Good Afternoon, Richard: I'm proud to re-blog this post of yours, Hoss. Common sense solutions to simple problems are few and far between these days- whether on your coast or mine, Sacramento or Sweet Home Alabama. Don't want a foreclosure? Pay your mortgage. Don't want an eviction and your neighbors sifting through your stuff at the curb? Pay your rent. Enforce the agreements folks signed and allow them to accept their consequences. Anything else only encourages others not to honor their agreements. Around here, the foreclosure process is back to a year or so- and may very well be getting worse. Employing what's become known as a "rocket docket", Orange County brought retired judges in to handle foreclosure cases and try to get rid of a huge backlog. It's been successful, but the program may soon fall victim to the budget axe- and have some "non-victim" beneficiaries living it up with free shelter for even longer periods of time.
The Foreclosure and Short Sale Debate
How do WE prevent a Foreclosure when it is not our responsibility or even within our control? We don’t! We can’t prevent Foreclosures, unless we intend to cover the mortgage payments for everyone that would otherwise go into default. Sometimes, defaults happen and it is THEIR responsibility. How about letting them face the consequences, for defaulting on a loan. Stop being an enabler, and stop treating them like a child that requires a parents protection, even when they are wrong. Borrowers are not children and default proceedings are clearly stated in the Trust Deed.
What is the purpose of a Trust Deed? It defines the terms of the loan and also states what will happen if the borrower defaults, on the loan. The failure to meet the terms of the note results in the house being forfeited. The house is the lender’s collateral to assure that the loan is repaid. It is that simple. Period. When the loan is fully paid, the borrower will receive a reconveyance. When the loan becomes delinquent, a notice of default is to be recorded and the foreclosure begins.
Should we create more programs for the homeowners to hold on to the homes?
No! It is not OUR problem, it is THEIR problem. We don’t need to make
it easier. We need to meet Foreclosure deadlines, and complete the Foreclosure process in the manner described in the note. Post default notices on time, post ads regarding sale dates on time and complete the Foreclosure proceeding in an efficient and timely manner. By extending deadlines or creating more programs, we are simply making defaults a more pleasant experience, and it should not be. Where is the incentive to pay on time, when deadlines are pushed out or penalties are forgiven? Homeowners in default are a minority of home owners.
Our gentle approach at easing a defaulting borrower through a delayed Foreclosure is absurd. Then, why do we do it? Guilt. We feel guilty about allowing unqualified people to buy a home, when they could not afford it. Really? I don’t remember doing that. THEY did that, not US.
The bottom line is that many people jumped on the Easy To Qualify loan wagon, and got taken on a ride. But, certainly not everyone. In fact, a small percentage of ALL homeowners are affected, but, unfortunately, everyone is forced to suffer.
WE have already come up with one great program, it’s called a Short Sale. While many see this as a solution and a means to sell homes and solve a problem, it is hugely responsible for plummeting property values. Seriously? Yes, SERIOUSLY!
Think about it:
1. There is NO provision in a Deed of Trust for a Short Sale. There is a provision for Foreclosure. Short Sales benefit the agent and providers of services related to the transaction. The seller does NOT benefit monetarily. It allows a borrower to avoid a Foreclosure, when the agreement clearly states that a Foreclosure is the process to be used in the event of a borrower that defaults. When penalties are not administered as stated, the power shifts from the lender to the borrower, and/or, the agent that is the driving force behind a Short Sale. This is not a case of the tail (borrower) wagging the dog (lender), it is the flea (agent) on the tail, that is wagging the dog. Or, at least trying to wag the dog, by convincing them to accept, what is most likely, an undermarket value price.
2. Since when did an agent’s marketing program consist of
reducing the price every week that an offer was not received?
Is this really how we go about bringing in the best price? How about the lack of photos and lack of effort in marketing a Short Sale property? How do you justify providing low comparables to a lender to support a lower price? How do justify not submitting ALL of the offers or even allowing ALL of the offers to be seen by a lender? Why aren't YOU accountable, for defrauding the lender by underpricing a property, simply to earn a commission? You think that helping your client avoid a Foreclosure is positive. What about the damage by devaluation, that you have done to the other homes on the street and in the neighborhood? What happened to the good of the many, outweighing the needs of the one?
3. Short Sales don't preserve property value. They destroy property value. Go ahead and argue this point. Tell us how you have driven up property values with your Short Sales success story. You may have helped a borrower in default prevent a Foreclosure and minimize the damage to their credit, but, you have not helped preserve the property values of every other homeowner.
Foreclosures and Short Sales are not positive events, and few people would consider the process to be a pleasant experience. However, there are always winners and losers. The buyer is a winner, they are the new homeowner. The agents completing a Short Sale are winners. The agent that markets an REO property is a winner.
The disgruntled former homeowner is a loser with damaged credit and a grim outlook for several years. They may also have lost their life savings, dignity and pride, while clinging to the hope that a Foreclosure would never occur. But it did. Why? Because THEY failed to make their mortgage payments on time, as required and as agreed to on their note, which they signed. WE are not responsible for their debts and obligations, THEY are responsible and they either meet their obligations or they suffer the consequences. It's not wrongful punishment, it's what THEY agreed to.
STOP trying to change the rules and start enforcing the rules.
Coldwell Banker Real Estate
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