Today, I read a very interesting article by Steve Cook that he wrote on July 30th. It was titled "On the Foreclosure Front, It's Woodshedding Time."  I don't normally watch Real Estate Insight and Intelligence but this particular article published at http://www.realestateeconomywatch.com caught my attention.  Not because the introduction was extraordinarily accurate, but because the intent of the article was to point out that what the mortgage companies have been doing - the government is well aware, and now since the politicians feel the heat, Washington wants to take the companies to the woodshed.

An excerpt from the article tickled me:  'So what was the meeting like?  “There was a sense of urgency,” Barbara Desoer, president of Bank of America Home Mortgage, told Ruth Simon of the Wall Street Journal.  Urgency?  I'll bet.  Ouch, woodshed time.'

Being an auctioneer, I can say that the article was very articulate in what needs to be done.    The article went on saying: "Reports from Tuesday's meetings suggest that loan servicers have been hampered with trying to make a brand new program fraught with administrative issues work on a large scale very quickly.  They discussed the need for standardized forms and to figure out a way to modify primary and secondary loans simultaneously, even though the two loans have different terms and are held by two different lenders."

Not that I am down on the mortgage companies, because I think that there has been blame to pass out all around, but you would think that the nearly 4,000 year old method of auction marketing would come into play.  Why?  You ask?  

The biggest complaint is standardization.  Auctioning a house all follows the Uniform Commercial Code.  The U.C.C is very specific about how to handle items that are in foreclosure or that have a lien attached to them.  So who cares if it has a first or second mortgage?  If you have an auction method of satisfying both, you need not have to do much more than sign the paperwork.

I think some of the problem is that we see too many people backward negotiating prices and want to cover their interests when the interests have evaporated.  Perhaps it is a sign that they were in the same delusional state as the homeowner when they thought the price of their real estate, already overly inflated, was going to go up further.

But, you ask, what does that have to do with the price of tea in China?  As folks with fiduciary duty, we can offer them auctions as a way of getting out of their current circumstance and put them into a better circumstance.

 Think about integrity when we offer them list and sit for 8 months versus selling the house in whatever market they are in less than 30 days.  Think about selling the house to settle the debit in a short sale versus having a house worth 30-50% less that does not sell at all, forcing your client into foreclosure.

Is it worth the cost of foreclosure to the 30% of Americans?  Each time there is a foreclosure, just remember folks - it costs you future business.