When the wall..comes tumbling down!

By
Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

MADE YOU LOOK!!!!

So, yesterday, I get a call from one of my Sellers. I had written about this particular Seller, in one of my earlier posts "Three blind mice, three blind mice...blah, blah, blah!" First, let me say I really like these folks. As you can see, this is a public post, as all of mine are, my Sellers read my Blog and know that I am going to use their situations as teaching tools. Maybe, if they read this it will reiterate what I told them yesterday and finally reality will sink in. I just hate it when folks dig their hole deeper by trying to solve serious problems, by putting a bandage on them, when the situation calls for an amputation.

These folks owe $195,000 on a house worth, maybe, $185,000. The property is currently listed with me, with the intent of finding a Buyer, and then being able to negotiate a "short sale". The combined payment is $1,400 a month and is way more than they can afford. Anyway, I got a call yesterday wanting to know if they were able to take the home off the market. Of course, I have no problem with this, as all of my listing agreements can be canceled at any time. In fact, I was kind of excited, hoping that they had decided to take measures to keep the house. I never wanted to list their house to begin with and had suggested they do whatever it takes to continue making payments. Like get a job!!

The reality is, that a rental will cost them $1,100 to $1,200 a month, anyway. So really, by losing the house, they are only saving a couple of hundred dollars a month. It doesn't make financial sense.

Well, I guess the stress has become too much and they have cracked under the pressure. Their new game plan is to refinance the house again. Supposedly, the Mortgage Broker who has offered to "help" them, said he can reduce their payment by $40 per month!!! Of course, this will cost them another $6,000 to $7,000, in equity, that doesn't exist to begin with. And there are no proceeds to the Seller. Thanks for your "help", buddy.

When I asked the Seller about this, their response was, that by refinancing, they would be able to skip March's payment and then they could use their tax return to make the payment for April. I asked them if they would then be able to continue to make more payments and they said "No, but we can't worry about that now, we just want to buy some time." So, there you have it, their well thought out plan. Quite the doozie!!!

Of course, we all know, that this plan, doesn't have a chance in hell of working. The payment will, more than likely, go up once the deal is structured. The Sellers by this time will be sold on their "solution" and will move forward with the refinancing, regardless of the payment. The "tax refund" will be spent on something else way before it is received. They will never make a payment on the new loan. A "short sale" will probably be out of reach by the time more "artificial equity" is taken from the house and placed in the Mortgage Broker and Lender's pocket. The Seller will be left facing an inevitable foreclosure again. And the "mind numbing" cycle of stress will begin all over again.

Well, I've done my best to get these folks to see reality. It ain't going to happen. The only thing left for me to do is pick up my sign and move on to the next "blind mouse" and try once again to help folks that are not willing to be helped. Such is the life of a REALTOR® in a declining market.

This is the fault of ALL Mortgage Brokers, Loan Officers and Lenders out there who prey on the stressed out uninformed consumer. OK, OK just kidding. But I do love getting the financial guys riled up!!!

Unfortunately, we can educate and counsel the consumer, until we are blue in the face, but they will still do what they want, in the end. I feel like I have been banging my head up against a wall. The wall of irresponsibility. Well folks, I'm here to tell you, that if attitudes don't change, this wall is going to come tumbling down. And the innocent will be crushed.

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 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Rainmaker
310,387
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
858-777-9751

This is the fault of ALL Mortgage Brokers, Loan Officers and Lenders out there who prey on the stressed out uninformed consumer.

Nice try.  You almost had me. 

Jan 20, 2007 09:55 AM #15
Rainmaker
651,433
Randy Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

I told a similar story in a room full of mortgage brokers and they didn't understand why I had a problem.  After all they closed another loan.

Ok, Ok I made that up.  I tool like to rile up mortgage brokers.  I hope this doesn't get me on the hate e-mail list.

Jan 20, 2007 09:57 AM #16
Anonymous
Gollum
What is a "short sale" as relates to mortgages?
Jan 20, 2007 10:10 AM #17
Rainmaker
1,136,378
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Gollum, A "short sale" is when a lien holder agrees to take a "short" payoff on the amount of money they are owed. They will agree to do this on occasion to avoid having to foreclose on the property. The seller has to be able to prove financial hardship and they cannot make any money on the sale. Banks are not in the business of owning property so a "short sale" is just one of their options.

Brian, This was a little trick I learned from the X-broker. But you knew that:)

Randy, if the mortgage brokers put you on their hit list you are in trouble.:) 

David, equity in a house is so 1980's. You know the last 10 deals I have closed were all 100% financing with seller paid closing costs. It's rare to see a deal in my market where the buyer has any money. Foreclosures are way above the national average.

