Shakespeare once wrote …”that which we call a rose by any other name would smell as sweet”.  Meaning of course, it matters what something IS, not what something is called.

The same holds true for unemployment.  Or so I thought.

My brother recently joined the ranks of the unemployed – not by choice but he is there just the same.  When I commented as such, he informed me that he is not ‘unemployed’; he is “in transition”.  Huh? 

It seems that since my brother is in between jobs – had a job, looking for another – he is not technically unemployed.  Since he is simply transitional; his current condition of not having a job is not considered unemployed, therefore is NOT included in the unemployment statistics.  

With that sort of logic, you may be out of work but you are not unemployed – you may be labeled a “discouraged worker”.   Discouraged workers are those that have given up looking for a job but are not classified as unemployed.   Oh yes, then there is the long term discouraged worker and the short term – it depends on how long the worker has been seeking employment.  Those workers who have been looking for work over a year are the long term discouraged workers – about 4 million adults – are not included in the tally.  They show up in one of the auxiliary unemployment categories. 

Then there are the “marginally attached” – these are the folks that are not looking for a job but say they want one.  How the heck do they measure that? 

The manipulation of the data and statistics goes on and on.  The more I looked, the more unbelievable I found the distortion to be.   Under measurement of unemployment has serious consequences.   Relying on skewed numbers is like sticking our heads in the sand to avoid the ugly truth.

In my work, Foreclosure Consultant, the #1 reason I hear for people losing their homes is loss of income.  Whether the loss is due to down sizing, jobs going overseas, technology, a crashed real estate market or whatever – if people can’t work, they can’t afford their homes. 

Our lawmakers and politicians aren’t doing us any favors by manipulating the unemployment numbers and may very well be adding fuel to the fire as businesses continue to look to unemployment rates as one of the indicators of our economy.

Unemployment – joblessness – transitional – out of work – displaced …  all are the same thing no matter what you call it (only this hasn’t got the same sweet smell of a rose).

A Yahoo search for “foreclosure assistance” results in 7,710,000 hits.  The Google search was a little less than a million.  Where do you start?  Better yet, where do you end?

First let’s get this out of the way:  Yes, you CAN negotiate with your bank, you do not have to pay someone to do it for you.  OK, there, I’ve said it.  Just like you can cut your own hair or change your own oil in your car; you too can negotiate with your bank to stop the foreclosure.

Of course, stopping a foreclosure is just a little bit more important than a bad hair cut. 

5 tips to help you find help:

1. Try to find someone LOCAL to the property.  Sometimes being familiar with local property values, trends and real estate market is pertinent when negotiating a repayment plan. 

2. Check credentials.  Is the business listed in the phone book? Member of the Better Business Bureau?  Licensed?

3.  Ask for a free consultation.  Ask questions.  Are the answers direct and relative to your question or is it just a lot of   beating-around-the-bush fast talk?  Listen carefully to the questions YOU are asked, are you being asked for information so that an evaluation of your specific situation can be completed?

4.  Be watchful of their demeanor.  Are you being pressured into a quick decision, sign here, sign now, etc.?  Is there good eye contact?  Listen to your gut, does this person make you feel comfortable? 

5.  Is the Agreement in writing?  You don’t need a long contract with a lot of legalease that is complicated, you just need a simple Agreement in which the services for which you are paying are spelled out.  WYSIWYG.  What you see is what you get.

Final suggestion, be sure to ask how often you can expect an update on the negotiations.  Loss Mitigation and Home Retention departments are so backed up that it crosses the lines of sanity.  As a full time Foreclosure Consultant, I can tell you the folks working in Home Retention and Loss Mitigation are overworked and under extreme pressure.  (maybe that’s why they get so ugly sometimes?) – be sure to ask whomever you are interviewing how often you will be updated as to progress.

Good Luck, best wishes.

 

Most people know the basics to buying a home:  talk to a banker or mortgage broker, get pre-qualified and start the search for your new home.

Nearly every buyer wants a bargain – we are a society of bargain hunters and we shop accordingly.  And why not?  In most areas of the country, it is truly a buyer’s market – buyer’s are almost brutal with their low offers and demanding contracts.

There is a huge surplus of inventory and fewer buyers.  Every seller vys for the qualified buyer hoping that their house will be the buyers choice.  As most any Realtor can attest, pre-foreclosures and REO’s (Real Estate Owned) are making up a larger percentage of the inventory at a very quick pace.  Failed short sale offers wind up as REO’s and back on the market – sometimes at deep discounts.

