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A Radical Resolution for Real Estate Recovery

Approval for Real Estate Resolution Last week, I had the opportunity to interview Southern Califoria and Nevada real estate legend Bob Dyson. He has been in real estate for 40 years and has a long track record of success--ranging from owning the master national Red Carpet Real Estate franchise to Dyson & Dyson Real Estate in Southern California and Nevada, to Broker for Sotheby's International Realty in San Diego and Riverside Conties.

But the interview wasn't about Bob Dyson.

It was about a radical proposal that is quickly being embraced by Realtors, lenders and local Real Estate Boards. We taped a total of four short interviews, but the last two will probably be of most interest to the Active Rain audience--and I am posting them here.

Why resort to radical resolutions?

Because, says Bob Dyson “This is a real estate depression–a serious, serious issue.”

He sees an immediate need to stabilize real estate markets and neighborhood values. He also believes the mortgage lending industry needs to get out of the “asset management” business, and instead focus attention on new loan originations.

So what to do with all those defaulted loans and pre-foreclosures?

That’s where Dyson’s proposed “American Incentive Resolution” saves the day.

How would it work?

1. The American Incentive Resolution Corporation (as a government entity) would buy defaulted loans from lenders at 50 percent of face value.

2. Re-market these homes through Realtors at retail market value.

3. Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years. The initial terms would be a 12-month lease-purchase, with all payments accruing to a down payment as long as payments are made on time. Lease payments would equal what loan principle, interest, taxes and insurance would be under normal loan terms at 5 percent interest. Initial move-in would entail first and last months’ payments.

4. At the end of 12 months, the lease would become a purchase with all payments made under terms of the lease being applied to the full down payment.

Some will argue "Be careful whom you make your protector lest they shall become your jailer." In other words, keep government out!

Bob would likely reply that "Better we oblige the government to offer these properties to the American public, than to spread the spoils among congressional cronies."

The first video below details Bob Dyson’s proposal for restoring neighborhood values and the real estate market, while the second explains how YOU can involve your local board in helping to create and implement the American Incentive Resolution:

For additional reading: http://sandiegopreviews.com/2008/09/01/a-most-unorthodox-market-bob-dyson/

Posted by Roberta Murphy - Carlsbad Real Estate North County San Diego Realtor on 09/03/2008 12:36 AM

Comments (66)

market bottom, mortgage defaults, neighborhoods, bob dyson, del mar

Originally posted at: The Real View: A Radical Resolution for Real Estate Recovery

This post has been included in California Information San Diego County, CA Information
Post is included in group: Everything California
Post is included in group: Short Sales and Forclosures ONLY
Post is included in group: Short Sale Specialists & Pre-Foreclosure Education
Post is included in group: Sotheby's International Realty
Post is included in group: The Economics of Real Estate

66 Comments on A Radical Resolution for Real Estate Recovery

SEP

2008

Hi Roberta

Great post with interesting insight on the real estate issues.

Good luck and success

Lou Ludwig

For additional information about Lou and his services go to www.LouLudwig.Com

Hi Roberta - Great Blog! I used to work for Bob Dyson in Vegas, when the brokerage was 40 agents. Bob is a visionary man & his ideas are sound.

On another note, I have a home in Aviara, and my daughter and partner is looking into buying a condo in the area. What can you tell me about prices? We were looking in Brindisi.

Lou: Thanks! If you have any interest in furthering this cause in Florida, please give Bob Dyson a call at 858-481-2020.

June:

It is a small world-and I'll be sure to mention you to Bob!

Aviara has held up fairly well during the downturn, but some bargains have emerfed. The north coastal area of San Diego was the last to crumble--and will the the first to recover. Please feel free to give me a call at either 877-818-8197 or 760-402-9101 and we can discuss specific opportunities in the Aviara area.

Very interesting blog and all my great ones around here are telling me it's an election year with high gas prices, but all have never seen it this bad. We are sending many listings into the rental department and doing well with this.

www.bobsellssumter.com

Bob: Thanks for your input! Rentals in many cases may be the best solution.

I like this! Anytime we can become PRO-active instead of RE-active we are better off. I've never heard of Bob but he has a fantastic idea here!

