structure with an additional 6 story, 606 space parking structure. The project houses 326 residences.

* Parcel Three 1.8 acre site provides a net building area of 78,408 sf which has been designed to include 387 residential units, 4 retail units (9,941/sf) and 535 parking spaces.

* Parcel Four conceptual design envisions including 300 residential units, a retail unit (5,400 sf) and 450 parking spaces.

* Parcel Five conceptual design envisions 387 residential units, 4 retail units (21,875 sf) and 497 parking spaces.

* Parcel Six through twelve total in excess of 38 acres and entitlements are proposed for retail.

Unique Investment Opportunity

Carlos Silva — Sat, 30 May 2009 12:56:49 -0500

Valued at $26M it is a 9 CAP opportunity. The client has picked it up for $15M. The client is looking for an equity partner to come in at $7M to finish the buy by next Thursday. The client has $8M in the deal and wants a fifty percent (50%) equity partner to close the transaction. Should you be interested, please provide me your email and will provide summary to serious investors who are willing to proof.

Foreclosure Today & In the Past: How Will It Affect Credit Score?

Carlos Silva — Thu, 23 Apr 2009 18:07:34 -0500

There's been a lot of questions concerning how a foreclosure this days will affect your credit score and ability to qualify to purchase a home in the future. Here's an article from NY Times which somewhat addressed the matter.

How Will Foreclosure Effect Credit Scores?

The amount of damage to a credit score caused by foreclosure, deed in lieu or a short sale during 2008 and 2009 may be mitigated by the slower economic times, say some credit and legal experts.

FICO may have to adjust its credit scores to lessen the impact of a foreclosure in the last two years, says Todd J. Zywicki, a professor of law at George Mason University.

''It just seems obvious that a foreclosure in 2008 or 2009 doesn't have as much information value as a foreclosure five years ago,'' he says. ''To the extent that foreclosure doesn't predict future behavior as much as it did in the past, you'd expect that the FICO algorithm would change to adjust for that.''

One of the country’s largest credit unions Golden 1 has already figured out a way to lend to people with a foreclosure on their record by offering a mortgage repair loan specifically for those who have lost a home to foreclosure and who want to buy a new one.

BECU, another large credit union based in Washington State, is about to present a program to fellow lenders, ''How to Lend to the Newly Credit Impaired.”

Source: The New York Times, Ron Lieber (03/14/2009

Housing Bubble Smackdown: Bigger Crash Ahead Huge "Shadow Inventory"

Carlos Silva — Wed, 22 Apr 2009 14:21:11 -0500

Due to the lifting of the foreclosure moratorium at the end of March, the downward slide in housing is gaining speed. The moratorium was initiated in January to give Obama's anti-foreclosure program---which is a combination of mortgage modifications and refinancing---a chance to succeed. The goal of the plan was to keep up to 9 million struggling homeowners in their homes, but it's clear now that the program will fall well-short of its objective.

In March, housing prices accelerated on the downside indicating bigger adjustments dead-ahead. Trend-lines are steeper now than ever before--nearly perpendicular. Housing prices are not falling, they're crashing and crashing hard. Now that the foreclosure moratorium has ended, Notices of Default (NOD) have spiked to an all-time high. These Notices will turn into foreclosures in 4 to 5 months time creating another cascade of foreclosures. Market analysts predict there will be 5 MILLION MORE FORECLOSURES BETWEEN NOW AND 2011. It's a disaster bigger than Katrina. Soaring unemployment and rising foreclosures ensure that hundreds of banks and financial institutions will be forced into bankruptcy. 40 percent of delinquent homeowners have already vacated their homes. There's nothing Obama can do to make them stay. Worse still, only 30 percent of foreclosures have been relisted for sale suggesting more hanky-panky at the banks. Where have the houses gone? Have they simply vanished?

600,000 "DISAPPEARED HOMES?"

Here's a excerpt from the SF Gate explaining the mystery:

"Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory." ("Banks aren't Selling Many Foreclosed Homes" SF Gate)

If regulators were deployed to the banks that are keeping foreclosed homes off the market, they would probably find that the banks are actually servicing the mortgages on a monthly basis to conceal the extent of their losses. They'd also find that the banks are trying to keep housing prices artificially high to avoid heftier losses that would put them out of business. One thing is certain, 600,000 "disappeared" homes means that housing prices have a lot farther to fall and that an even larger segment of the banking system is underwater.

Here is more on the story from Mr. Mortgage "California Foreclosures About to Soar...Again"

"Are you ready to see the future? Ten's of thousands of foreclosures are only 1-5 months away from hitting that will take total foreclosure counts back to all-time highs. This will flood an already beaten-bloody real estate market with even more supply just in time for the Spring/Summer home selling season...Foreclosure start (NOD) and Trustee Sale (NTS) notices are going out at levels not seen since mid 2008. Once an NTS goes out, the property is taken to the courthouse and auctioned within 21-45 days....The bottom line is that there is a massive wave of actual foreclosures that will hit beginning in April that can't be stopped without a national moratorium."

