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Choose Your Facebook Friends Wisely!

Dec. 27, 2011
Categorized in: Mortgages

Time to cut off your friends who are deadbeats, at least on Facebook?

According to an article in the New York Observer banks are beginning to look at your social media interactions as one piece of your credit-worthiness.

If your bank asked for your Facebook login info as part of the loan application process, how would you react?

I think my friends make me look pretty good, but I'd still be tempted to take my banking business elsewhere. At least, assuming there will be banks who don't go down this road!

Foreclosure Prevention Efforts Fail

Jul. 22, 2010
Categorized in: Foreclosures/Short Sales

Elizabeth Warren testified in front of a Congressional Committee today about the government's efforts to stem the flow of foreclosures. She may not have been quite this blunt but the gist of her testimony was that those efforts have failed. And, as far as I can determine they've failed on almost every front, every corner of this country. Virginia set up a state commission to work on foreclosure prevention. I'm sure all of those people were well-intentioned. I'm sure they tried really hard. But I don't believe you could point to any evidence that they had a significant impact.

Here are some of the measurements by which the federal plan has failed:

  • Expected to help up to 4 million homeowners.
  • Only 347,000 homeowners received permanent modifications.
  • Less than 1/2 of 1% of the money allocated for the program has been spent.
  • Real estate market remains depressed in much of the US, hurting the overall economic recovery.

Unlike others, I don't believe that this result was inevitable. Elizabeth Warren talked about some very specific reasons this hasn't worked. One of those is that the program never really had a good plan to deal with homeowners who owe more than their home is worth. The HAMP program is meant to help people in financial difficulty stay in their homes. But a lot of those people are upside down on their mortgages. If you don't address that part of the problem, the program is likely doomed to failure.

The congressional testimony didn't mention another reason I believe HAMP has failed. Every program the government has offered has made bank participation completely voluntary. The government offered financial incentives, yes. Those incentives might work well if the homeowner is not upside down on the mortgage. But if you owe $400K on the house, it's now worth $200K, no small financial incentives will get the bank to take that hit and adjust the entire loan amount.

The result is that the real estate industry across the country is still not in good shape. It's one of many factors impacting this recovery; slowing it down.

Elizabeth Warren said Treasury (who administers HAMP) has now lost the opportunity to get in front of the foreclosure crisis. I suspect that was lost a few years earlier when Ben Bernanke decided the real estate market didn't need any federal help to stabilize.

Indymac and Bank Math

Feb. 15, 2010
Categorized in: Foreclosures/Short Sales

You've probably heard the horror stories from families trying to get their loans modified so they can afford to stay in their homes. And a lot of us keep scratching our heads wondering why the banks aren't doing more to help with this. Why would they want the loss of either a foreclosure or a short sale on their books?

Here's the answer!

I don't know about you, but I've just about run out of outrage. And, I'm getting a little tired of hearing about bankers preaching that homeowners need to do the moral thing. Even when they try, many of them are getting shafted by the banks, and, indirectly by their government.

And people wonder why there's so much anger out there!

Do it All Right, Still Get the Shaft

Nov. 17, 2009
Categorized in: Foreclosures/Short Sales

For those of you who thought my last post on a rogue mortgage company wasn't bad enough...

What if you listened to my advice, chose a supposedly reputable major mortgage company, made every payment on time...


Bad things do happen to good people. We don't want to believe it because it means we're all vulnerable.

I wish I could tell you how to protect yourself. I'll mention again that I'm a big believer in a strong relationship with a good, local bank. Will you always get the absolute best rate? Probably not. Will they likely foreclose on a house that you've made all the payments on? Probably not! (It's very bad business to show up on the front page of the local paper!)

Short Sale Approval Info

Nov. 4, 2009
Categorized in: Foreclosures/Short Sales

Been trying to get an answer from the banks for weeks or months on whether or not your short sale has been approved?

Are you a buyer trying to buy a short sale? Or a seller desperately waiting for that "yes" or "no" that will make all the difference?

Maybe you're an agent tearing your hair out over the hours you spend on hold with banks.

There's help at hand, finally! No matter where you live in Virginia, there's information here for you.


This site will get you the straight scoop on whether or not your short sale has been approved in seconds.


A Good Laugh

Oct. 10, 2009
Categorized in: Foreclosures/Short Sales

This video is hilarious, mostly because there's so much truth here!

Now someone needs to do this for short sales. Now there's a subject so painful it's got to be ripe for humor.

Short Sale Help?