More often than not, one of the best ways to create front-end equity is to buy a house via a short sale.  In a nutshell, a short sale is when the seller’s lender or lenders agree to accept less than the full amount of the debt when the house is sold.  

5 QUICK TIPS:

1.   First and foremost, find a Realtor with whom you are comfortable and who has experience in successful short sales.  Many real estate agents dabble at short sales or are learning short sales but look for a Realtor with a proven track record.  As a buyer’s agent, your agent won’t be able to negotiate the short sale for you, but the experienced Realtor will know the right questions to ask of the listing agent and short sale negotiator to determine if the process is moving along and to guesstimate just long the ‘wait’ period will be.  Your Realtor will also know if a third-party negotiator should be hired to facilitate the short sale.

2.   Get “Buyer Ready”.  Most lenders require a buyer pre-approval letter or proof of funds to submit along with the offer.  The stronger your letter, the better it looks.  Allow your lender to pull your credit, provide any documentation (proof of income, employment, etc.) the underwriter will need, etc.  The goal is to handle any financing hiccups now rather than later.  Once your offer is accepted, the pace will be very fast – there won’t be time to cure hiccups later.  Short payoffs want quick closings.

3.    Be prepared to wait.  The time you have to wait depends on exactly where in the short sale process the negotiations are at.  Many times, the listed price is a speculative price rather than a negotiated asking price.  Your Realtor will obtain this and other pertinent information from the listing agent to help you decide if the house you selected is “worth the wait”.

4.    Timing.  When buying a short sale, timing is critical.  All time sensitive contract contingencies such as financing and inspections should commence upon  the short-sale lenders written acceptance.   Your contract should include a Short Sale Addendum or language specific to (1) approval of the seller’s lender of the contract and HUD-1 and (2) Time periods commencement upon seller’s lender approval.  Never accept a verbal.  A wise old attorney once said:  “If it ain’t in writing, it ain’t so.” 

5.    About the utilities.  Typically, the seller is responsible for having the utilities on so that the buyer can make inspections.  Don’t be surprised if the seller does not or cannot turn on the utilities for your inspections.   There has been more than one occasion when a buyer had to turn on utilities – it’s not as bad as it sounds.  In most cases, even if the deal didn’t close – the buyer spends less than $50 (turn on fees & minimum usage, deposits are fully refundable).  By the time the buyer is ready for inspections, the buyer should already have the acceptance from the short-sale lender and a very strong comfort level of approval with his own lender.   Once the short sale lender has accepted the offer – the closing typically takes place in 30 days or less.

Buying a house via a short sale is one of the best ways to get front end equity and hedge off declining value issues.  

If you can afford the time,

a short sale may very well be worth the wait.

This post is dedicated to a local Realtor engaged in the very dangerous practice of structuring short sale buy-back/lease backs.

For those not familiar, a short sale buy back is where the Seller/Borrower (who is in foreclosure) enters into a Purchase Agreement with a relative, friend or whomever to buy the [distressed] property at a short sale discount.  Unbeknownst to the lender, the buyer’s intention is to buy the house at the short sale discount, allow the seller to remain in the house and then enter into an agreement with the seller (who is now a tenant) to buy back the house at a significant savings (but more than the short sale purchase price of course).  

The investor/buyer (1) gets a great deal on the house via the short sale, and (2) will make more money when the seller-turn-tenant-turn-buyer excises the option to buy-back the property.  Both the investor and the homeowner have gotten what they wanted – it’s the lender that loses thousands of dollars in this scheme.

And, yes, it is a scheme.   I believe the correct word is fraud.

Buy backs have gotten a bad reputation due to the dishonesty of investors who literally bilked homeowners out of their home and equity.  Homeowners that felt “cheated” many months, sometimes years after being “saved from foreclosure” appear regularly on the 6 o’clock news.   Most Realtors and investors that I know won’t even do a buy-back anymore.

Add a short sale to the mix and you have a recipe for disaster.

In the State of Florida, a Realtor can be held accountable for his or her actions for up to five years.  That gives a homeowner plenty of time to feel “cheated”. 

George, there are plenty of honest ways to earn commission – please don’t add to the foreclosure, mortgage & housing crisis by dishonest dealing.

