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Email ArticleReal estate agents are suffering with "short sale fever" in epidemic proportions and families are losing their homes every day. Imagine what would happen to the face of the real estate industry if real estate agents focussed their savvy and their hearts on helping distressed homeowners KEEP their homes, if more of those homeowners had hope and better guidance!
Record breaking foreclosure rates see REALTORS' e-mail inboxes full of enticing, income producing opportunities. Veteran speaker/trainer Roger Butcher hosts two Webinars each week that invite real estate professionals to "make a fortune doing short sales." He says that his goal is to enlist 30,000 real estate agents and brokers in his short sale crusade this year.
Foreclosure rescue diva Alexis McGee issues weekly bidding to her "foreclosure coaching" classes: "Contact Super Motivated Sellers," "Repeat In-Foreclosure Offenders," "Fill Your Bank Account with Foreclosure Investing," "This Is As Good As It Gets - Earn Profits NOW!", "Best Foreclosure Deals Since the 1990s," "Earn Your White Knight Profits NOW!"
McGee's investor-wannabes learn how to role play telephone and door knocking techniques and "how to overcome objections with neighbors, relatives, owners, banks, and REALTORS." McGee had a California real estate license until the mid 1980s. "Why should I settle for six percent when I can make fifteen percent?" she asked. Her students learn to find distressed homeowners who have large chunks of equity to convert to investor profits. Her "Shark Bait Foreclosure Software Tool" is designed to seek out equity and profit.
The Foreclosure Epidemic Is About More Than Numbers.
Thirty thousand real estate agents who refer 3.3 short sales each to Roger Butcher will displace 100,000 families collectively.
What are the consequences of displaced families? Households are thrown into chaos and troubled children struggle with shame and humilation, and they are torn from friends and schools. Houses in cities are left vacant and boarded, becoming rodent infested and havens for drug users and criminals. Neighborhoods are destroyed and property values decline.
There is a growing support system in online communities among real estate professionals who share advice about becoming skilled pre-foreclosure experts:
- " ... after you knock on the door back up several steps."
- "Never say the F word - Foreclosure."
- "Just say, 'I noticed your HOUSE in the newspaper'."
- "Write an offer before you get there and in the sales price blank just write 'Balance of Mortgage,' write your number in the top corner of the first page, fold it and hand it to the owner. Tell him you wanted to make an offer to help. Hand him the offer and walk away. If he is not in denial he will probably call you."
- "Remember you are helping them not the other way around. If they don't call don't worry ,you will find others."
- "Do you know several investors looking for good deals? Set your network up and have a Great time. Now is an awesome time to build a great real estate business on short sales and pre-foreclosures! I currently have 7 on my desk!!!!"
- "That's fantastic that you have 7 right now on your desk! You rock! How do you develop your list of investors? Do you find them in the Pennysaver?"
Declining real estate values in many areas of the country leave many homeowners with loan balances that exceed the value of their properties. Short sale specialist training is a burgeoning business, and short sales are becoming second nature to real estate professionals facing the "upside down seller."
ALWAYS Seek Legal and Tax Advice from a Qualified Professional.
"Any homeowner who has a loan value that exceeds the sale of a property should discuss the matter and review his paperwork with an attorney who specializes in consumer protection law and foreclosure," says Brian Mildenberg, a Philadelphia attorney specializing in predatory lending. Mildenberg says that competent attorneys routinely find errors and discrepancies in loan documents and disclosures and they negotiate lower interest rates, reduced balances, and favorable terms for their clients.
"Sometimes loan brokers have made inconsistent loan representations regarding the benefits of the loan. Some states and federal consumer protection laws require the lender to pay attorney fees when they lose a case," he says.
Legislative action that would offer judicial relief for distressed homeowners suffered a setack last week when President Bush threatened to veto the “Foreclosure Prevention Act of 2008” (S. 2636). At a White House press conference Thursday, Feb. 28, Bush took special umbrage with Title IV of the Act, which will allow bankruptcy judges to modify the terms on unaffordable loans to allow families to keep making their mortgage payments, just like bankruptcy judges can currently do with yachts and vacation homes.
“President Bush must have misspoke when he asserted that speculators and not homeowners would be helped by the bankruptcy code changes in the Foreclosure Prevention Act,” said Maude Hurd, National President of ACORN. “Bankruptcy judges can already help owners of yachts and vacation homes, why not struggling homeowners? President Bush should join the Senate leadership in supporting real solutions for distressed homeowners.”
In addition to the bankruptcy provision, the Foreclosure Prevention Act also increases counseling assistance, allows state housing finance agencies to do more to assist in refinancing, offers assistance to communities impacted by foreclosure, and increases disclosure requirements in the lending process.