Sep. 23, 2009
Categorized in: Foreclosures/Short Sales

Word is that the federal government will soon be coming out with guidelines meant to standardize and streamline how short sales work.

For the record, nothing could make most real estate agents (and short sale buyers and sellers) happier than a better process.

Unfortunately, I have absolutely no faith that it will happen. The guidelines, like most of the government plans around foreclosures thus far, is going to take a carrot approach, with incentives for banks to cooperate. I'd be willing to wager a fair amount of money that the banks could care less about any incentive offered. The money involved is likely to be miniscule from the banks' perspective.

Let me also say that I'm a little offended by the concept. So these banks have billions of our tax dollars to save them from their own stupidity (and to keep us from going over the cliff with them) and now we have to bribe them to play nice?!

Seems to me California has a better idea here. They've passed new regulations that a bank that has gotten all the documents on a short sale, including the draft HUD1, must produce an answer in four days! And, if they don't there are penalties.

To give you some sense of perspective, if I get a response from a lender within 6 weeks, I do a dance of joy! Everyone has stories of banks that didn't respond for well over four or five or six months!

There has to be a better way. And I'd love to believe that the Federal Government is about to roll that out. I'm just not that gullible any more!

Don't Take No For an Answer

Sep. 9, 2009
Categorized in: Mortgages

As this story today on NPR's Morning Edition makes clear, the banks still don't seem to have the hang of this whole loan modification, even after a couple of years.

The key take away for me is that you should never assume that the answer is "no" until you've heard it multiple times.

If you're in danger of losing your home, fight and then fight some more! You never know when the person at the other end of the phone simply got it wrong or was too lazy to do the work to get it right.

Keep asking, escalate to a supervisor, ask for help from other organizations.

Don't give up!

Why Mortgages Aren't Being Modified

Aug. 8, 2009
Categorized in: Foreclosures/Short Sales

It's no secret to most people that the majority of homeowners are unable to get their mortgages modified and eventually lose their homes. And, in fact, even those who do get modifications, end up with a monthly payment that is HIGHER than the original. That's why you hear about so many modifications that still end with the homeowner losing the home.

Now there's new reporting about why those modifications aren't happening. There has been plenty of speculation, but now there are some facts to look at.

Baseline Scenario, in my mind the best blog out there on the economic turmoil we've been experiencing, has a new post talking about what's actually been happening.

Loans are not being modified because there is a financial incentive in many cases, to NOT modify them. Until that changes and the job market improves, it's hard to see how the foreclosures stop.

That said, the picture here looks rosier than the one depicted in the chart shown in the blog post on Baseline Scenario. Remember that all real estate is local!

So, how do we change the financial incentives for the services and mortgage companies?

How it Should Work

Jun. 21, 2009
Categorized in: Foreclosures/Short Sales

Short sales are a pain! You're going to hear that from any real estate agent you talk to, or more likely, even stronger language.

The relationship between banks and real estate agents on short sales has gotten to the point where you could call it adversarial. And, it shouldn't be that way. We should be working together towards a common goal, finding a deal that works for everyone and getting it closed before the house goes into foreclosure.

The thing is, I don't think it needed to be this way. Both banks and real estate agents should have sat down at the beginning of this wave of short sales and worked out some things. Here are some ways the outcomes and the working relationships could have been improved.

  • Each bank should have a package of it's procedures in working with real estate agents and owners on short sales.
  • Banks should have a link on their main web site that provides real estate agents with everything they need to process a short sale.
  • Lending institutions and real estate companies and/or associations should have set up joint seminars where agents and lenders could meet and develop working relationships.
  • Banks should have easy access on their web sites to information for their customers who are contemplating going through the short sale process.

No one item here would have completely fixed the problems with the current system. But any and all of them would have helped tremendously. And, this list is just a starting point. There are lots more possibilities.

This is a broken system. A little planning up front might have saved us all a lot of grief!

The Great Bank Conspiracy?

Jun. 18, 2009
Categorized in: Local Market Conditions

Fellow agent and blogger Danilo Bogdanovic just wrote a post on Agent Genius suggesting that perhaps the lack of inventory is actually a plot by the banks to all withhold their foreclosure inventory and thus drive up prices.

Danilo uses the word "Collusion". If you're a buyer right now you may find this persuasive. But I'm not convinced it's all an evil plot.

If the banks are fans of "Buy Low, Sell High" it makes sense for them to hold on to assets until prices improve. And, as inventory has gotten scarce prices are starting to improve.

A banker friend has also suggested that any publicly traded company would logically spread out losses so that they don't all show up on the balance sheet in the same quarter.