The first time I heard about this strategy I thought surely this must be an anomaly.  Nobody would intentionally set out with such a plan, surely it must be criminal or at the very least fraudulent.

Then after pondering the pros and cons, the different ways a person could actually pull it off and the resultant ramifications, I thought:  Why not? 

Let’s use Harry Homeowner to illustrate the strategy. 

Suppose Harry Homeowner, after diligently keeping up with the news, his neighbors, his friendly Realtor, etc., realizes that he too is upside down in his house.  Like millions of other Americans, he owes more in mortgage debt than his house is worth.  As he tries to calculate how long he would have to keep pouring money (mortgage payments) into this property he  realizes that his home is no longer an asset and that there is no relief – he will lose thousands & thousands of dollars by hanging onto this house.

So Harry decides to go house hunting.  Given the market, he has many houses to choose from many at significant discounts.  Harry finds a home that suits the needs of him and his family and enters into a purchase agreement.  Since Harry has been faithful to his current mortgage payments, his credit is good, and with his stable income, Harry is approved for a mortgage for his new home.

After Harry moves in his new home, he stops making payments on his old house.  He hires a Realtor to put his old home on the market, since it is upside down it becomes a short sale candidate.   Someone else will come along, like Harry’s old house, and buy it at a discount.

Harry will recover from the damage to his credit report in a relatively short time as his new mortgage and other debts are paid on time.  

The End (kinda).

I’m neither endorsing nor encouraging this strategy.   But I do see homeowners finding solutions on their own when lenders are turning a deaf ear to their plight.  I see homeowners willing to take the risk and live with bad credit rather than continue to spend good money on a losing property. 

What’s next?

Brain Purge.  I’m not sure how it is defined in the dictionary but Brain Purge for me is taking a piece of paper and a pen and writing down everything that comes to mind.  I’m talking about all those little tasks we all do such as drop off dry cleaning, send a birthday card to a firend, pick up milk, etc. as well as all those tasks that are business related. 

Write all your tasks, chores and stuff to-do on the list.  The list is not complete if it takes you only a few minutes to complete. 

A real Brain Purge can take hours. 

It is not uncommon to add to the list in short spurts, sometimes a single task might have many sub-tasks; add them all to the list.   The objective is to purge all the brain clutter.  Keep adding to the list, no matter how minor the task.

Title your page Brain Purge (case sensitive).  There are 2 reasons for this (1) using all caps is equivalent to shouting, and (2) I suspect the heading of TO DO LIST has some sort of psychological effect on people.  Brain Purge invites the author to add to the list continually thereby keeping the brain free of clutter.

Ideally, there should be two lists.  One for tasks related to business and other list for personal tasks.   Anything not business related I include on the Personal Brain Purge list.

At times you may not need to do both lists at the same time as one area  may not have much clutter as the other.  I personally find that business tasks clutter my brain much more frequently than personal brain clutter.

Especially with the real estate industry being what it is today, I find it takes twice as much work to earn the same amount of pay.   I’m not sure if it’s truly twice as much work or if it seems that way because it’s just more difficult to get anything actually done.  It seems that I am always waiting for a lender to return my call, or a BPO to be done, etc.  It seems like there is more to remember , the old stuff plus the new stuff.  That makes for a lot of brain clutter.

Many of us have been there and experienced that sinking feeling when you know you can’t make the house payment.   People who find themselves in this situation go thru a variety of feelings that often include embarrassment, stress or guilt.  Not being sure of what to do or who to call, too often they do nothing which only makes matters worse.

Take these 4 Steps:

1.  Admit that there is a problem – you are having a financial crisis if you are falling behind in your house payments.  Admit that it is time to look at your budget & money management.

2.  Ask for help.  Ask now while the problem is small and manageable rather than waiting for the crisis to get worse.  Your ego will have to take a back seat for now.

3.  Contact your lender.  It can seem impossible to get thru but make the effort – phone, fax or even write but make contact.

4.  The quicker you take action, the more options you have. 

How much time do I have?  That is the most frequently asked question of me – it is the first question of most homeowners during the initial consultation.  Naturally, the answer to the question depends on the state in which you live.  There are judicial and non-judicial states – judicial foreclosures go through the court system whereas non-judicial foreclosures have no court intervention.