I passed you blog link onto my daughter, Lauren, who may be calling you aout Aviara condos. Mine is in Viaggio & I love it...bought it in 1998 - If there is a deal too good to pass up - please e-mail me. I think I will give Bob a jingle! Thanks for his #!

Susan: Am in 100% agreement with you. Bob is full of great ideas and initiatives.

June: Will do! And please give Bob a call. He'd love to hear from you.

Roberta, Let's hope that with Bob's guidance and Realtor buy-in that we can collectively reverse this bloodshed and take back what Realtors do best and put Banks back to working on building good loans for the consumer. I will forward this to the Sacramento Association of Realtors. I would also like to write an article and include your videos on Sacramento Real Estate Voice and spread the word. Bob, certainly is an innovator and everything that you have said about him...remarkable.

Hi Roberta, Thank you for the info. I think this is a very important post, I'm flagging for a post. I think it's essential that as many as possible read it. And I'm in complete agreement with Bob's analysis of the majority of our legislators in Congress. Sorry to say that, but it seems more apparent daily.

Seems to me like his ideas have merits and with (imho) fine tuning it could help, he knows from what he speaks. Home-ownership has been the rock, the foundation for the average American. If we loose it, the gaps between the haves and the have-not's widens, we all loose.

Bob's been through 6 downturns, we need to listen to this man. This is my 4th in 38 years, and by far it's the deepest and widest I've experienced, impacting others far beyond the world of r.e.

SEP

2008

This would definitely be a radical resolution to the current real estate market. It has some interesting possibilities.

well, at least Bob is willing to speak up - his ideas should be taken seriously.

Roberta, Very interesting.. I fully agree that Lenders need to get back into lending... Solutions certainly should include Banks being more receptive to Short Sales and making the process easier for homeowners to just move on... So the banks can stay out of the asset management game and keep the homes (and neighborhoods) from getting beat up even more when the frustrated homeowner just walks away...

(We are taking another short sale tomorrow after the homeowner just became plain out frustrated after trying to work something out with their lender and getting nowhere.)

Not sure about the first video or plan... I certainly liked some of Bob's comments on the second video though.

As far as finding the bottom... recent sales for Las Vegas Homes certainly suggest a bottom with the increase in sales. We have over 6,000 short sales on the Las Vegas MLS... yet I only showed 250 short sales closing in July... Certainly a ratio that needs to be worked on to keep the 5,000+ bank owned homes on the Las Vegas MLS from climbing even higher.

In other words... Solutions specific to this segment would certainly benefit and help speed up the recovery. No solutions... and homeowners are just going to continue walking away from being upside down $150,000+.....

Well, this is what I've been saying for the past 3 months and everyone looked at me like I fell out of a tree. I said we needed to find a way to put families back into homeownership plus get their credit repaired. This seems like a credible way to achieve the process.

Roberta, sounds like a good solution to get folks in homes. But, do you think the banks would let the gov't buy back the loans at a lessor rate? I don't. I also have a problem with the gov't getting involved, but we dod need a solution.

Wouldn't unloading these properties at 50% of the loan amount crush the investors holding the notes? Do you want to expand the Federal Governments responsibilities? What, besides the military, does the Federal Government do well? Bob sounds like an entreprenuerial, free enterprise type. This is all contrary to that type of businessman. I'm confused.

This is CRAZY! I was talking to my son and husband last night talking about this RE recession and explained some of the notions of selling in the late 70s to early 80s to them. THis was one of them (lease option to purchase.) I didn't exactly explain it on this level though. It would be interesting to see something on this scale implemented!

Gena: You go, girl!

Lynda: Thank you and I agree. Just hope we can stop this slide in time.

Christine: Agreed!

Chris and Maria: I sure hope so!

Paul: Thanks for sharing the Las Vegas stats. I know Bob's ideas may seem radical, but a radical solution is needed.

Diane: Thank you--and Realtors should be the ones to take the lead.

Missy: I don't doubt for a minute that this proposal would rattle investors, banks and Wall Street. At the same time, it might save a few instituitions--along with thousands and thousands of homeowners and neighborhoods.