Teresa, that's my "Bubba" picture. I wear a lot of makeup when I go to work. This is the true me. I keep getting chips in my beard though.

Sean, It will definitely be a "rear entry" loan.  

Mikey, placing another mortgage on this property is criminal in my opinion. This will be the 4th time they have refinanced. The house was built in 2004!!!

Debi, you're right. I've done all I can do on this one. I tried, I failed, I'll move forward.

Cynthia and Bob, people will do what they want no matter what we say. Throw the stress of pending foreclosure in there and they are sitting ducks. They will grab any rope that is thrown in their direction.

Dena, the seller are always right. I spend a lot of time shaking my head in disbelief. 

Jay, it was great talking to you today too. Your sure have a deep voice for a lady:)

Anthony, I hope they read it too. Maybe I'll e-mail them a link. Thanks for your real life example as well. I bet your folks don't have a dime of that $200,000 left.

Jay, one spouse works the other doesn't. She got turned down a couple of times and just gave up looking. I'd be scrambling my butt off to keep my house.

TLW, quit leaving nasty comments on my post. 

Jan 20, 2007 10:49 AM #18
Ambassador
555,768
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL
LOL. (sorry guys that was an inside joke)...TLW...ROAR!
Jan 20, 2007 10:58 AM #19
Ambassador
3,334,525
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

I agree with Teresa 0 this is a good pic and QUITE the improvement.

Ugly situation. The mortgage thing makes no sense!! Sounds like they are desperate and grasping at straws.

Jeff

Jan 20, 2007 11:37 AM #20
Rainmaker
303,699
ARDELL DellaLoggia
Sound Realty - Kirkland, WA

TVLW< Your inside jokes are getting so outside...I don't think you need to explain or apologize.

Jan 20, 2007 12:51 PM #21
Rainmaker
223,106
Rick & Ines - Miami Beach Real Estate
Majestic Properties - Miami Beach, FL
Too bad Bryant...too bad.  The only thing I can tell you is that you tried.  You have been busting your butt to try to help these people and that is all that counts. .......NEXT!
Jan 20, 2007 01:04 PM #22
Ambassador
3,278,941
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Bryant, I walked away for a refinance like this a couple of months ago, but unfortunately the few that don't care, give the overwhelming majority a black eye every time they help people sink deeper in a hole.

But this is also a very good example of how people do not listen to sound advice and just keep on getting themselves in deeper trouble. In the long run they only really have themselves to blame, because they are making the decision to still go ahead with this even after being explained how dumb this is.  They can't plead ignorance later, no matter how willing this Loan Officer is to help push them into the pit. 

Jan 20, 2007 01:53 PM #23
Rainer
122,117
Christy Powers
Keller Williams Coastal Area Partners - Pooler, GA
Pooler, Savannah Real Estate Agent

Love the picture.....you look well....unique...

You did all you can do. It makes no sense what they are about to do. I guess with foreclosure breathing down your back, you aren't really thinking. I don't understand how you can take more equity out of home if it isn't there. If the appraisal comes in higher, I would want to check that company out. The appraiser and the lender may be working together. I just don't understand why someone would want to "help" them get to foreclosure with more money in debt. I think that is just wrong..... 

Jan 20, 2007 02:36 PM #24
Rainmaker
246,726
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699
Hey Bubba, YOu have way too much time on your hands!!!!  Do you just stay up nights making photos of yourself???? This one is one of your better ones, I must say! Well, getting to your irresponsible seller...my oh my...too bad he just can't see the forest for the trees. But, then again that's how he got where he is and he probably will get there again real soon. Robbing Peter to pay Paul only works for sooooo long. Good luck to him!
Jan 20, 2007 03:07 PM #25
Rainmaker
206,139
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate
You can do your best to educate them, but you can't make decisions for them.  It's a shame that they won't learn the lesson until they loose the house and then it will be too late.
Jan 20, 2007 08:17 PM #26
Rainmaker
453,249
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904
Ah yes BB - Bang Head Here You read it didn't you???  Love the photo cuzin! Peter called...he wants his money back from Paul...(lol)
Jan 20, 2007 09:37 PM #27
Rainmaker
546,213
Maggie Dokic | Miami, FL | 305.81.HOUSE (46873)
eXp Realty LLC - Miami, FL
GREEN, CDPE, SFR, Pinecrest | Palmetto Bay |

Bryant, on the one hand, my heart goes out to them.  On the other, I have to think they have an awful lot to do with the situation they are in.  I have someone extremely close to me who has lost a home and is now renting.  Nothing I did, (not even the money I loaned to get their mortgage back on track..which by the way, I never got back)  ever got through to this person.  You can lead a horse to water, but you cannot make him drink. 