And, given what I've seen dealing up close and personal with banks on short sales and foreclosures for a couple of years now, I doubt most of them are capable of the planning that would be necessary for this level of collusion!

If you're a homeowner you're probably thinking this sounds like the best idea ever. If the banks put one or two foreclosures up for sale each year, your home might actually begin to appreciate again!

Either way, I suspect we're giving the banks way too much credit in thinking collusion is responsible for what we're seeing right now.

Banks Walking Away

Mar. 31, 2009
Categorized in: Foreclosures/Short Sales

According to an article in Sunday's New York Times, it's not just homeowners that are walking away.

Apparently more and more banks are deciding some properties just don't have enough value to be worth the foreclosure process. When you consider that NAR (National Association of REALTORS) has estimated that the foreclosure process can cost a bank $60,000, properties at the low end of the market quickly become more trouble/expense than they're worth.

Of course, if you're a municipality with vacant, deteriorating homes where no one is paying any property taxes, you've got a big problem.

We haven't yet seen much of this in our area. Prince William would, perhaps have been most vulnerable to this with their high volume of low cost condos going into foreclosure. But the prices fell fast enough and demand jumped enough that the problem has been dodged.

There seems to be no chance of seeing this kind of thing in Fauquier or Rappahannock Counties. Culpeper does have some foreclosed townhouses selling below $100,000. But the numbers are very small and there seems to be enough demand in that price range to absorb what comes on the market.

Short Sale Warning

Mar. 27, 2009
Categorized in: Foreclosures/Short Sales

I just got back from a class on short sales. Things keep changing and you have to try to keep up with the latest trends.

Here's the biggest take away as far as recent changes to the short sale process go.

Banks are much less inclined to forgive the debt on a short sale. This is particularly true of the second mortgage holder. And, they're willing to hold the deal hostage at the last minute in order to get their pound of flesh.

It brings up the question of whether a short sale, deed in lieu of foreclosure or foreclosure is better for the homeowner. And, I'm going to tell you that if you're a seller wondering that you shouldn't be asking me.

If you're not talking to an attorney who can protect your interests, with this much money at stake, I think you're making a mistake.

A couple of years ago, most debt was wiped out completely on a short sale. So, if you got one done then, be very, very glad!

The other take away is how difficult these things still are. I've seen press reports that they're getting easier, banks are getting more reasonable or smarter or more efficient. Don't believe it!

On a short sale, if you go from contract to settlement in anything less than 120 days, consider yourself lucky!

If you're a buyer you're going to have to weigh your ability to wait that long against the incredible deals that are available on short sales. The truth is that most buyers are deciding short sales won't work for them. That makes the deals better for those few willing to endure the pain of the process.

Too Big....Period!

Nov. 19, 2008
Categorized in: Mortgages

We've heard a lot of talk lately about financial institutions that are "too big to fail". I don't know how the rest of the country looks, but here, in Virginia, that's not how things seem to have worked.

The clients who had the best mortgage experiences and who are less likely to be in trouble are those who did business with small local banks. A lot of these banks lost a fair amount of mortgage business during the crazy years to fly by night outfits who promised the moon. These were the guys quoting ridiculous rates and finding a way to get a mortgage for anyone who could fog a mirror. The small guys who did this aren't around any longer.

But there were plenty of big financial institutions who couldn't resist the lure of all that money and jumped right into the mud. Countrywide is one that comes to mind. While the company name still exists, it's only because they were rescued by a savvier financial institution that took fewer risks.

From a real estate agent's point of view there were always a lot of advantages to a local institution. They were accountable for the loans they made. If something went wrong during the mortgage process it was a lot harder for them to duck me! I could walk into their office and ask what the heck was going on!

Small, local banks also take risks, but they're a different sort of risk. It's the "George Bailey" school of risk-taking. Yes, they look at credit scores. But some of these smaller, local institutions will also look at the individual and know that risk is also about integrity.

When this current financial crisis is over and someone writes the book on what happened with banks, there's going to be a recognition that our small, local banks made better decision and suffered less.

Maybe "too big to fail" should instead be, "too big to save"?

Ten Cents

Oct. 11, 2008
Categorized in: Buyers

I was supposed to have a settlement yesterday. My clients are buying a foreclosure. (The one that we've been working on for months and months and months!)

I know it will come as no surprise to many of you that the settlement didn't happen.

Why, you ask......?

The original estimated settlement statement (HUD1) differed from the final numbers by.....TEN CENTS.

Ordinarily, the change would be made and we'd have approval from all parties for the change in a matter of minutes and would proceed with settlement.