JP Morgan Chase, Wells Fargo and Fannie Mae have all stepped up their foreclosure activity in recent weeks. Delinquencies have skyrocketed foreshadowing more price-slashing into the foreseeable future. According to the Wall Street Journal:

"Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can't meet their loan payments, up from about 1.7 million in 2008." (Ruth Simon, "The housing crisis is about to take center stage once again" Wall Street Journal)

Another 20 percent carved off the aggregate value of US housing means another $4 trillion loss to homeowners. That means smaller retirement savings, less discretionary spending, and lower living standards. The next leg down in housing will be excruciating; every sector will feel the pain. Obama's $75 billion mortgage rescue plan is a mere pittance; it won't reduce the principle on mortgages and it won't stop the bleeding. Policymakers have decided they've done enough and are refusing to help. They don't see the tsunami looming in front of them plain as day. The housing market is going under and it's going to drag a good part of the broader economy along with it. Stocks, too.

By Mike Whitney

Housing Bubble Smackdown: Bigger Crash Ahead Huge "Shadow Inventory"

Carlos Silva — Wed, 22 Apr 2009 13:29:41 -0500

By Mike Whitney

Bulk REO Or Goose Chase?

Carlos Silva — Tue, 21 Apr 2009 04:32:36 -0500

If you have chased the elusive Bulk REO as I have than you are probably wondering how to get your hands on a real buyer, a real seller and a real tape. You probably also ran across your fair share of , NCNDs, MFAs, intermediaries, mandates, broker chains, "buyers", "sellers" and a fair share of tapes. One thing I have learned is to do a lot of due diligence and not to get too excited like I did at the beginning of my bulk REO journey. I am embarrased to say how much time has been "invested" in this endeavor and not yet have a successful transaction. However, am happy to say I have established new relationships, learned the real meaning of due diligence and have become somewhat of an REO expert. Guess it's a part of earning your stripes. The funny thing about life is that when you chase something too hard you end up driving it away. I no longer chase the elusive bulk REO deal but will wait patiently for it to fall on my lap.

Please share any suggestions, comments, experiences or your own goose chases.

Is Commercial REO On The Rise?

Carlos Silva — Fri, 17 Apr 2009 03:24:35 -0500

Many investors are anxiously waiting for commercial REO to hit the market and have not seen much inventory in the past. Just recently received a two page list of commercial REO, notes and land from one of my connections at a bank. Was wondering if this is an indication that commercial REO is going to start hitting the market.

The list consists of the following:

* Full service car wash in AZ (REO)
* 5 Single family residences and an apartment building in Las Vegas, NV (Note)
* 5 single family homes and 26 improved lots in Sparks, NV (REO)
* 5,000 Single story office building in North Las Vegas, NV (Note)
* 5,000 Single Story office building in Las Vegas, NV (Note)
* Office warehouse in Las Vegas, NV (Note)
* Residential, multi-family, custom home and commercial land in NV and AZ.

Speculator Or Real Estate Investor?

Carlos Silva — Fri, 10 Apr 2009 04:06:32 -0500

The last real estate boom saw many real estate "investors" crawl out of the wood work or in many cases Las Vegas casinos. Many of them were casino employees who had no previous experience in real estate investment. Low interest rates, creative financing and all the buzz about everyone making a killing in the real estate market was too much to resist. Unfortunately, those new "investors" did not have a strategy or savvy to insulate themselves for unforeseen circumstances or in this case adjustment of the artificially inflated real estate market. In fact many of them were barely able to make their payments while at the same time trying to squeeze in another investment property to make sure they squeezed every last drop out the real estate boom. The real investors knew the market was getting ready to adjust and got out just in time. However, the new "investors" had no clue what hit them and soon realized they would have been better off putting their money on black or red. Once again we are seeing the real estate market pick up and another stream of "investors" line up to get a piece of the action. We can only hope they will do their homework, get professional advice and learn from the mistakes of the last boom casualties to become real estate investors and not just speculators.

Tips for new investors:

*Make sure you have positive cash flow.

*Use 10 months (preferably 9) to calculate your ROI.

*Consider using a good property management company.

*Make sure you have at least 6 months reserves for every rental property.

*The lowest priced property is not necessarily the best investment property.

Don't Remove The Fish In Foreclosed Homes With "Green Pools"!

Carlos Silva — Thu, 09 Apr 2009 16:42:35 -0500

In an effort to control mosquitos that carry the West Nile Virus in foreclosed homes that have pools with stagnant water (green pools) the Las Vegas Nevada Health District's "Mosquito Control Program" have introduced Gambusia Affinis. It is a minnow like fish that lists mosquito larvae as it's favorite food. The fish were initially introduced to control mosquito population in wetland areas. With the increased amount of foreclosures with pools containing "green pools" they have become the health district's allies to prevent the West Nile Virus. Real estate agents or neighbors are asked to contact the health district when they encounter a "green pool". The health district will show up with fish in tow and get to work. They will only add fish to pools when the pumps are off. The purchaser is asked to call the health district to relocate the fish to a new home and another buffet of mosquito larvae.

How Do I Become A Master Blogger And Get More Referrals?