“George Bush and his Wall Street backers are vastly out of touch with everyday Americans who work for a living and struggle to pay our mortgages. America needs to rise up and foreclose on the White House and take it back for the people,” concluded Hurd.
Consumers Score Victories Over Banks with Help of Nonprofits.
Dorothy Hicks, a homeowner in Oakland, CA, stood in front of her house several months ago, a week before her lender was scheduled to take away her home, and told an assembled press corps that she was going to fight. The 74-year-old grandmother was a victim of predatory lending and she was determined to keep the house where she lived for 39 years.
She mobilized other homeowners facing foreclosure, and enlisted the aid of nonprofit consumer advocates at her local Acorn office. They went to Sacramento and talked to legislators. She talked to heads of regulatory agencies and attorneys. She won her case and kept her house.
Nonprofit agencies working with homeowners at risk of foreclosure in California, Ohio, Texas, Arizona, and elsewhere report 40% and greater success rates, often within days or hours of scheduled auctions.
Absent in most of these stories is the real estate professional. Imagine what will happen to the industry when the talent and energy and good intentions of REALTORS are applied to efforts to help distressed homeowners KEEP their homes? The following is a list of resources that will help real estate professionals and empower distressed homeowners to take action to save their equity and remain in their homes.
RealTown Foreclosure Prevention Toolbox
Acorn is an association of community organizations helping preserve homeownership.
Nonprofit Mortgage Brokerage partners major lenders with Acorn Housing.
Neighborhood Assistance Corp. of America Real estate agents can register their clients here and follow their progress online.
Foreclosure Prevention Counseling - Preserving the American Dream
This book is directed to housing counselors and others advising homeowners threatened with foreclosure. The book should also prove useful for the homeowners themselves.
The Companion CD-Rom contains:
- Sample foreclosure prevention counseling forms;
- Consumer information, including information on credit card debt and an EITC brochure;
- Sample loan documents;
- Summaries of state foreclosure laws;
- Summaries of state real estate tax abatement laws;
- HUD handbooks and 18 mortgagee letters regarding FHA-insured loans;
- Handbooks and letters regarding Section 502 RHS-held loans;
- Handbooks regarding VA-guaranteed loans;
- Fannie Mae and Freddie Mac information;
- Schedule of standard attorney fees approved by HUD and investors;
- Bibliography and list of helpful web sites; and
- PAD loan calculator.
Center for Responsible Lending
National Assn. of Consumer Advocates Refer homeowners to attorneys who specialize in Consumer Protection Law and Foreclosures.
National Assn. of REALTORS Field Guide to Foreclosures
List of Lender Loss Mitigation Department Telephone Numbers courtesy of REALTOR/Blogger Catherine Myers of Contra Costa, CA.
Inspiration: Bostonian of the Year 2007 is a crusader for Homeowners in Crisis.
Join a Webinar to Explore Ways to Help Americans KEEP Their Homes
(Frances Flynn Thorsen, e-PRO, SRS, ACRE, is Managing Editor of RealTown.com. She lost a home to foreclosure several years ago. She is a Certified e-PRO Trainer and publishes several blogs, including RealTown Report, The REALTYgram Blogger, Web Women Giving Circle, No Blogger Left Behind, and The FAT Lady Blog.)
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Comments
Comment by: janet jones
- Mar 3, 2008 1:57:51 PMComment by: Frances Flynn Thorsen
- Mar 3, 2008 2:05:22 PM2. You can also find a local office for ACORN for consumer assistance. http://ww.acorn.org.
Comment by: joseph ferrara
- Mar 3, 2008 3:15:39 PMComment by: Catherine Myers
- Mar 3, 2008 4:05:04 PMComment by: Frances Flynn Thorsen
- Mar 3, 2008 5:31:33 PMWe need to stop asking whether or not homeowners QUALIFY for a workout or a refi! Attorneys who specialize in consumer protection law say this:
"If a homeowner has a loan amount that EXCEEDS the value of a home, (s)he may have a cause of action in court!"
That says to me that ANY HOMEOWNER who is upside down is best served by speaking with a consumer protection specialist who can review loan paperwork and supporting documents ... and hear the consumer's recitation of events ... the first consultation is often free.
Consumers can find an attorney at http://naca.net
ACORN is another organization that is doing WONDERS and having magnificent results after interceding with lenders on behalf of distressed homeowners.
Homeowners ALWAYS have options!!! They need to be POSITIVE and PERSISTENT. I have spoken with numerous people in the last couple of weeks ... some were within HOURS of a sheriff sale ... and NONE of them qualified by the rule books we are used to reading!!!