But, this ten cent change had to go back up the chain of command on the bank's side. And, so, we're still waiting. Since this was Friday and no bank is going to give us final approval over the weekend settlement won't happen before Monday.

Except that this week, Monday is a holiday. So, now we're looking at Tuesday at the earliest.

So, how much do you think it cost the bank, to approve this ten cent change? How much in lost time (wages) for the employees who worked on this? How much did it cost them to have this money in my clients' pockets and not theirs for these extra few days?

This is the culmination of months of negotiations as the bank continued to get lower offers from my clients after they rejected higher ones. And, in one case, lowered the price while we had a higher offer on the table!

There are very well managed financial institutions in this country. This isn't one of them.

To Inspect or Not

Sep. 11, 2008
Categorized in: Buyers

Clients I'm working with who are trying to buy a home settled on the one they want this week. It's a foreclosure and, as with most foreclosure properties, it's sold as is. That means we can't make the offer contingent on a home inspection or a radon inspection.

Normally, what I advise clients to do in this situation is to have a home inspection done before writing an offer. But in this case the bank already had several offers and gave us a deadline if we wanted to submit an offer. We had less than 20 hours to do so.

It's impossible to get a radon inspection in that time. And, it's practically impossible to get a home inspection done that quickly. In the end, my clients decided to pass on writing an offer on this home.

Here's my dilemna. I advised them that it's certainly not prudent to buy a home without an inspection. And, that's true. But the deeper truth is that I'd have put an offer on this home without a home inspection. It's a pretty new home, built in 2005. I see nothing that worries me, nothing to suggest water or pest issues, my two biggest worries. I am, by nature, less risk averse than your average individual.  And, so, I'd have jumped in and made that offer.

But, it seems like the wrong advice to give to clients. First of all, let's all admit that we live in a litigious society. God forbid something seriously wrong shows up after they've moved in. These are very, very nice people. But that doesn't mean they wouldn't sue me for giving them bad advice and costing them a lot of money. And, that does impact what I say.

I also try very, very hard to never push my own personal likes, dislikes and personal biases on my clients. So, just because I'm willing to take that risk doesn't mean I assume that my clients have that same willingness to take risks with what may be their largest investment.

I'll admit that I remain a little torn about this. It's possible this would have been a good home for them. And I'll never know whether my advice was right or wrong. Don't you hate that?!

Market Impressions

Sep. 3, 2008
Categorized in: Local Market Conditions

I promised a sneak peak at the August numbers. And, overall, they're looking good. The number of closed sales looks like it stayed pretty close to July numbers. But those were good numbers overall. Inventory seems to have dropped significantly in most markets. Final numbers will be out next week and I'll have a more detailed analysis then.

And, while I'm giving you impressions, here are a few things that hit me after showing dozens of homes over the weekend.

  • The showing instructions provided for many of the real estate agents were often wrong. There were a lot of people in homes where the listing agent had said they were vacant or out of town. Surprises are never a good thing!
  • Overall, foreclosures are priced significantly below the rest of the market. There are a few banks who still aren't getting it. But most have priced these homes to move! However, most foreclosures will require, at a minimum new paint and carpet throughout the house.
  • Short sale pricing is all over the map. And, many of the properties where the bank has already approved the short sale price are going to actually sell for much less. Or, the banks will not accept the offers and it will end up in foreclosure (at a much lower price).
  • There were a substantial number of short sales where it was clear an offer had disappeared after buyers gave in to frustration when the bank took too long to make a decision. I suspect the real surprise is that there weren't more of those!
  • For the first time in a very long time, we ran into other agents with clients showing the same homes at about the same time. That's got to be a good sign!

Bank Logic

Aug. 27, 2008
Categorized in: Mortgages

As I continue to hit my head against the wall, the wall now known as banks, it's good to see it's not just me! Another blogger tells a story of the frustration out there.

And, in a related development, apparently an asset manager for a major bank was on a news program this week saying that the banks are deliberately slowing things down. This gentleman said that the purpose of doing this was to spread out the losses over time so that their numbers don't look as bad.

Well, it's the first rational explanation I've heard for the banks behavior. But I'd argue that it's only rational on its surfact. As soon as you begin to think about this a little more deeply you have to question that strategy.

Pricing will not, can not, recover until the foreclosure and short sale inventory gets cleared out. The longer that takes, the more prices fall. So, the properties that the bank moves to the back of their list will simply be worth a whole lot less, thus increasing their losses. Yes, they may be more spread out, but if the bottom line impact is worse, what have they gained?

