RealTown's RealTalk

Deede wrote:

It seems to me that you are blaming the victim. With his $300,000 home now worth $175,000, at 5% appreciation per year, it would take him 12 years to break even.  During this time, he will have paid $302,400 in monthly payments!  This man will be 41 years old at that time and STILL have nothing!  You are suggesting that a SANE person do this?

This is happening to MILLIONS of people across our country.  It is the responsibility of the banking industry to find a way to fix what THEY broke.  I think my suggestion of a modification loan agreement for the 1st and the 2nd is generous.  Are any of you experiencing what we are experiencing in Arizona??  You must not be, because if you were dealing with what we are dealing with, you would offer solutions, not morals.

Hey Deede,

Yes, I know what you are experiencing in AZ….I am in Florida and we are experiencing a 40%+ depreciation in my area.  Business going under, people losing jobs, foreclosures, short sales….you name it.  So I know where you are coming from. However, I have to disagree with your comment  ‘it is the responsibility of the banking industry”.  No one made your relative sign mortgage papers.  That is like saying it is the bartenders responsibility because someone got drunk.  We all have to start taking responsibility for our own actions.

I know you don’t want to hear about morals……here is the problem….Hardship cases should be just that ‘hardship cases’, not “oh poor me my house isn’t worth what it used to be —it must be SOMEONE ELSES fault—not mine”.  Hardship is about illness, death, losing a job, etc…..

I spoke with one of my investors the other day that made a lot of money in the past 5 years.  He is sitting on 3 properties worth about 300K with no mortgages.  He has another property that he’s upside down on by 100K.  He wants the bank to short sale the upside down property.  I told him the bank is not going to consider since he has other assets.  He found that very unfair.  I told him to sell one of the other properties to get out and he said he didn’t want to sell HELLOOOOOOOO…..

Step back to the late 80’s with me for a moment.  I bought a property….market collapsed….I was upside down by 50K…….boy would I have loved to let it go back to the bank…and trust me….I considered it…..but I rode it out.  I rented out the house and moved out of the area to find work.  I paid about $350 each month to support an upside down property.  That was not fun!  Ten years later I was able to sell the house with only a $30K lose.  But guess what?  I bought another home for 150K and 7 years later sold it for 425K.  I was happy that I stuck it out.  A lot of people thought I was crazy but as you can see it all washed out in the end.

Hey, we all know how it feels right now because most of us have also taken big hits on our own recent investments.  Would you like me to tell you how much I’ve lose in this market?  I’ll save you the boring details.  But this is life and sometime we’re the dog and sometimes we’re the tree.

Here is my solution…Have you relative go and get a second job. That is what our fathers and grandfathers would have done.

Your right…this is happening to Millions….but if millions decided to walk this country will collapse. 

Like other people have said in this post…things happen in cycles.  We just have to make it to the other side.

Good luck,

Deb Cullen, GRI, ABR, e-PRO, SRES, RSPS

Century 21 Sunbelt

Cape Coral, FL

deb@CapeDeb.com

www.CapeDeb.com

Deede Wockenfuss continues:

This relative had 40K in the bank ….  He used all of it to maintain his debts for the past 18 months.  He also has an insurance policy with cash values which he has borrowed to make his payments.  …child care costs are for two children …$1250 per month.  …there is health insurance at $800 per month.  …$2100 house payment, $400 in utilities and just a basic $500 for food, perhaps NOW you can see that this person DID NOT over debt himself or buy unnessary things. He has ZERO credit card debt. He is a victim of this market.  There MUST be a middle area for a compromise.

I don't know about you guys, but I NEVER promised any bank, or lender that I would go into poverty by continuing to pay for something that is worthless to me any longer. 

This is happening to MILLIONS of people across our country.  It is the responsibility of the banking industry to find a way to fix what THEY broke.  I think my suggestion of a modification loan agreement for the 1st and the 2nd is generous.  Are any of you experiencing what we are experiencing in Arizona??  You must not be, because if you were dealing with what we are dealing with, you would offer solutions, not morals.

Mark Jay comments:

It sounds like—given the facts you’ve presented—that your “relative” is completely insolvent both in terms of net worth and cash flow.  This means that your “relative” is essentially bankrupt and should consult an attorney to obtain advice on how he can get his debts and other obligations discharged by way of a Chapter 7 petition or “reorganized” with a court approved “payment plan” by way of a Chapter 13 petition.  If your relative is married he should probably also get advice from a divorce attorney as well due to the fact that a significant number of young married people—you did say your “relative” was 29—wind up divorced after the turmoil of Bankruptcy.  Your relative should be careful that he doesn’t get is debts discharged through bankruptcy only to pick up another series of debts through the divorce that most likely will occur because of the bankruptcy.  He should first slip in alone to see a divorce attorney and then he and his wife should see a bankruptcy attorney.  It might even make better sense to divorce before the bankruptcy and only his attorney can advise him on that issue.