Carlos Silva — Wed, 01 Apr 2009 15:11:08 -0500

First of all I'd like to thank all of you for being so helpful! One of the main things I like about the AR community is everyone's willingness to help and share with all. As you might have noticed I am kind of new at blogging. Was wondering if you might have some suggestions or AR articles that I could read to help me become a master blogger and address the following questions:

*How often should I blog?

*How can I improve on my profile?

*How can I add pictures to the blogs?

*How can I get more referrals via AR?

*Is there any groups I should definitely join?

*Should I focus my blog on a particular niche or subject?

*Should I keep the blogs focused on business only or are hot issue blogs acceptable?

*What kind of blogs should I write that will get more activity, business and feedback?

*Since we are only permitted to blog to 5 groups which ones should those be for the best results?

*How do I make sense of Localism, Active Rain Channels, My Groups and categories to blog accordingly?

Please feel free to give advice or suggestions to anything else that I missed or might help. Thank you in advance for your time and assistance!

Ps
Think I should focus my blogging primarily on REO since that's my niche market and work with the largest REO brokerage in the state of NV.

Bank Owned (REO) Real Estate's Little Known Secret To Great Investments

Carlos Silva — Tue, 31 Mar 2009 02:45:42 -0500

Everyone knows REO properties can be purchased at discounted rates and that they are great investments. What not many know is that high end homes are even better bargains and in most cases can be purchased at even bigger discounts than your typical REO property. It is not uncommon, in our market, to purchase a property valued at $2million for $1 million. Here are some of the reasons why that market offers great deals:

1. Fewer buyers in this market.

2. Misconception jumbo financing is not readily available.

3. Most buyers focus on properties which can be purchased with conforming loans.

4. Misconceptions there is no REO inventory in the high end market.

We just found out there is a major financial institution offering jumbo loans for buyers with 720+ FICO scores with 20% down and excellent interest rates. Furthermore, as more foreing investors enter the US distressed markets the high end inventory will probably be their primary investment choice. This would be a great time to invest in a second home, move up or simply invest an excellent tangible asset.

HELP!!! Out Of State Buyer Or Just A Tourist Wanting A Tour Of The City?

Carlos Silva — Mon, 30 Mar 2009 15:27:43 -0500

Recently showed property to out state buyers referred to me by another agent.......

In the past I have wondered if the folks who I picked up at the airport or their hotel, bought lunch for and gave them a good tour of the city (to find out what part of the city they liked best) where serious buyers or just wanted someone to give them a tour of the city. Besides being referred and making sure they can purchase have tried to pin down any clues as to whether they are a serious buyer or a tourist needing a tour guide but have not been able to pin it down. Our broker has told us on more than one occassion that folks who are looking at property right now are serious buyers because most folks are worried about the economy and whether they are going to keep their job. That makes sense and will have to agree with him. However, it still nags me that someone could possibly be using me as their personal tour guide.

..........the buyers recently referred to me did not like what they saw and asked to be emailed properties that might be to their liking; did not buy them lunch.

Please help out with any suggestions, strategies or ideas.

Formula For A Successful Real Estate Career

Carlos Silva — Thu, 26 Mar 2009 17:00:09 -0500

If you want to have a successful and long lasting real estate career all you need to do is the following:

1) Close On Time-Close of Escrow means it has to be funded and recorded by that date. It is not a target date!

2) Easy To Work With-Be accessible to your clients and make them feel comfortable enough to contact you with any questions or concerns. It is better to answer too many questions than to lose their business and family/friends business to someone else who doesn't mind taking the time to help them!

3) Keep Your Promises-Don't promise something you can't deliver. I.E. set an appointment and be late or don't show up without calling parties concerned; say you're going to call at a certain time or day and don't call at the accorded time or date. If you don't do what you say your clients/business partners will lose their trust in you and go somewhere else!

4) Communicate Well-Make sure the client understands everything and tell them what to expect so there won't be any surprises. I.E. PITI monthly payment, interest rate, type of loan, how much money they need for their closing costs and/or down payment, explain different options and what/why it's best for their current situation, when they can expect to move into their new home, when they need to vacate the home they're selling, when they should hook up their utilities, when they can expect to receive funds of a sale, when they have to provide funds for the down payment and/or closing costs. Stay in contact for future business and referrals!

5) Meet Deadlines-Make sure any inspections, walk-thru, appraisal, recording and funding is done per contract or on a timely basis to close on time. It's better to be prepared and organized then to make excuses!

6) Enjoyed Working Together-When the transaction is done the client needs to know, without a doubt, they had the best team (realtor, loan officer, inspector, appraiser and escrow officer, financial planner, etc.), working for them. Leave a lasting impression so they will tell everyone they know!

7) Stay In Touch-Set up a follow up plan to stay in touch to help with anything that comes up and for future referrals. A satisfied client is the best and most inexpensive form of marketing and/or advertising!

7) Be Loyal- Send referrals to your business partners and highly recommend them to clients. Divided we fall together we stand! Now you know and knowing is half the battle. Tojours Pret!!!!

Carlos H. Silva Sr., ABR, CRS, CIPS
REO And Distressed Real Estate