Clearly I don't think like a banker!

Settlement Companies & Foreclosures

Aug. 5, 2008
Categorized in: Buyers

Since foreclosures are such a big part of the market right now, I'm going to do a few posts on some of the issues that are likely to arise if you're buying a foreclosure.

Today I'm going to talk about settlement companies.

Once the bank has given you a verbal agreement that they've accepted your offer, you'll get an addendum (or, more likely, multiple!) One of the clauses you're going to see in that addendum concerns your choice of settlement agent.

The bank is going to want you to use their settlement attorney and there are several ways they may try to make this happen.

One is to incentivize you. The addendum will basically offer you some discount or deal if you use their settlement company. The most common one here is free title insurance. The problem with these incentives is that (as with new construction) you will very rarely actually save any money. Reports are now coming in about the padded fees for these settlement companies in order to make up for giving away the title insurance. In short, you'll be lucky if you save $50 and may actually end up paying more.

The other way a bank can try to get you to use their settlement agent is to simply say in the addendum that you, the buyer, are obligated to do so.

Let's make it clear right now, that you are not obligated and nothing a bank says in an addendum can make you obligated. A buyer in Virginia always has the right to choose their own settlement agent. And, a bank's attempt to get you to use their settlement agent without disclosing the financial relationship between them is a violation of Federal RESPA laws.

The problem becomes that many buyers desperately want the house and are afraid if they don't agree with the addendum without any changes their offer will still be rejected. I understand wanting the house. But it's my job as your agent to also make sure you're protected.

So, go ahead and sign the addendum and get the whole thing ratified. Then your real estate agent should write a notice, informing the seller (in this case, the bank) that you'll be using "X" settlement company instead.

Any clause in any contract forcing you to use their settlement agent is not enforceable. And, in all honesty, once they have a ratified contract in hand and the money is in sight, they're unlikely to balk.

By the way, the other reason you may not want to use the settlement company recommended by the bank is that the process is already slow enough! Since there are very few settlement companies working with these banks, most of them are completely overwhelmed. Good luck getting a settlement done in a timely fashion!

And, last, but not least, the settlement company is going to be doing the title search and make sure you really do own your house when you actually close. You want that done as thoroughly as possible by someone who cares about protecting your ownership interests. The bank's settlement agent would seem to have someone else's best interests at heart!


Aug. 4, 2008
Categorized in: Buyers

It feels like we're all moving in slow motion these days in the real estate industry. Or maybe we're just wading through deep mud that's slowing us all down!

Or choose your own mental image here.

And, there's one segment of the real estate industry that's almost single handedly responsible for the slow down...lending institutions.

With foreclosure sales making up 2/3 of Culpeper sales last month and 1/2 of those in Fauquier, a lending institution is actually the seller in most of the sales happening these days. If you add in short sales, where the lender has to approve any deal you're definitely dealing with the vast majority of transactions.

Lenders are moving very slowly on these things. On one foreclosure sale I'm working on right now it took my buyer clients about three weeks to even get a response to their offer. And there are enough stories around this to fill up a blog!

But lenders aren't the only ones slowing up the process. Listing agents who handle foreclosures are typically specialists in this area. Foreclosures are about all they do. Lenders typically offer less compensation on each individual deal in exchange for providing large volumes of transactions. And, so you get agents who are completely overwhelmed by the number of listings they have, but can't afford or won't pay to get help.

I heard one story last week about a buyer's agent bypassing the listing agent when he wasn't getting anywhere and asking the settlement company to talk to the lender directly to get things done. A week after settlement had taken place the listing agent still claimed to be unable to get an answer from the bank on outstanding issues! (This agent was completely unaware the deal had already settled!) More likely the agent wasn't even trying to get an answer as the issue had fallen through the cracks.

Documenting everything I do, every conversation I have, every fax or e-mail I send and who I talk to have become even more important than usual.

If you're trying to buy in the midst of all this, be aware that you will need a lot of patience. You may very well get a good deal buying a foreclosure or short sale. But it may require that you have the ability to wait several months to get the deal closed and get into your new house. Keep that in mind as you search for your next home.

Me? I'm getting just a little tired of slogging through all this mud. But like everything else, it's cyclical and this too shall pass!

Piedmont Real Estate Blog

Blog by Julie Emery
Amissville, Virginia

An ongoing dialog on real estate news, opinion and trends in Northern Virginia and the greater Piedmont area. Julie is an Associate Broker at Frankly Real Estate Inc, 6304 Crossroads Circle, Ste 102, Falls Church, VA 22044


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