Renee: I think lots of us are having these discussions, and as real estate professionals may have some real solutions. Hopefully this proposal--with input from all of us--can make it to Congress quickly.

Roberta, last night after reading your article and listening to Bob, I sent a copy along with links to each of the Sacramento Association of Realtor Board of Directors. Action is what is needed to correct this problem.

We need to get the banks back to doing what they know how to do and leave listing and selling homes up to the Realtors. This blood that runs through neighborhoods needs to come to a screeching halt. The sooner this is done, the faster the economy will improve.

I for one, back Bob and his innovative idea. It's time to act.

I like his ideas - particularly as a way for those with damaged credit to get another home. I represent some "short sales" and these buyers (with families) want to own a home and circumstances have forced them out and it takes such a long time for them to recover.

Gena: I don't know whether Bob is following this thread or not, but I'll make sure he is aware of what you have done. If your contact at the SAR wants to speak with Bob directly, let me know. He has already done so with the Desert Board--with great success. Let's get the ball rolling! And please feel free to blog about this on your Sacramento Real Estate blog.

Cathy: Most of us have had to deal with these heartbreaking situations, where families are ripped from their homes and depart with damaged credit. This provides a second chance for people--and entire neighborhoods.

Most of the foreclosures I've seen in my market (North East) are not financeable under current most lending guidelines. Frozen pipes, mold etc...

The problem seems to be the asset managers or banks are unwilling to take 50 cents on the dollar. If they were the investor would begin to look at these properties.

If we created a new government backed entity ( Fannie and Freddie) are they going to fix the houses up and make them financable ? or are they simply going to re-list them with agents. If they are not willing to repair we have gained nothing, except a new seller.

After saying all this I agree that the banks should be out of the asset management business. I just think it should be local entrepreneurs. The best way out of this situation is to encourage banks to actually sell the houses for market prices. Realtors should give solid advice to asset managers.

The goal should be to move these houses into private ownership as quickly as possible. I believe investors are our best option. especially since it will not take an act of congress to get going.

Great post! It will certainly get the debate going.

It is good to know that there are people thinking outside the box. Perhaps some of those in government can look into some of these proposals. It seems that this situation is not going away any time soon.

Steve: Thanks! The damaged homes could either be sold as-is and be priced accordingly--or be fixed. Either way, it removes vacant and deteriorating properties from the market.

Joan: I hope the government considers some resolutions--and quickly.

that sounds wonderful to me .. definately will help the market and all these people who have been left with no credit and no home.

How about just reducing the loan to 90 % of the current market value of homes, for those that can afford it at the reduced ammount....

Interesting comments, suggestions, and Dyson's ideas. However, government involvement is a mistake.

There is at least one major investment banker who plans to drastically reduce the balances on problem loans in their portfolio and offer new terms/loans to the people living in those homes.

This succeeds because of more than one thing. First, it saves homes for people previously duped by certain mortgage companies. Second, it brings back some money lost because of write downs. Third, it diminishes the impact of "low ball" home values by avoiding new sales.

Roberta, I like the idea. Unfortunately I never think the government is the answer to anything. I think there is a way to get the lenders involved in this, but then we might have anti-trust problems.

Jerry: Refinancing the note is the way to go. If the bank is willing to take .50 on the dollar I think it would make more sense to write down the loans 10-20% and then refinance the home owner with a 40 year fixed mortgage. The bank would make up the write off with an additional 10 years of mortgage interest and the home owners would have a lower monthly payment.

When the market rebounds and the house have appreciated they can be sold. win-win for everyone

Great post Roberta.

Radical solutions are surely needed to cure the severe dislocation of the housing market.

Sadly, unless a solution is the brainchild of some special interest group, no one in Congress will even entertain it.

Even at 50% of paper value, it would take Billions and that means it will take some serious palm greasing to even get the ear of most Congresspersons.

Of course, I'm jaded but I didn't get that way by myself. Good luck to them.

Jennifer: I think the proposal would helo to put the real estate market back onto a more even keel.

Jerry: That is also a workable plan. Just wish there could be broad implementation.

Fred: I am not usually a fan of government intervention into private business, but this is a national emergency.

