This morning I read with great interest the following blog post by Todd Clarke:
His most wonderful idea is to gather together all our nightmare short sale/foreclosre stories in one group which could then be forwarded to all our congressmen and representatives.
This idea was touched upon in several comments on Kent Simpson's awesome blog post:
There are probably other blogs that have talked about these issues. I confess, I haven't ready every post on every blog. But these two have been posted just in the last couple of days, and I happened to find them.
ActiveRain, over 123,000 members strong and VOCAL, for goodness' sake, should be able to mount a grassroots campaign to inform our legislators what is going on out here. Is it about throwing more money at the problem? Maybe, maybe not, but certainly the vast majority of Rainers have had some experience dealing with the meltdown, and as the trained professionals working in the field, we need to make our voices heard by those who enact the laws.
One of the biggest problems, IMHO, is the fact that in the largest mortgage companies, the right hand doesn't seem to know what the left hand is doing. How many times have you presented an offer for your buyer on a home listed as a short sale possibility? How long do you have to wait to get an answer from the lienholder? Weeks? Months? This is not uncommon. You may finally get an approval on your buyer's offer from the loss mitigation department only to find out that its too late; the foreclosure department, IN THE SAME COMPANY, is proceeding with the foreclosure process.
Another major concern I've seen and heard about is that borrowers must be at least 3 months behind in their payments to even get their loan company to deal with them on a modification or forebearance. In effect, this actually increases the problem. Borrowers who know their rates are getting ready to adjust and that the new payments will be beyond their financial means can't head off the problem before its too late. The vicious cycle starts anew.
Ultimately, the banks and lienholders are holding "toxic debt" i.e.: properties with huge unpaid mortgages on them which are now worth a fraction of that mortgage value. But these properties still have VALUE. And the sooner these properties can be sold for their value today, the better off the lienholders would be, wouldn't they? Each month that goes by, a particular property is, in effect, losing value. A potential buyer of a distressed property may be willing to pay, say 85% of what is owed at the time of offer writing. But what happens in the intervening 2, 3, or 6 months it takes the lienholder to review the file? Prices continue falling, thus, appraised value falls. If the lienholder had been able to take advantage of the ready, willing and able buyer at the time when the offer was written, they would have been able to cross that one off their books. Now, some months later as the loss mitigator is evaluating the offer and accepting it, the appraiser does his job and finds the value to be more like 75 or 80% of the mortgage owed. The bank just lost that money. And that's one of the reasons our commissions are being attacked. The bottom line, baby.
I'm certainly no financial whiz. I'm with the majority of Americans who barely understand mortgage backed securities and the resulting meltdown. What I've discussed here is my own personal perception of what's going on in this corner of the real estate world. Our area of the Eastern Panhandle in the state of West Virginia has one of the lowest rates of foreclosure compared to the rest of the country. I'm thankful for that, but we are still dealing with them.
I still have to work with clients every day who are frightened and confused about what is happening and what might happen to them in the future. I don't have any easy answers for them. I'm not suggesting that there is one easy formula to be put in place that can deal with this mess, but there has to be a better way or ways.
And I'm frankly tired of Realtors, as a whole, being dumped on with the same ferocity that is ususally saved for the predatory lenders. We Realtors are on the front lines of this issue. We need to make our voices heard to those that can help effect change in the system.
So, Todd and Kent, thank you for the impetus I needed to jump on this bandwagon. I will be adding to the Blog Group Todd has created. And I will be encouraging others in my field to do the same. ENOUGH IS ENOUGH!
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