“There MUST be a middle area for a compromise?”  There IS a middle area for a compromise and that is that the investor lose an amount of money and your “relative” lose the property.  I think you’re too close to the situation to view things objectively.  There should and will be a measure of balance for this situation.  Certainly you would like to see your “relative” come out of this difficult period smelling like a rose but what’s in it for the investor?   The investor takes a big loss and your “relative” continues to live in the property with a lower mortgage balance and a lower monthly payment?  What kind of compromise is that?  I got a real chuckle out of your suggestion that your “relative” is being generous toward his lender by getting the lender to grant a modification of the loan agreement lowering the balance and the monthly payment.  Maybe your “relative” could further extend his generosity and have the lender lower the interest rate and extend the term as well.  How about a “payment holiday” too!  How about no payments for 6 months or a year.  You don’t want to hold back on your generosity, do you?

Your “relative” is 29!  Bankruptcy and the likely divorce that will follow should be no big deal—he’s young.  He lives in an apartment or rents a property for a couple of 2 years and after maintaining a spotless credit record his credit scores recover to “A paper” level and he buys another property and maybe picks up another wife.  Who knows—maybe he can get another 80/20 or 2/28 No Money Down mortgage and hope to have better luck next time (just kidding).  The stock in the investor goes down in value for a couple of 6 or 8 or 10 quarters.  The senior managers of these investor entities get reduced bonuses or their stock options can’t be cashed for a profit and in  a couple of years things will be back to normal—pre-2001 normal—where people actually have to have 2 years of income stability in the same line of work, a little down-payment, a little cash reserve, and payment to income ratios and debt to income ratios that reflect ability to pay over a fairly long run.  Everybody learns a lesson….  Everybody pays a price.

For the past 7 or 8 years many Americans profited greatly from the part time job of selling each other their homes at ever increasing prices all financed by US pension funds, European and Chinese investors and others who didn’t have a very good handle on the concept of “risk”.  We’ve all now just beginning to learn the lesson.  My sense is that things will get worse before they get better.  I see clouds on the horizon through 2009 with a return to normal by 2010.

My sense is that you should work on getting yourself into a position where YOU can profit from this difficult situation.  Get the property listed at a commission that the underlying lender will approve—something like 4% if you sell it yourself and 5% if the property sells through a co-broke so that when the lender gets the property back you’ll be a natural to continue the listing.  Forget about your “full service at a discount model” and contract for what the lender is prepared to pay.   Currently your “relative” is a lemon; get yourself in a position to make lemonade!  Take the commission you earn and stash it away so when your “relative” is able to buy again you can gift it to him for a down payment or closing costs—THAT would be generous!

Closing on your sentiment of “solutions, not morals”—the short version for you and your relation is this: bankruptcy, divorce and you obtaining a listing and collecting a commission!

Mark Jay, e-Pro

REALTOR and Mortgage Consultant

414-771-7713  Voice

262-853-6001 Voice

Southeast Wisconsin MLS Region

Mark@MarkJayRealty.com

>>It seems to me that you are blaming the victim. With his $300,000 home now worth $175,000, at 5% appreciation per year, it would take him 12 years to break even.  During this time, he will have paid $302,400 in monthly payments!  This man will be 41 years old at that time and STILL have nothing!  You are suggesting that a SANE person do this?

This is happening to MILLIONS of people across our country.  It is the responsibility of the banking industry to find a way to fix what THEY broke.  I think my suggestion of a modification loan agreement for the 1st and the 2nd is generous.  Are any of you experiencing what we are experiencing in Arizona??  You must not be, because if you were dealing with what we are dealing with, you would offer solutions, not morals.
>>

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Mike Nielsen opines….

“The man will be 41yrs old at that time and still have nothing”??   He will be 12 yrs into his mortgage (I am assuming he is living there).  He will have provided a nice quality home for he and his family (if he has one) to live in..  Isn’t the bottom line of buying a home (especially in these days) to have a place where you can enjoy living?  I really push that mindset as opposed to the “investment”.  Homes will ultimately appreciate in time.. but I NEVER RECOMMEND buying a home for the investment;  You buy a home to have a warm, enjoyable place to live and raise your family.  Even if appreciation is slow, you still get the benefit of the tax deduction on your interest…etc…   Hope all have a great weekend!   Glad the market here in the Midwest is NOT as bad as elsewhere!

Mike
 Mike Nielsen  CRS, ABR, GRI, e-PRO
Coldwell Banker Reilly & Sons
602 Delaware St; Leavenworth, KS 66048
15520 State Ave; Basehor, KS  66007
913-758-SOLD (7653) - Direct
877-720-MIKE (6453) - Toll Free
866-805-6476 - Toll Free Fax
MikeNielsenRealtor - Skype(TM)
mailto:MikeNielsen@ColdwellBanker.com

When YOU think Real Estate; Think MIKE NIELSEN!

Visit my website http://www.KSHomeSales.com

Melinda Tomson says,

He needs to get an offer, and then try I would suggest trying to negotiate a low interest or interest free payment for the short portion of the loan.  In order to negotiate a short sale the seller has to have NO other assets

Response for Deede Wockenfuss

  I hope people start accepting their responsibilities. We blame McDonald for hot coffee because a careless woman burned herself stupidly. We as a society must have objected to her claim. But no. Now we found a easy way to get lots of bucks for our stupid mistakes.  

Deede is saying that Bank is the villain. They did not come to this irresponsible borrower and gave the money. If now they are over their head then reduce expenses (simple living.. stop all unnecessary expenses, like outside eating, cable TV…), work with the bank, work with the local society, second job…

Dave Mehta