Steve: Agreed

Lenn: Thanks for the wise words from someone close to Beltway politics. And for just once, I wish our elected officials could forget about the grease....

Hi Roberta, great post! You are so right

Thanks for the post Roberta, but sorry to put a pin so close to your balloon - I think it's a bunch of hooey.

Endre: Thank you.

Lyn: Trial balloons are often popped, but something must be done to stop the decimation of neighborhoods and get lenders back into the lending business.

Hi Roberta: I don't know Mr. Dyson, but I think he is on the right track. As a person old enough to remember the Resolution Trust Corporation (RTC), which came about after the S & L crisis, it seems like a good idea. I'm not a fan of the government trying to fix things generally (Katrina, social security, medicare, medicaid, are great reasons for me to think that way), but RTC was probably as efficient as you could have done this. Similarly, Mr. Dyson's idea may have merit. Given that we can't just wish it away, people with the guts and brains are going to lead the way. Sounds like Mr. Dyson has those qualities, and I hope he can prevail on the decision makers to get this done.

Tom:

It is easy to dismiss ideas such as this as so much hot air, but I believe Bob Dyson is on the right track--and has the means and commitment to follow through. But he can't do it alone. It will also take the energies of other Reators throughout the country to bring this issue before those in a position to implement solutions.

Interested in participating?

I think its great. Less government now would mean more corporate corruption. This seems like the only viable solution I have seen presented so far.

Shane: Care to present the proposition to the Eau Clair Board of Realtors? :-) All they need to do is let NAR know of their support.

"Because, says Bob Dyson “This is a real estate depression–a serious, serious issue.”

How can that be? You kept posting in San Diego that we hit the market bottom.

Access: We may have hit bottom--or something close to it, and now it is time to find solutions, stop the bleeding, and start rebuilding.

Dear Roberta, thanks for the post/information. Very interesting proposal and could even possibly work. Might be better with a non-government agency but who knows?

Roberta---- The investors who hold these notes will never agree to a 50% across the board discount on every property in their portfolio. Most won't even consider bulk offers today.

Why would they? They can get far more marketing them thru their REO agents.

In addition, if they unloaded these properties at these steep discounts, who would make sure they sold at "market value?"

This plan would further destroy values on all other properties in the area, including the homes where they are these same investors are the note holder for borrowers that are in good standing.

This would create even further pressure on the market as more and more people would watch their homes go upside down.

Its a creative idea but like the proposals the goverment has already made, the investors aren't going to back ideas where they take all of the losses. They would rather stay in the real estate business.

It's nice to see someone trying to propose solutions for a change. I went to the website but it's evidently still under construction so have bookmarked it and will check back.

I don't know if this is the solution, but will follow it with interest.

Roberta ... Thanks for your note about Bob Dyson and his proposed American Incentive Resolution. Let's get more information and see whether his proposition has legs in terms of legislative and/or private sector and Realtor support. I would need to know more. Harrison K. Long, Explore Properties Group, Irvine, CA

Gabe: Bob's proposal is not cast in concrete; it is still being shaped by thoughtful people in the business. Your input would be appreciated.

Aaron: Perhaps so, but lenders may be in the real estate business far longer than they (or we) would like. Their current system is very inefficient and the pool of qualiied buyers is diminished daily.

Beth: The site is still under construction--but will be worth following.

Harrison: I'll share information as it becomes available. Let's hope it grows lots of legs!

Very fascinating idea. Please keep us all posted on it Roberta!