Florida is a judicial state.  The foreclosure process begins with the lender filing a complaint and a Lis Pendens is filed.  The homeowner is served with a notice of the complaint (usually by a process server)and the homeowner will have an opportunity to appear before the Court.  The validity of the complaint (the debt and right to foreclose) will be determined and if valid, a judgment will be issued for the amount due (loan, late fees, attorney fees & costs, past due interest, etc.)  The next step is a writ issued by the court which authorizes the sheriff sale.  Your property will be sold to the highest bidder at the auction or, as it frequently happens, the property will go back to the bank.  If you have not yet already vacated the premises, the sheriff will remove you from the property.

It’s harsh.  Foreclosure a legal process by which the lenders attempt to recoup the money that the homeowner borrowed.   It can be a brutal experience.

Basically, in Florida, the entire foreclosure process could be completed in as little as 90 days.  More often, the process takes about five months, sometimes longer. 

One popular fallacy is that a homeowner can simply file bankruptcy and delay the auction or sale indefinitely.  While it is fact that filing for bankruptcy can slow the foreclosure process, there are other ramifications to consider before making this leap.  In October of 2005, a new law went into effect making it harder to use bankruptcy as a means to stall a foreclosure.  Prior to October 2005, homeowners could manipulate the system and literally stay in their house, free of payments, for years.

When a homeowner has foreclosure looming, the best decision is to take action to minimize the damage to your credit, your family and your financial well being.  Foreclosure solutions should not be the do-it-yourself variety – ask questions, get answers. 

Take control.

As soon as the Notice of Default or Lis Pendens is recorded, every vulture, shark and do-gooder is at your door or filling your mail box with “We Can Help” and “We Buy Houses” postcards & letters. 

5 Tips to Finding Good Foreclosure Assistance:

1.   Look for a license (Real Estate Agent, Attorney) or at least a member of the Better Business Bureau.  In most states no license is required for Foreclosure Assistance or Foreclosure Specialist – that means no training, no accountability.  Seeking professional, licensed assistance is essential.

2.  Ask about experience.  How long has this person been working with homeowners facing foreclosure?  You need experience on your side.

3.  What is the area of expertise?  For example, if you want to keep your house, you don’t need someone who specializes in short sales, you need a negotiator with a history of working out repayment plans that “homeowner friendly”. 

4.  Make sure everything is in writing.  All agreements, contracts, everything should be in writing.  There’s a wise old saying “If it ain’t in writing, then it ain’t true!”

5.  Time to think.  Be cautious if you are being pressured to sign right now, or the deal is only good tonight, or whatever.  If you are not given the opportunity to “sleep on it” and time to discuss details with your spouse, then let it go.  This is not time for impulse decisions.

Most important is to not let anyone push you to make a quick decision.  Investor sharks are not always easy to spot – some have charisma and a smooth sales pitch that could sell ice to an Eskimo. 

Tags: Foreclosure, Save+My+Home, Work+Out

When Money Gets Tight

Most of us have had it happen.  Something happens and you miss a paycheck or two.  The next thing you know there isn’t enough money to pay all the bills.  It happens all the time. 

Most of the time the money-shortage is short lived or temporary and the worst that happens is the credit card and car payments are late.  So you pay the late fee and catch up next month.  But when the loss is more than a couple of weeks, a money shortage can quickly turn to a financial crisis. 

Crisis turns to disaster when the decisions are made to pay bills other than the mortgage payments.  It’s so easy to do.  Let’s say you have $1500 – you can either pay that one mortgage payment of say $1300 or you can pay 5 or 6 small bills.  Paying 5 or 6 smaller bills may seem like the better choice because more debtors are paid. 

The reality is that when you are behind in mortgage payments, the mortgage company can take your home, they will foreclose and seize the very roof over your head.   If you don’t pay your credit cards, the credit card companies will send nasty-grams and collection letters and will threaten legal action but they can’t take your home.  You car might be repossessed for not making payments but they can’t take your home.  The furniture company might come and take all the furniture out of your house but they can’t take your home.  Mortgage companies will foreclose and take your home when you are behind in payments.  Are you with me here? 

Only the mortgage company can take your home.

Let your credit cards go, let the student loans go, even let the car or truck go, let it all go but don’t let your home go.   Don’t lose your home to foreclosure.

Without your home you are homeless. 

It’s that simple.  Don’t let it go.   Keep your home.