We need to throw out those rule books, lose the words "short sale" from our real estate lexicon, and KEEP these people in their homes!
Comment by: kathymcgraw
- Mar 3, 2008 9:30:56 PMComment by: Bill @ConnectRealty
- Mar 4, 2008 10:28:21 AMPeople are buying into this idea that personal responsibility is way to old fashioned. People ignore the fact that we still have the freedom to choose and decide for ourselves when borrowing money. The flip side of enjoying freedom is taking responsibility for the decision. Good or bad, it was YOUR decision to sign the note.
Politicians build careers by creating a victim class (remember, most of them are attorneys.. ). Then the polician promises "salvation" (or a hand out) in exchange for the vote. It's pathetic, really.
This is America- where once we were proud to take responsibility for our decisions and actions. When it comes to the current financial problems in the market place, let's think about it just a minute. When a borrower freely elects to sign a promise to repay a loan with terms that are beyond their means, is there any responsibility placed on the borrower? Or have we turned away from the concept of personal freedom and responsibility?
Who compelled the borrower to sign the note? Isn't it true that many borrowers either ignored the risk, falsified their application, gambled that future interest rates would not increase.. or just flat wanted the money, no matter what?
If fraud was involved on the part of a lender, that's another story, of course. It goes without saying that a lender who actually commits fraud should be punished. Attorneys make big bucks for technical violations of the dozens of laws already on the books. Talk about ambulance chasers!
But politicians today are pandering to voters for the most part- and are rewarded ONLY if they can appear to be compassionate.. they try to create a massive class of victims who need him/her for their salvation. It's so transparent. (It's also a favorite tactic used by class action attorneys who are the REAL winners in these cases.. )
America needs to grow up. We need to throw aside this idea that we are all victims of one another's greed, fraud, deceipt, etc. Sure there are evil people out there who will commit fraud- but let's not let ourselves be deceived into believing that we are victims who are incapable of making good decisions about real estate financing. When markets go south for awhile, suck it up. Cycle's come and go. You'll make it.
Finally, few people borrow money so they can purposely go through the foreclosure process. For most people, it's not what they planned on. But as I look at the landscape, it appears to me that the vast majority of defaults (unrelated to divorce, death, job loss, etc. ) have to do with poor decision making on the part of borrowers.. combined with poor decision making on the part of lenders.
Each side needs to accept responsibility for making better decisions in the future, and suffer the consequences of poor decision making in the present. We don't need more victims. We need to underst and that freedom and liberty requires a higher level of personal responsibility than that required of citizens who live in oppressive socialist systems where the state confiscates freedom to make personal decisions or choices.
Comment by: Catherine Myers
- Mar 4, 2008 6:33:25 PMComment by: Frances Flynn Thorsen
- Mar 4, 2008 6:54:35 PMAn attorney can review the documents and if there are discrepancies in the paperwork, the consumer will have recourse. Much of this recourse comes in the form of workouts, lower interest rates, and adjustment of terms. Much of this discussion happens outside the courtroom.
It is not a REALTOR'S job to decide whether or not a homeowner should pursue action, but it IS a REALTOR'S fiduciary obligation to show a full range of options.
Depending upon the matter at hand, an attorney may want to pursue discussions with loan originator, mortgage servicer, and/or other real estate professionals who had a hand in the transaction that puts the homeowner at risk.
I will not dignify the silly "victimology" rant in the comment preceding Catherine's question. It speaks for itself.
Comment by: Catherine Myers
- Mar 4, 2008 8:03:27 PMAll my clients are strongly urged in writing and verbally to see an attorney. Almost all do. Not a consumer attorney though. I just question the validity of a comment coming from the attorney group saying "If a homeowner has a loan amount that EXCEEDS the value of a home, (s)he may have a cause of action in court!" Feels a little like the fox guarding the chicken coop. I still can't figure out , given the cases I've seen, what action they would have. Some people simply misjudged the market. Got a teaser rate loan, knowing it was getting them into more home they could afford figuring all the time they'll refinance out of the loan. But when their values started dropping that went out the window. Yes, I've seen some fraud. And yes, I've seen some that I felt were taken advantage of and to all I've recommended an attorney.
Comment by: Amanda
- Mar 5, 2008 6:49:16 PMYour article is good, but Bill McKee has a very valid point - in addition to being a Real Estate Broker, I am a paralegal with a Chicago law firm, and I work on mortgage foreclosures every day. Most of what I see are borrowers who have borrowed too much who are now blaming the lenders for loaning them money.
I, too, am concerned about any government bail out plan when the predominant attitude I hear from those in trouble is that it is the bank's fault for giving them the money.