I don't know...there is more to this story than meets the eye. Banks are not handing out loans, and hanging onto properties without letting them go for less than current market prices for a reason. Do you think the banks are not strategizing??? The AMERICAN way is capitalism. The INCENTIVE is capitalism. The RESOLUTION is capitalism. If an independent corporation were to present this idea no one would want to hear it...mention bringing in the government sounds like it would be (a little) "safer". If I were to try and read between the lines, it almost sounds like a way to get control of bank owned properties to level the home sales competition. Why would the government want to get involved? "...buy defaulted loans from lenders at 50 percent of face value". Why not just individuals purchase these available properties for that much? Interest rates are fairly low. But, there isn't a whole profit in that is there? Re-market these homes through Realtors at retail market value. That sounds like a remark to get Realtors behind the bandwagon to push things along. Those of you who would like to wait a year for commission on a lease/option to buy, raise your hand! ;) Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years. (Just those individuals, I doubt it.) The initial terms would be a 12-month lease-purchase, with all payments accruing to a down payment as long as payments are made on time. Lease payments would equal what loan principle, interest, taxes and insurance would be under normal loan terms at 5 percent interest. Initial move-in would entail first and last months' payments. Where is the rest of the paragraph that states: but unlike a security deposit, you don't get the option money back at the end of the lease if you can't purchase the house or decide not to. At the end of 12 months, the lease would become a purchase with all payments made under terms of the lease being applied to the full down payment. If home prices drop (even more), you are still committed the retail market price from a year before. ...and what about interest rates, are they locked in a year in advance of actual purchase? If Banks are going to let these properties "go" at face value, then they should not go to American Incentive Resolution, but AMERICANS. I am predicting banks will drop the prices of their foreclosed properties next year. I am also betting interest rates will go up next year.

Roberta that is definitely an interesting idea. I will be very interested to see how this develops.

First and foremost it is a challenge to see into the future as to what is going to be happening too real estate. Yes, we need to find a solution, and like most things change requires a paradigm shift, and most individual in the real estate industry find it hard to give up what is called traditional thinking. Robert Kiyosaki who wrote Rich Dad Poor Dad mention in his book that real estate has not changed in over 50 years. It is one of the slowest to change industries. This quagmire that we are currently in with homes going into default, or having to sell short is without a doubt is difficult on the family and on the economy. There is a good book out called Who Moved My Cheese by Spence Johnson, it addresses the issue of change. If anyone should get involved with this crisis that we are going through it should be our Governor.

Roberta, on the surface this sounds like a good idea but Ruthman -has good points: "Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years."

To me, it seems that this would penalize the people who were prudent and didn't fall for the buying frenzy of the past few years!But at least someone is thinking of solutions--this does need further investigation.

What about the people who already live in it getting it at the reduced value and paying back later to the same fund if they ever can sell it for more than it is worth right now?

Steve: I shall!

Ruthman: All interesting and intelligent points. Still, there is an IMMEDIATE need to find a resolution to this American neighborhood problem. As fo Realtor commissions: A deferred commissin beats nothing in the present tense.

Roy: me too!

Lorraine and Loretta: Governor Palin?

REO Broker: This program would hopefully protect the interests of those who continue to make house payments as they have in the past. Dyson's program aims to stabilize neighborhood values so long term residents are not penalized.

Ardell: I don't see why current owners could not benefit from this program.

SEP

2008

Central America is an option.

Thomas

www.realtyexecutivescentralamerica.com

I think it sounds like a great plan and would probably be better than anything congress could come up with since the last fix has only driven up rates.

Thanks for the Re-Blog link as well!

SEP

2008

Thomas: Not sure what Central America can lend to the solutuons needed in the U.S.

Garren: Re-Blog at will--and thank Active Rain gurus for the link!

Great job, great inteview, great use of video. Very impressive.

SEP

2008

I think an incentive to get the banks to work with the distressed homeowner would be an alternative....if they were willing to take .50 on the dollar, then they may be better off taking a hit and refinancing these loans to more affordable terms for the homeowner to help them get themselves back on their feet. Also, a 12 month lease purchase will not be enough time for these folks to repair their damaged credit from mortgage lates, the short sales and/or foreclosures on their credit history. I would take a min. of 24 mos. for a lender to think about giving them another loan when they walked away from their previous mortgage and perhaps longer for them to restore their credit score....it could be a long term solution, but I think these properties would have to held for many, many years before these people could buy again... Plus...if the homeowners could get out so easily and get another place to live and buy within 12 mos. wouldn't the market be flooded even more with homes? The people would just walk wouldn't they?

SEP

2008

I found this part of the proposition fascinating. I can see this working:

3. Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years. The initial terms would be a 12-month lease-purchase, with all payments accruing to a down payment as long as payments are made on time. Lease payments would equal what loan principle, interest, taxes and insurance would be under normal loan terms at 5 percent interest. Initial move-in would entail first and last months' payments.

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