Hopefully your clients will read your blog and the comments and not do another refi!  You can feel good knowing you've given your all to help them.  Good luck to all of you!

Jan 20, 2007 11:54 PM #28
Rainer
53,146
Ron Withers ----Retired Mortgage Professional
Kissimmee, FL

BB,

It's great that some of your clients follow your blog.......as a matter of fact.....DUH....it's novel! This can only serve to lend credence to your service and commitment to them as well as serve a solid referral base. And.....it probably doesn't hurt to have a 14,000+ community of professionals quitely shouting AMEN from the realms of cyberspace.

Jan 21, 2007 02:09 AM #29
Rainmaker
1,124,058
Jeff Turner
RealSatisfied - Santa Clarita, CA
BB, this is the perfect example of why we all need to give back to the community in the form of education. The good guys need to be out there preaching the opposite of what this lender is teaching your clients. It's a crime, truly. The public looks to real estate professionals, including the mortgage industry to help them make good decisions. In this case, they got two different stories and took the road of least resistance. It's sad.
Jan 21, 2007 08:37 AM #30
Rainmaker
1,136,378
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Hi every one, I really appreciate all the comments. I hate it when I see the consumer put in this situation. Granted they created the problem by over spending and refinancing so  many times, in such a short period of time, but there is no way a lender should be willing to refinance this house, at this time. BTW they did just call me to remove the home from the market. They are moving forward with their "plan". Maybe there should be limits on how often a property can be refinanced. 4 times in 2 years is a sure sign that the owners are having financial difficulties. Or at least require the owners to have reserves in an escrow account or something.
Jan 21, 2007 09:50 AM #31
Anonymous
Stan

http://tinyurl.com/yofdj8
"Doug Gooch, newly installed president of the Pensacola Association of Realtors, said his group is working to get the word out to Realtors and buyers about the array of state and federal lending programs, especially for first-time home buyers."

"An agent in our office just sold a house to a 21-year-old with no money down," said Gooch, office manager of Palm Realty in Pensacola. "It's always been our position to try and help anyone get into a home."

Notice....21 yr old w/no money down.  "It's always been our position to try and help anyone get into a home."  So, members of the organization can talk about fiscal responsibility and ignore it at the same time?  It reminds me of the Tom Clancy novel definition of "politician"......."When I'm not kissing babies, I'm stealing their lollipops".


As long as spokesmen, such as in this article, promote these policies consumers will continue to hold the term "Realtor" in low regard.

 

Jan 22, 2007 12:55 AM #32
Anonymous
Larry Walker
I agree, Stan. We realtors are promoting "Time@Buy" and "Now is a great time to buy." with total disregard for the fundamentals of our market. I would think that if we want to retain a shred of dignity, that we should ask our professional organizations such as NAR and FAR and our local boards to stop the embarrassing campaigns that are telling people such as these that the immediate future for real estate is very bright. I can continue to make a decent living in Florida real estate without selling my soul and wearing a "Time2Buy" button hoping to convince someone that now is a good time to jump into our market. There are great deals to be had but not everyone should be believing that now is the time for them to jump into home ownership any more than these particular people should have bought when they did. 
Jan 22, 2007 05:48 AM #33
Anonymous
Stan

Larry,

There's plenty of "blame" to go around for the real estate mess, however, Realtors (tm) are the "face of real estate" where the public is concerned.  They get more credit than they should when markets are rising and more blame than is fair during a declining period.  What gripes my butt is misrepresentation; bordering on fraud. 

Here's a few headline bullet points the industry is pressing on the public:

1) "It's different here".  That song played out in market after market until it became a joke.

2) "Housing is an investment".  While it can, and often does, appreciate, it's a lifestyle choice and NOT a right.  The American Dream has turned into an American Nightmare for many.....BB's client is typical of what's being played out all across the country as the "piper demands payment".

3) "They aren't making any more land".  True, but where's the excess inventory of new homes coming from?

4) RealtorSpeak......if I read one more listing that says "In the coveted and award winning XXXX school district.......Must see....Won't last for long"  I will puke.  The listing description is your first conversation with a potential client and if you don't sound credible, why should I believe ANYTING you say?

Oh yes, when the Feds get involved in MLS access, it's not a good day.  So, maybe the question the real estate industry should ask itself is what would it look like if you remove their MLS monopoly?  It's won't take much of jump for someone to sue for total public access with the basis of the suit being "in the public's best interest".  Right now it's a sacred cow but I've seen a few go to the slaughterhouse.

JMHO

BB, sorry for hijacking the thread.

Jan 22, 2007 07:34 AM #34
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Rainmaker
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Bryant Tutas

Selling Florida one home at a time
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