I believe in helping people; I also believe that people should accept responsibility for their decisions and choices. If they aren't willing to accept any responsibility for what is happening to them, how can they be trusted to make payments on time if a new terms were worked out for them?
I don't know what the answer is, but until I hear some homeowners admitting som responsibility for their hardship, I don't know if they can be helped.
Comment by: Frances Flynn Thorsen
- Mar 6, 2008 4:50:44 AMAmanda's comment underscores the importance of finding competent legal help and using an attorney who is schooled in consumer protection law!
Homeowners at risk need a STRONG VOICE of advocacy and legal advice, not whining speculation from paralegals and real estate agents about accountability and questions like, "How can they be trusted with a new payment?"
PEOPLE ARE LOSING THEIR HOMES IN RECORD NUMBERS AND WE MUST HELP THEM! THAT is the only answer, Amanda. They do not owe YOU an explanation. They do not owe Bill McKee an explanation. We owe THEM a helping hand. We owe it to ourselves and to the economy ... we can create forward motion and help families avoid foreclosure. We have the talent and the resources to make this happen.
Can you imagine the energy that we can create if 1 million REALTORS stop talking about short sales and start talking about ways we can help people KEEP their homes? Imagine the possibilities! WOW!
Catherine, You are right that there are lots of sad stories! There are also some wonderful, inspiring stories. We need to share more of the success stories! Let's find those stories and share them and create another kind of energy and replace "despair" with "hope" and replace "short sale' with "remain in home."
Comment by: Catherine Myers
- Mar 6, 2008 9:14:21 AMAnother issue.. homeowners buying another house before their credit gets too bad, and then letting their original house go to foreclosure. Not everyone is moral and some feel no qualms about the bank taking it on the chin. If you owe 650k on your house and can afford that same house across the street now listed at 300k. .. it is tempting to some. I think we'll start to see an increase in that. But some banks I'm dealing with now are getting smart and are checking credit reports during the short sale process, to confirm the validity of the financial statements and probably now to check for any other mortgages and mortgage company inquiries
Comment by: Molly Gordon
- Mar 6, 2008 2:11:04 PMI love your vision, and I love that realtors and others in related professions will be learning how to help people keep their homes.
I also see Mr. McKee's perspective. When my husband and I were looking for a mortgage 7 or 8 years ago, we started working with a friend, a mortgage broker who encouraged us to get an ARM. Neither of us were particularly savvy, but I had read or heard enough about ARMs in previous market cycles to be uncomfortable.
Long story short, we got a conventional loan from a local bank. I'm grateful that I had just enough awareness of loan structures to do further research before entering into an ARM. I did and do accept responsibility for evaluating the terms of a loan and our own income before making a commitment.
At the same time, I don't expect exeryone to have the same information. Many folks rely on the real estate and loan professionals they work with to not only have their best interests at heart, but to also be able to offer wise guidance.
In my experience, there are many bankers and mortgage brokers -- and certainly many real estate agents and realtors -- whose ability to assess a loan is based solely on whether or not the deal can be done. The emphasis is on ways to spin financials and applications so that loans get funded, not on making a considered judgment about the suitability of the loan.
I imagine that some of the folks looking at increasing loan balances and decreasing property values knowingly took a risk , believing what they wanted to believe so they could have the home they thought they wanted/needed. I also imagine that some folks simply took the advice of people they trusted, who, in turn, made decisions based on then-current business practices.
For me, the bottom line is in our individual response to current reality. It's not up to me to decide if someone is in over their head because they were greedy or misguided or unlucky. It is up to me to respond with integrity and truth.
It's not up to me to decide is another person is or is not a profiteer, but simply to make sure that my own offers of "help" meet my personal ethics.
As a small business coach, I am confident that realtors who are esponding to the current market by doing everything in their power to help people keep their homes are developing a network and community that will help them grow their business over the long term and with great intrinsic as well as extrinsic returns.
Doing good makes economic sense as well as moral sense.
Thanks for giving me a place to rant, Fran!
And rock on.
Your fan,
Molly
I
Comment by: Bo Buchanan
- Jun 1, 2008 9:50:27 PMFrances - I think you make some excellent points and provide some great references. One of the problems is that there really isn't any education out there for REALTORS to help homeowners. Whenever I sit down with a homeowner facing foreclosure - I always lay out all the options - forebearance, loan modification, FHA Secure, etc. I never pressure them to sell - I really want to provide them with options. And everytime I read something else like your article - I learn more. But I'm cobbling together these different options as I learn about them.
Comment by: Justin Zimmerman
- Aug 16, 2008 8:02:41 AMThanks Fran, great stuff!
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